Burnham Holdings, Inc. Announces First Half Results and Declares Dividend

    LANCASTER, Pa., July 17 /EMWNews/ -- 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 period ended June 29, 2008, and announced a

common stock dividend.



    Second quarter and year-to-date sales were $44.8 million and $86.9

million, respectively. Prior year second quarter and year-to-date sales

were $47.9 million and $94.5 million, respectively. First half sales have

declined $7.6 million, or 8%, compared to a year ago. The decline has been

experienced in both our residential and commercial products. With the

economic conditions that continue to dominate the national news, namely

declining housing and real estate markets, rising fuel prices, and

tightening of credit, the residential industry is seeing a reluctance by

both the end-consumer and distributors to over-extend themselves beyond

immediate needs. Broad measures of the residential market such as the cast

iron boiler industry and the gas warm air furnace industry are down 15% and

18%, respectively, on a unit basis. While economic concerns have not

impacted our commercial business as dramatically, that portion of our

business is down moderately from the strong first half it experienced in

2007. Although current conditions remain challenging, we are optimistic

about longer-term prospects for the business. Existing boilers will

continue to be replaced over time due to age or operating costs, and our

new powerful lineup of high-efficiency residential and commercial products

position us well in the market. As we approach the upcoming heating season,

we are scheduling our manufacturing facilities for the normal pattern of

higher demand in the second half.



    The loss for the second quarter and year-to-date was $(1.0) million or

$(0.22) per share, and $(2.2) million or $(0.50) per share, respectively.

The 2007 second quarter gain was $197 thousand or $0.05 per share, while

the year- to-date loss was $(508) thousand or $(0.11) per share. The lower

sales levels discussed above have negatively impacted the 2008 first half

results through both the loss of the gross profits on this volume, and

through lower production requirements which lowers coverage of fixed costs.

Additionally, as we discussed in our first quarter Report, the Burnham

group of companies, like most users of steel products in the United States,

is experiencing cost increases for raw steel and steel related products

reminiscent of year 2004. In the first half, raw material price increases

on new material purchases were over $2 million, or approximately 2.5% of

net sales, higher than the last prices paid at the end of 2007. We have

announced product price increases within all of our businesses to mitigate

these cost impacts, while at the same time being cognizant of our need to

remain cost competitive in this difficult market. Selling, administrative,

and general expense was lower in dollars, and as a percentage of sales,

compared to the prior year (both for the quarter and year-to-date) and is

indicative of actions taken by Burnham to lower its cost structure. To

further highlight this cost structure change, it may be useful to compare

the current first half results with the first half results of 2005. In

2005, a year of normal price inflation, Burnham experienced first half

sales of $94.0 million (similar to 2007 but $7 million higher than 2008)

with a net loss of $(2.7) million (a greater loss than this year on

substantially higher sales).



    The Company's balance sheet remains strong with high liquidity and

working capital at a level consistent with the business activity. Inventory

levels are only slightly higher than last year at this time despite the

sharp increase in raw material costs, increases resulting from our new

product introductions, and increases within our commercial businesses that

have experienced growth. We are able to maintain steady inventory levels,

with a resulting stronger cash flow, because of the increased production

flexibility provided by the facility expansions and equipment improvements

made over the last several years. Total debt at June 29, 2008 is $42.3

million, or $2.2 million lower than at this point last year, and as a

percentage of total capital (debt and equity) is 32.7% versus 35.9% last

year.



    At its meeting on July 17, 2008, the Burnham Holdings, Inc.'s Board of

Directors declared a quarterly common stock dividend of $0.17 per share

payable August 29, 2008, with a record date of August 8, 2008.



    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. Careful consideration should be given to cautionary

statements made in our 2007 Annual Report. We undertake no duty to update

or revise these forward-looking statements.










