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Ballantyne of Omaha Inc Reports Operating Results (10-Q)

November 09, 2009 | About:
10qk

10qk

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Ballantyne of Omaha Inc (BTN) filed Quarterly Report for the period ended 2009-09-30.

Ballantyne is a provider of motion picture projection, digital cinema projection and specialty lighting equipment and services. It supplies major theater chains, top arenas, television and motion picture production studios, theme parks and architectural sites around the world. Formerly Ballantyne of Omaha, Inc., the company is a world-class manufacturer of commercial motion picture equipment and entertainment lighting systems. Marketed under the Strong brand name, the company's products enjoy worldwide recognition. It primarily operates within two business segments: theatre and lighting. The Company has three wholly owned operational subsidiaries: Strong Westrex, Inc., Strong Technical Services, Inc. and Strong Digital Systems, Inc. Ballantyne Of Omaha Inc has a market cap of $52.31 million; its shares were traded at around $3.7 with a P/E ratio of 46.25 and P/S ratio of 0.95.

Highlight of Business Operations:

Sales of lighting products fell to $1.0 million during 2009 from $1.2 million in 2008 due primarily to lower demand for replacement parts which fell to $0.1 from $0.2 million in 2008. Follow spotlight sales were flat at $0.7 million compared to a year-ago. Sales of all other lighting products, including but not limited to, xenon lamps, skytrackers and britelights amounted to $0.2 million in 2009 compared to $0.3 million in 2008. Lighting sales were impacted by the effects of the troubled credit markets as demand for these products is dependent on the construction of stadiums and auditoriums around the world.

For the reasons outlined herein, we experienced net income of $0.5 million compared to a net loss of $0.3 million in 2008. Basic earnings per share amounted to $0.04 in 2009 compared to a loss of $0.02 a year-ago. Diluted earnings per share was $0.04 per share in 2009 compared to a loss of $0.02 per share in 2008.

Sales of lighting products fell to $2.4 million from $3.5 million a year-ago due to in large part to lower demand for follow spotlights where sales fell to $1.4 million from $2.1 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 the rest of 2009 and beyond. Sales of Skytrackers fell from $0.3 million in 2008 to $0.1 million in 2009 which management believes is also attributable to current credit markets. Sales of replacement parts also declined to $0.4 million during 2009 from $0.6 million in 2008. Sales of all other lighting products, including but not limited to, xenon lamps and britelights amounted to $0.5 million in 2009 compared to $0.5 million in 2008.

For the reasons outlined herein, we generated net income of $2.0 million compared to a net loss of $0.7 million a year-ago. We generated basic earnings per share of $0.14 during 2009 compared to a loss of $0.05 in 2008. Diluted earnings per share was $0.14 in 2009 compared to a diluted loss per share of $0.05 in 2008.

Net cash provided by investing activities amounted to $9.3 million in 2009 compared to $0.8 million in 2008. During 2009 we purchased $0.8 million of capital equipment and liquidated, at par, approximately $10.0 million of our auction-rate securities. $9.4 million of the proceeds resulted from the sale of such securities to a financial institution whom we have a banking relationship, while the remaining amounts were redeemed through other means. Investing activities during 2008 consisted of capital expenditures of $0.6 million. In addition we received $0.3 million of proceeds from the sale of our coater and marinade product line and liquidated, at par, $1.3 million of our auction-rate securities during 2008.

During 2009, we provided guarantees to notes entered into by the DL II to finance digital projection equipment deployed in the normal course of business. The loans provided for borrowings of approximately $1.5 million and bear interest at rates ranging from 7.0% and 7.2% per annum. Our portion of the guarantee of the notes at the time the notes were entered into was limited to its 44.4% ownership percentage, which amounted to approximately $0.7 million. RealD, who holds a membership interest of 55.6% in the joint venture, provided a guarantee for the remainder of the note outstanding, which amounted to approximately $0.8 million at the time the note was entered into. During 2008, we provided guarantees to notes entered into by the LLC to finance digital projection equipment deployed in the normal course of business. The loans provided 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 portion of the guarantee of the notes at the time the notes were entered into was limited to its 44.4% ownership percentage, which amounts to approximately $1.4 million. RealD, who holds a membership interest of 55.6% in the joint venture, provided a guarantee for the remainder of the notes outstanding, which amounted to approximately $1.8 million at the time the note was entered into. As of September 30, 2009, our guarantee on the remaining balance of the notes outstanding was approximately $1.3 million. We have recorded a liability for the fair value of the obligations undertaken by issuing the guarantees which amounted to approximately $0.06 million as of September 30, 2009. The guarantees will expire by the end of 2012. 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.

Read the The complete ReportBTN is in the portfolios of John Rogers of ARIEL CAPITAL MANAGEMENT LLC.

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