Burnham Holdings, Inc. Announces First Half Results and Declares Dividend

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Jul 15, 2010, 03:45 ET

LANCASTER, Pa., July 15 /PRNewswire-FirstCall/ -- Burnham Holdings, Inc., (Pink Sheets: BURCA), a leading domestic manufacturer of boilers, and related HVAC products and accessories for residential, commercial and industrial applications, today reported its financial results for the period ended June 27, 2010, and announced a common stock dividend.

Second quarter and year-to-date sales were $35.6 million and $71.1 million, respectively. Prior year second quarter and year-to-date sales were $37.0 million and $71.7 million, respectively. Adjusting the quarter and first half sales for both years to remove the revenue of Wendland Manufacturing Corp., sold on February 22, 2010, quarter to quarter sales are basically identical and sales for the first half are 2% higher than 2009. This compares to our various markets that are generally flat to moderately down from last year. We expect market conditions to be challenging until the economy eventually recovers, and credit availability, housing, real estate activity, and consumer confidence return to a more normal level. Although current business conditions remain difficult, we are optimistic about longer-term prospects for the business. With a firm foundation based on our core principles and philosophy, Burnham is financially and operationally strong. Existing boilers will continue to be replaced over time due to age or operating costs, and our powerful lineup of high-efficiency residential and commercial products positions us well in the market. We produce top-quality, high-value equipment for virtually any application. As we approach the upcoming heating season, we are scheduling our manufacturing facilities for the normal pattern of higher demand in the second half.

The losses for the second quarter and year-to-date were $(122) thousand or $(0.03) per share, and $(942) thousand or $(0.21) per share, respectively. This compares favorably to 2009, when quarter and year-to-date losses were $(115) thousand or $(0.03) per share, and $(1.3) million or $(0.30) per share, respectively. We have been continually and systematically evaluating our cost structure during this economic recession to remain cost competitive in the market. Cost of goods sold as a percentage of sales for 2010, for both the quarter and year-to-date, were basically equal to the same periods of 2009 (2010 at 77.7% and 79.3%, respectively, versus 2009 at 78.1% and 79.4%, respectively). This reflects the results of product pricing actions matched effectively with changes in raw material costs and from strict control of manufacturing overhead expenses. Selling, administrative, and general expenses were 5% lower for the first half compared to the prior year, $15.5 million versus $16.4 million in 2009, and were 1% lower as a percentage of sales. The resulting favorable impact from the above-mentioned cost drivers are that operating dollars and profit margins, for both the quarter and first half, are better than last year despite the flat sales. Other income (expense) was unfavorable for the quarter and first half, compared to the same periods of last year, mainly as a result of fluctuations in the mark-to-market of interest rate agreements.

The Company's balance sheet remains strong with working capital at a level consistent with the business activity. Total debt was $33.2 million at June 27, 2010, down substantially from $42.9 million at the same point in 2009. Our spending for capital equipment of $1.5 million (an increase of $392 thousand over the 2009 spending level) was paid for partially by the cash proceeds from selling the assets of Wendland Manufacturing Corp. in Texas, previously mentioned in the 2009 Annual Report. The net cash used in operations for the six months was $10.1 million, which was better than the $10.7 million used in 2009 (see Consolidated Statements of Cash Flows for details).

At its meeting on July 15, 2010, Burnham Holdings, Inc.'s Board of Directors declared a quarterly common stock dividend of $0.17 per share payable September 1, 2010, with a record date of August 23, 2010.

Consolidated Statements of Operations
(In thousands, except per share data)	Three months ended		Six months ended
	June 27,	June 28,	June 27,	June 28,
(Data is unaudited (see Notes))	2010	2009	2010	2009

Net sales	$35,623	$36,960	$71,148	$71,656
Cost of goods sold	27,689	28,872	56,420	56,908
Gross profit	7,934	8,088	14,728	14,748
Selling, administrative and general expense	7,724	8,026	15,496	16,378
Operating income (loss)	210	62	(768)	(1,630)

Other income (expense)
Mark-to-market gain (4)	31	156	71	238
Interest income	1	1	1	2
Interest expense	(433)	(398)	(776)	(686)
Other income (expense)	(401)	(241)	(704)	(446)

Loss before taxes	(191)	(179)	(1,472)	(2,076)
Income tax benefit	(69)	(64)	(530)	(747)

Net loss	$(122)	$(115)	$(942)	$(1,329)

Per Share Data:
Basic & Diluted loss	$(0.03)	$(0.03)	$(0.21)	$(0.30)
Dividends paid	$0.17	$0.17	$0.34	$ 0.34

Notes:

1) The accompanying unaudited financial statements contain adjustments that are necessary for a fair presentation of the interim results, and these adjustments are applied consistently for the periods presented. The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the Annual Report for the period ended December 31, 2009. Statements other than historical facts included or referenced in this Report are forward-looking statements subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. We undertake no duty to update or revise these forward-looking statements.

