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Ballantyne of Omaha Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 12, 2009 12:01AM
Ballantyne of Omaha Inc (BTN) filed Quarterly Report for the period ended 2009-03-31. Ballantyne of Omaha Inc. is a leading developer manufacturer and distributor of commercial motion picture equipment and long-range follow spotlights in the U.S. and abroad. The company's product lines are distributed on a worldwide basis through a network of domestic and international dealers to movie exhibitors ride simulation operators and amusement park operators. The company's broad range of both standard and custom-made equipment can completely outfit and automate a motion picture projection booth and is being used by major motion picture exhibitors. Ballantyne of Omaha Inc has a market cap of $44.47 million; its shares were traded at around $3.17 with and P/S ratio of 0.81.
Highlight of Business Operations:
Sales of lighting products fell to $0.6 million during 2009 from $1.1 million in 2008 due to in large part to lower demand for follow spotlights where sales fell to $0.4 million from $0.7 million a year-ago. Spotlight sales were impacted by the effects of the troubled credit markets as these sales are in many instances dependent on the construction of stadiums and auditoriums around the world. It is unclear if other projects will be delayed or canceled during 2009 and beyond. We also experienced a reduction in demand for replacement parts which decreased to $0.1 million from $0.2 million in 2008. Sales of all other lighting products, including but not limited to, xenon lamps, skytrackers, britelights and nocturns amounted to $0.1 million in 2009 compared to $0.2 million in 2008.
Consolidated gross profit increased to $3.4 million in 2009 from $2.3 million a year-ago and as a percent of total revenue increased to 19.7% from 16.3% in 2008. Gross profit in the theatre segment increased to $3.2 million in 2009 from $1.9 million in 2008 and as a percentage of theatre sales increased to 19.5% from 15.0% a year-ago. Our theatre margins were impacted primarily by profits from our screen manufacturing subsidiary, Strong / MDI Screen Systems, Inc., coupled with higher gross profit recognized within our theatre service subsidiary.
For the reasons outlined herein, we experienced net income of $0.5 million and basic and diluted earnings per share of $0.04 in 2009 compared to a net loss of $0.3 million and basic and diluted loss per share of $0.02 a year-ago.
During 2008, the Company amended its Original Credit Facility to allow an interim extension of credit (the Interim Credit Facility) in the amount of $10.4 million in addition to the $4.0 million allowed under the Original Credit Facility. Effective September 26, 2008, the Company entered into a Ninth Amendment to its Original Credit Facility to extend the maturity date of its interim extension of credit (the Interim Credit Facility) to August 30, 2009 and to reduce the available borrowings to the lesser of $9.4 million or 80% of the par value of the investments held in the pledged account ($7.7 million as of March 31, 2009). The Interim Credit Facility is evidenced by a Promissory Note with an interest rate set at a floating rate set to after-tax interest income received on certain investment securities. The credit facilities contain certain restrictions primarily related to restrictions on acquisitions and dividends. All of our personal property and certain stock in our subsidiaries secure the credit facilities. Total borrowing available under the Original and Interim Credit facilities amounted to $11.7 million. No amounts are currently outstanding under either of the credit facilities. The Company intends to renew the credit facilities prior to their expiration.
Net cash used in operating activities amounted to $0.2 million in 2009 compared to net cash provided by operating activities of $0.7 million in 2008. The results for 2009 reflect an increase in accounts receivable balances of $5.1 million during the first quarter due to the timing of cash receipts. Accounts receivable balances are expected to decrease in subsequent quarters. The $0.7 million of cash flow from operating activities for the three months ended March 31, 2008 resulted primarily from turning a significant amount of our consignment inventory into cash resulting in a net inflow of cash of $1.8 million from this inventory.
During 2009, the Company provided a guarantee to a note entered into by the LLC to finance digital projection equipment deployed in the normal course of business. The loan provides for borrowings of approximately $0.3 million and bears interest at a rate of 7.2% per annum. The Companys guarantee of the note is limited to its 44.4% ownership percentage, which amounts to approximately $0.1 million. RealD, who holds a membership interest of 55.6% in the joint venture, has provided a guarantee for the remainder of the note outstanding, which amounts to approximately $0.2 million. During 2008, we provided a guarantee to notes entered into by DL II to finance digital projection equipment deployed in the normal course of business. The loans provide for borrowings of approximately $0.7 million and $2.5 million, respectively and bear interest at rates of 7.2% and 7.0% per annum. Our guarantee of the notes is limited to our 44.4% ownership percentage, which amounts to approximately $1.4 million. RealD, who holds a membership interest of 55.6% in the joint venture, has provided a guarantee for the remainder of the notes outstanding, which amounted to approximately $1.8 million. We have recorded a liability for the fair value of the obligation undertaken by issuing the guarantees which amounted to approximately $0.07 million as of March 31, 2009. The guarantees will expire by the end of 2011. Under the terms of the guarantees, the Company and RealD would be required to fulfill the guarantees should the joint venture be in default of its loan or contract terms.
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