This excerpt taken from the BEZ 10-K filed Mar 10, 2006.
2004 compared to 2003
Total sales for 2004 were $648.2 million, rising 15.5% above 2003 net sales of $561.4 million. Sales of electric motors increased 13.5% in 2004 and amounted to 76.2% of total product sales compared to 77.5% in 2003. Sales of drives products were up 15.7% for the year and amounted to 17.1% of total product sales in 2004 compared to 17.0% in 2003. Sales of generator products rose 41.8% during the year and comprised 6.7% of total product sales versus 5.5% in 2003.
Gross margin of 26.9% in 2004 declined from 27.1% in 2003. During 2004, raw material costs increased sharply and although productivity and product design improvements and price increases mitigated much of the effects of increased copper and steel costs, gross margin suffered during 2004.
Operating margin of 9.3% in 2004 was an increase over 2003 operating margin of 8.2%. Most of the 2004 improvement resulted from our ability to support a 15.5% increase in 2004 total sales without adding fixed selling and administrative costs. Selling and administrative costs were 17.6% of sales in 2004 compared to 18.9% in 2003. During the fourth quarter of 2004, certain contingent liabilities were adjusted by approximately $1.5 million to reflect current exposures, resulting in a reduction in selling and administrative expenses of 0.2% of sales.
While increased material costs in 2004 had a negative effect on the 2004 gross margin, efficiencies in selling and administrative costs combined with increased sales volume resulted in a pre-tax margin of 8.1% for 2004 compared to 7.0% in 2003. Net earnings increased to $35.1 million, or $1.05 per diluted share, in 2004 compared to $24.8 million, or $0.74 per diluted
Exhibit 13 Page 3
share, in 2003. During the fourth quarter of 2004, certain accrued income tax liabilities were adjusted to reflect current exposure, resulting in an increase in earnings of $0.06 per diluted share.
International Sales: International sales (foreign affiliates and exports) increased 2.0% in 2005 to a record $103.1 million compared to $101.1 million in 2004 and $82.8 million in 2003. In 2005, our export sales from the U.S. to non-affiliate customers increased 17.1% or $7.9 million. Sales from our European affiliates to foreign customers declined 10.0% primarily due to general business conditions in Europe and the anticipated availability in early 2006 of new motion control products. We expect to see steady growth in the motion control products during 2006.
Environmental Remediation: Management believes, based on its internal reviews and other factors, that any future costs relating to environmental remediation and compliance will not have a material effect on the capital expenditures, earnings, cash flows, or competitive position of the Company.