2) Basic earnings per share are based upon weighted average shares outstanding for the period. Diluted earnings per share assume the conversion of outstanding rights into common stock.

3) Common stock outstanding at June 27, 2010 includes 2,857,179 of Class A shares and 1,598,459 of Class B shares.

4) Mark-to-market adjustments are a result of changes (non-cash) in the fair value of interest rate agreements. These agreements are used to exchange the interest rate stream on variable rate debt for payments indexed to a fixed interest rate. These non-operational, non-cash charges reverse themselves over the term of the agreements.

5) Accounting rules require that the funded status of pension and other postretirement benefits be recognized as a non-cash asset or liability, as the case may be, on the balance sheet of the Company. For December 31, 2009 and 2008, projected benefit obligations exceeded plan assets, although the 2009 unfunded position was lower than the 2008 unfunded position. The resulting non-cash presentation on the balance sheet is reflected in "Deferred income taxes", "Other postretirement liabilities", and "Accumulated other comprehensive income (loss)", a non-cash sub-section of "Stockholders' Equity" (see Note 9 of the 2009 Annual Report for more details).

6) In the first half of 2010 and 2009, the Company made voluntary pre-tax contributions of $2.1 million and $2.6 million, respectively, to its defined pension plan. These payments increased the trust assets available for benefit payments (reducing "Other postretirement liabilities") and did not impact the Statement of Operations.

7) On February 22, 2010, the Company sold the assets of Wendland Manufacturing Corp. in Texas. The sale was recorded in the 2009 financial statements, while the transfer of cash occurred on the date of sale.

Consolidated Balance Sheets
	June 27,	June 28,
(In thousands and data is unaudited (see Notes))	2010	2009
ASSETS
Current Assets
Cash, cash equivalents, and marketable securities	$3,956	$3,963
Trade and other accounts receivable, net	20,740	23,100
Inventories	50,884	58,195
Prepayments and other current assets	2,794	3,545
Total current assets	78,374	88,803
Property, plant and equipment, net	44,308	47,043
Deferred income taxes (5)	1,189	2,563
Other assets, net	21,813	22,076
Total Assets	$145,684	$160,485

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts and taxes payable & accrued expenses	$22,198	$26,330
Current portion of long-term liabilities	344	400
Total current liabilities	22,542	26,730
Long-term debt	33,075	42,787
Other postretirement liabilities (5)(6)	19,644	21,662
Stockholders' equity
Preferred stock	530	530
Class A common stock	3,315	3,258
Class B convertible common stock	1,598	1,652
Additional paid-in capital	14,359	14,308
Retained earnings	88,657	85,977
Accumulated other comprehensive income (loss) (5)	(20,078)	(18,467)
Treasury stock, at cost	(17,958)	(17,952)
Total stockholders' equity	70,423	69,306
Total Liabilities and Stockholders' Equity	$145,684	$160,485

Consolidated Statements of Cash Flows
	June 27,	June 28,
(In thousands and data is unaudited)	2010	2009
Net loss	$(942)	$(1,329)
Depreciation and amortization	2,292	2,376
Other net adjustments	(760)	(1,528)
Pension and postretirement liabilities expense	380	691
Contributions to pension trust (6)	(2,100)	(2,643)
Changes in operating assets and liabilities	(8,992)	(8,262)
Net cash used in operating activities	(10,122)	(10,695)
Net cash used in the purchase of assets	(1,538)	(1,146)
Proceeds from sale of assets (7)	871	---
Proceeds from borrowings	12,500	13,763
Principal payments on debt and lease obligations	(119)	(53)
Proceeds from exercise of stock options	51	---
Dividends paid	(1,514)	(1,514)
Cash, cash equivalents, and marketable securities:
Increase for period	129	355
Beginning of year	3,827	3,608
End of period	$3,956	$3,963