    Consolidated Statements of Operations

    (In thousands, except              Three months ended    Six months ended

     per share data)                  June 29,     July 1,  June 29,   July 1,

    (Data is unaudited (see Notes))     2008        2007      2008      2007

    Net sales                         $44,754     $47,924   $86,898    $94,484

    Cost of goods sold                 37,062      36,917    71,362     74,312

      Gross profit                      7,692      11,007    15,536     20,172

    Selling, administrative

     and general expense                9,202      10,308    18,260     19,889

    Operating (loss) gain              (1,510)        699    (2,724)       283



    Other income (expense)

      Mark-to-market gain (loss) (4)      389         203        21       (46)

      Interest income                      18          25        44        47

      Interest expense                   (458)       (622)     (817)   (1,070)

        Other income (expense)            (51)       (394)     (752)   (1,069)





    (Loss) gain before taxes           (1,561)        305    (3,476)     (786)

    Income tax expense (benefit)         (562)        108    (1,251)     (278)



    Net (loss) gain                     $(999)       $197   $(2,225)    $(508)



    Per Share Data:

      Basic & Diluted (loss) gain      $(0.22)      $0.05    $(0.50)   $(0.11)

      Dividends paid                    $0.17       $0.17     $0.34     $0.34

    Notes:



    1) The accompanying unaudited financial statements contain adjustments

that are necessary for a fair presentation of the interim results, and

these adjustments are applied consistently for the periods presented. The

results for any interim period are not necessarily indicative of results

for the full year. These consolidated financial statements should be read

in conjunction with the Annual Report for the period ended December 31,

2007.



    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 June 29, 2008 includes 2,795,378 of

Class A shares and 1,656,511 of Class B shares.



    4) 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 a portion of the variable rate debt

for payments indexed to a fixed interest rate. These non-operational,

non-cash charges are recorded on a quarterly basis but reverse themselves

over the term of the agreements.



    5) In 2006, accounting rule changes required recognition of the funded

status of pensions and postretirement benefits as a net liability or asset

on the Company's balance sheet. On an annual basis, changes in the funded

position of these obligations are recorded as an adjustment to the

liability or asset with an offsetting change (net of deferred taxes) in

Other Comprehensive Income (Loss), a sub-section of Stockholders' Equity.

The primary 2007 year-end, non-cash change for Burnham was a net increase

in Other Assets of $9.7 million and a net increase to Stockholders' Equity

of $7.3 million (after tax) (see Note 9 of the 2007 Annual Report).










    Consolidated Balance Sheets

    (In thousands)                                    June 29,        July 1,

    (Data is unaudited (see Notes))                     2008           2007

    ASSETS



    Current Assets

      Cash and cash equivalents                        $3,432         $1,268

      Marketable securities                               ---            751

      Trade and other accounts receivable, net         26,500         29,920

      Inventories                                      55,647         54,181

      Prepayments and other current assets              4,873          4,499

          Total current assets                         90,452         90,619



    Property, plant and equipment, net                 48,148         50,179

    Other assets, net (5)                              31,834         22,053

          Total Assets                               $170,434       $162,851



    LIABILITIES AND STOCKHOLDERS' EQUITY



    Current Liabilities

      Accounts and taxes payable & accrued expenses   $28,227        $28,880

      Current portion of long-term liabilities            403            366

        Total current liabilities                      28,630         29,246



    Long-term debt                                     42,152         44,360

    Other postretirement liabilities                    3,385          3,400

    Deferred income taxes (5)                           9,362          6,554



    Stockholders' equity

      Preferred stock                                     530            530

      Class A common stock                              3,253          3,225

      Class B convertible common stock                  1,657          1,685

      Additional paid-in capital                       14,308         14,308



      Retained earnings                                82,323         81,807

      Accumulated other comprehensive loss (5)          2,786         (4,312)

      Treasury stock, at cost                         (17,952)       (17,952)

        Total stockholders' equity                     86,905         79,291

        Total Liabilities and Stockholders'

         Equity                                      $170,434       $162,851