Burnham Holdings, Inc.

occur from time to time and the seasonal nature of our business. The
Revolver and LOC have various financial covenants but no scheduled
payments prior to maturity. As of December 31, 2012 and 2011, the
Company was in compliance with all covenants as shown below:
December December
Dollars in thousands 2011 2012
Funded Debt (1) Stockholders’ Equity on
$ 10,929 $ 1,476
FIFO basis (2) 117,747 123,065 Minimum level:
$102,000 for 2012 and
$100,000 for 2011
Debt Coverage Ratio (1) 5.00 6.02 Minimum Ratio: 1.35
Funded Debt to EBITDA (1) 0.90 0.09 Maximum Ratio: 5.00
(1) As defined by Revolver and LOC Agreement.
(2) Stockholders’ Equity excluding AOCI (shown below) plus LIFO inventory reserve
(which can be found in “Inventories” Note 2 on page 23).
Key Liquidity Data and Other Measures:
December December December
Dollars in thousands 2010 2011 2012
Cash $ 3,965) $ 4,489) $ 4,740)
Working Capital 40,515) 43,555) 40,741)
Total Debt 14,143) 16,320) 7,692)
Financed Debt (1) 12,382) 13,713) 5,265)
Financed Debt (1) to Capital (2) 11.4%) 12.2%) 4.8%)
Stockholders’ Equity 73,940) 64,392) 68,891)
AOCI (22,171) (33,917) (34,634)
Stockholders’ Equity (excluding AOCI) 96,111) 98,309) 103,525)
Common Stock Price $ 15.13) $ 13.50) $ 14.46)
Book Value per share as reported 16.52) 14.34) 15.29)
Book Value per share (excluding AOCI) 21.50) 21.93) 23.01)
(1) Financed Debt is defined as Total Debt less mark-to-market non-cash liability
related to interest rate swap instruments.
(2) Capital is defined as Stockholders’ Equity (excluding AOCI) plus Financed Debt.
REVIEW OF OPERATIONS, (CONTINUED)
Burnham Holdings, Inc. 2012 Annual Report
The following chart presents the Company’s Stockholders’ Equity
(excluding AOCI) and Financed Debt as a percentage of this Equity over
the last five years at December of each year (typically near the lowest
borrowing level for the year).
120
100
80
60
40
20
0
50%
40%
30%
20%
10%
2008 2009 2010 2011 2012
Financed Debt (1) 0%
Stockholders' Equity
(excluding AOCI) $ in millions
%
Throughout a typical year, our borrowing requirements fluctuate
based on business activity and our need to support working capital
levels. The normal cyclical high borrowing level occurs during the third
quarter of each year and is provided for by the Revolver mentioned
previously. Debt levels for the third quarter ending September 2012
and 2011 were $31.2 million and $40.0 million, respectively.
The Company believes at this time that its liquidity position, its
capital structure, and its banking relationships are adequate to meet
foreseeable future needs.
Burnham Holdings, Inc., is not a party to any financial derivative
transaction or any hedging agreements, except for interest rate swap
instruments and short-term currency contracts. The Company has
entered into these arrangements to hedge its exposure to interest rate
fluctuations on a portion of its variable rate debt and to lock in costs
for a portion of its foreign-supplied materials.
CAPITAL INVESTMENTS
In late 2010, the Company moved forward with the long-term plan
of owning, rather than leasing, its Centerville manufacturing facilities in
Lancaster, PA. As part of this strategy, two investment properties in
Lancaster were sold by subsidiaries for total net proceeds of $11.8
million, resulting in a net book gain on these properties of $4.7 million.
DIVERSIFICATION
From industrial scotch marine boilers to residential gas & oil heating units to high-efficiency air conditioners and water heaters,
Burnham Holdings, Inc.’s, affiliated companies offer the widest array of products in the industry for our extensive customer base.
Through a combination of eight major brands, our subsidiaries are able to service any geographic region, using various fuel
alternatives, across all sectors of the market, including residential, commercial, and industrial applications.