LANCASTER, Pa., Feb. 26 /PRNewswire-FirstCall/ -- Burnham Holdings, Inc., (Pink Sheets: BURCA), a leading manufacturer of boilers, furnaces, radiators, air conditioning systems, and related accessories for residential, commercial and industrial applications, today reported its financial results for the year ended December 31, 2008.
We are pleased to announce a successful financial year with increased sales, improved profits, and a solid balance sheet. Burnham's audited Annual Report will be available about March 20, 2009.
Net sales for 2008 were $225.8 million, up from last year's $224.7 million. This sales gain was achieved despite a challenging business environment in 2008. The residential portion of our business continues to experience a cyclical downturn from the robust levels of 2004 (the record sales year for Burnham). This industry downturn is the result of a number of factors, including the sharp decline in the real estate market and its impact on home construction, fluctuating fuel prices, the slowdown in the general economy, and reduced credit availability. The 2008 market for our residential products was down 5% in units from 2007. The commercial portion of our business, which over the last several years has mitigated the downturn in the residential portion, also began to feel the constraints on spending in the commercial / industrial sector as 2008 unfolded. Faced with these business conditions, we are encouraged that we were able to maintain our sales levels during this cycle.
The net income for 2008 increased to $5.8 million, or $1.30 per basic share, compared to $5.5 million, or $1.24 per basic share, reported for 2007. The profitability growth achieved in 2008 was accomplished despite an extremely competitive pricing environment caused by the decline in industry units, coupled with a surge in costs for raw materials and purchased parts that placed pressure on our margin structure. Manufacturing overhead expenses and production variances declined in 2008 from the prior year by over $1 million and we have steadily continued our progress in reducing selling, administrative and general expenses ("SG&A"). The 2008 SG&A expenses are at their lowest level, as a percentage of sales, for at least the last 10 years. Operating income as a percentage of sales was 5.1% for both 2008 and 2007, and only our record year of 2004 had a better percentage in the last 5 years. Management strives to ensure that our operating costs continue to be at a level that enables the Company to be highly competitive in the market. The actions taken over the last several years have lowered our ongoing cost structure and will enable us to remain competitive going forward.
Our efforts to consolidate and streamline operations have enabled us to improve quality, reduce material handling, improve productivity, and lower inventory levels while providing a very high level of customer service. Ever rising and fluctuating fuel costs have increased consumer emphasis on more energy-efficient products. In response to this consumer shift, the Company has introduced more new products over the last several years than at any other time in its history, and we plan on being at the forefront of the industry in this effort.
The balance sheet is sound with appropriate levels of working capital and a conservative ratio of debt to equity. Debt, not including interest rate instruments that hedge our exposure to interest rate fluctuations, declined from 2007 and is now at its lowest level in eleven years.
On January 29, 2009, the Company announced a quarterly dividend of $0.17 per share on its common stock, the 69th consecutive year of paying a dividend. The dividend is payable February 27, 2009. The annual dividend rate for preferred stock is $3.00 per share.
The Company's directors have scheduled the 2009 Annual Meeting for Monday, April 27th. The meeting will be held at the Lancaster Host Resort and Conference Center in Lancaster beginning at 11:30 a.m.
Consolidated Statements of Operations (In thousands, except per share data) (Data is unaudited (see Notes)) Years Ended December 31, 2008 2007 Net sales $225,805 $224,677 Cost of goods sold 175,961 172,070 Gross profit 49,844 52,607 Selling, administrative and general expenses 38,436 41,121 Operating income 11,408 11,486 Other income (expense) Mark-to-market (5) (427) (549) Interest and investment (loss) income (126) 228 Interest expense (1,787) (2,536) Other income (expense) (2,340) (2,857) Income before taxes 9,068 8,629 Income tax expense 3,264 3,106 Net income $5,804 $5,523 Basic & Diluted income per share $1.30 $1.24 Other Financial Highlights: Preferred dividends per share $3.00 $3.00 Common stock dividends per share $0.68 $0.68 Book value per common share $16.05 $20.28 Book value per share (excluding AOCI, see Note 7) $20.28 $19.66 Notes: 1) The accompanying unaudited financial statements contain all adjustments that are necessary for a fair presentation of results for such periods and are consistent with policies and procedures employed in the audited year-end financial statements. These consolidated financial statements should be read in conjunction with the Annual Report for the period December 31, 2008, which will be available about March 20, 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. 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 as of December 31, 2008 includes 2,799,558 of Class A shares and 1,652,331 of Class B shares. 4) In 2008 the Company made pre-tax contributions of $2.8 million to its defined pension plan. These payments increased the plan assets available for benefit payments and did not impact the Statement of Operations. There were no contributions to the plan in 2007. 5) 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. 6) 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 2007, the non-cash impact was an increase to Other Assets (plan assets exceeded the projected benefit obligation) and an increase to Accumulated Other Comprehensive Income (Loss)("AOCI"), a non-cash sub-section of Stockholders' Equity, of $7.3 million after tax. In 2008, despite the cash contribution referenced in Note 4 above, pension plan assets declined as a result of the dramatic downturn in the stock market. The resulting non-cash impact to the balance sheet was a decline in Other Assets of $10.7 million (the reversal of the 2007 established balance), an increase to the Other Postretirement Liability of $20.4 million (projected benefit obligations exceeded plan assets), and an after tax charge of $21.1 million to AOCI (see Note 9 of the 2008 Annual Report for more details). 7) Book value per common share is presented excluding AOCI, a non-cash subsection of Stockholders' Equity, which has been dramatically impacted in both years by the pension and postretirement benefit adjustments described in Note 6. Consolidated Balance Sheets (In thousands and data is unaudited (see Notes)) December 31, 2008 2007 ASSETS Current Assets Cash, cash equivalents and marketable securities $3,608 $3,496 Trade and other accounts receivable, net 30,165 26,743 Inventories 45,695 45,034 Prepayments and other current assets 3,019 3,703 Total current assets 82,487 78,976 Property, plant and equipment, net 48,202 49,499 Deferred income taxes (6) 2,776 --- Other assets, net (6) 21,815 32,785 Total Assets $155,280 $161,260 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts and taxes payable & accrued expenses $30,160 $29,315 Current portion of long-term liabilities 398 402 Total current liabilities 30,558 29,717 Long-term liabilities 29,304 28,266 Other postretirement liabilities (6) 23,649 3,247 Deferred income taxes (6) --- 9,417 Stockholders' equity Preferred stock 530 530 Class A common stock 3,258 3,232 Class B convertible common stock 1,652 1,678 Additional paid-in capital 14,308 14,308 Retained earnings 88,820 86,062 Accumulated other comprehensive income (loss) (5)(6) (18,847) 2,755 Treasury stock, at cost (17,952) (17,952) Total stockholders' equity 71,769 90,613 Total Liabilities and Stockholders' Equity $155,280 $161,260 Consolidated Statements of Cash Flows Years Ended December 31, (In thousands and data is unaudited) 2008 2007 Net income $5,804 $5,523 Depreciation and amortization 5,041 5,311 Other net adjustments 290 (405) Pension and postretirement liabilities expense 989 2,185 Pension contribution (4) (2,800) --- Changes in operating assets and liabilities (3,643) (2,976) Net cash provided by operating activities 5,681 9,638 Net cash used in the purchase of assets (3,565) (3,369) Proceeds from borrowings 1,193 22,343 Principal payments on debt and lease obligations (151) (25,288) Dividends paid (3,046) (3,046) Cash, cash equivalents and marketable securities Increase for year 112 278 Beginning of year 3,496 3,218 End of year $3,608 $3,496
