U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1996.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
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EXCHANGE ACT
For the transition period from __________ to ___________.
Commission File No. 0-3366
BRYAN STEAM CORPORATION
(Exact name of small business issuer as specified in its charter)
NEW MEXICO 35-0202050
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
POST OFFICE BOX 27
PERU, IN 46970
(Address of principal executive offices, including zip code)
(317) 473-6651
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No _______
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
COMMON STOCK 191,284
(Title of class) (Number of shares outstanding
April 30, 1996)
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BRYAN STEAM CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited Unaudited
For the For the
Nine months Ended: Fiscal Quarter Ended
----------------------------- --------------------------------
31-Mar-96 31-Mar-95 31-Mar-96 31-Mar-95
(Current (Preceding (Current (Preceding
Year) Year) Year) Year)
------------ ----------- ------------ ---------------
Gross sales less
discounts, returns
and allowances $16,920,316 $13,386,105 $ 4,749,693 $ 3,878,302
Cost and expenses --
Cost of goods sold $11,067,879 $ 8,949,487 $ 3,149,728 $ 2,673,000
Selling, general and
administrative expenses 4,403,611 3,802,860 1,494,434 1,294,465
Total cost and expenses $15,471,490 $12,752,347 $ 4,644,162 $ 3,967,465
Interest expense $ 66,520 $ -- $ 16,164 $ --
Income (or loss) before
taxes on income and
extraordinary items $ 1,382,306 $ 633,758 $ 89,367 $ (89,163)
Provisions for taxes
on income 558,049 247,382 3,367 (34,875)
Net income (or loss) $ 824,257 $ 386,376 $ 86,000 $ (54,288)
Earnings per share* $ 4.31 $ 2.02 0.45 $ (0.28)
Dividends per share* $ 1.40 $ 1.3 $ 1.40 $ 1.30
*Based on 191,284 shares of Common Stock issued
and outstanding throughout the period.
BRYAN STEAM CORPORATION
PERU, INDIANA
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited
ASSETS March 31, June 30,
1996 1995
CURRENT ASSETS ---------- ------------
Cash and cash equivalents $ 1,014,630 $ 2,192,946
Investment securities 1,625,515 1,928,404
Accounts receivable (net) 3,191,762 3,002,774
Prepaid expenses 308,876 239,919
Inventory 3,944,789 4,181,513
Prepaid federal income tax - -
Prepaid state income tax - -
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TOTAL CURRENT ASSETS $10,085,572 $ 11,545,556
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FIXED ASSETS
Land, buildings, equipment $ 7,361,787 $ 6,067,148
Less: Depreciation accumulated 2,870,163 2,542,731
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TOTAL FIXED ASSETS $ 4,491,624 $ 3,524,417
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OTHER ASSETS
Organization expenses (Net of amortization) $ 4,250 $ 5,000
Noncompete agreement (Net of amortization) 284,999 -
Goodwill - Hoppes (Net of amortization) 8,497 8,833
Deferred patent costs (Net of amortization) 6,460 6,865
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TOTAL OTHER ASSETS $ 304,206 $ 20,698
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TOTAL ASSETS $14,881,402 $ 15,090,671
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LIABILITIES AND NET WORTH
CURRENT LIABILITIES
Accounts payable - trade $ 97,809 $ 320,072
Loans payable - bank 57,797 200,000
Accrued commissions 493,496 694,809
Accrued property taxes 273,218 226,651
Accrued taxes & other expenses 98,431 105,365
Accrued federal income tax 79,036 118,730
Accrued state income tax 8,964 36,453
Deferred federal income tax 39,915 39,915
Deferred state income tax 9,157 9,157
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TOTAL CURRENT LIABILITIES $ 1,157,823 $ 1,751,152
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LONG-TERM LIABILITIES
Loans payable - bank $ 600,000 $ 800,000
Deferred federal income tax 262,474 262,474
Deferred state income tax 60,215 60,215
Dividends payable 34,506 8,863
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TOTAL LONG-TERM LIABILITIES $ 957,195 $ 1,131,552
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TOTAL LIABILITIES $ 2,115,018 $ 2,882,704
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NET WORTH
Capital stock $ 810,272 $ 810,272
Treasury stock, at cost (28,727) (28,727)
Retained earnings 11,984,839 11,426,422
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TOTAL NET WORTH $12,766,384 $ 12,207,967
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TOTAL LIABILITIES AND NET WORTH $14,881,402 $ 15,090,671
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BRYAN STEAM CORPORATION
PERU, INDIANA
COMPARATIVE CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
July 1, 1995 July 1, 1994
to to
Mar. 31, 1996 Mar. 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES -------------- ------------------
Net income $ 824,257 $ 386,376
Non-cash items included in net income
Amortization 16,492 8,738
Depreciation 329,352 287,964
Changes in:
Inventory 236,724 477,640
Accounts receivable (188,988) 168,897
Prepaid expenses (68,957) (55,992)
Prepaid federal income tax - 98,785
Prepaid state income tax - (1,348)
Accounts payable (222,263) (302,231)
Commissions payable (201,313) 63,772
Accrued county property tax 46,567 55,138
Accrued taxes & expenses (6,934) (17,133)
Federal income tax payable (39,694) -
State income tax payable (27,489) (29,055)
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 697,754 $ 1,141,551
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CASH FLOWS FROM INVESTING ACTIVITIES
Noncompete payments $ (300,000) $ -
Redemptions (purchases) of investment securities 302,889 (444,248)
Purchases of plant and equipment (1,294,639) (325,038)
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NET CASH (USED) BY INVESTING ACTIVITIES $ (1,291,750) $ (769,286)
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CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt $ (342,203) $ -
Dividends paid $ (242,117) $ (248,356)
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NET CASH (USED) BY FINANCING ACTIVITIES $ (584,320) $ (248,356)
------------ -------------
NET INCREASE (DECREASE) IN CASH $ (1,178,316) $ 123,909
============ =============
CASH & CASH EQUIVALENTS
July 1 $ 2,192,946 $ 360,213
March 31 $ 1,014,630 $ 484,122
------------ -------------
NET INCREASE (DECREASE) IN CASH $ (1,178,316) $ 123,909
============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (Net of amount capitalized) $ 66,520 $ 259
Income taxes $ 389,036 $ 179,036
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Item 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The unaudited interim consolidated financial statements to which this
management's discussion and analysis is attached have been prepared in
accordance with the instructions to Form 10-QSB and, therefore, do not
include all information and disclosures required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, the finacial statements reflect all adjustments
which are necessary to a fair statement of the results for the interim
period presented. All such adjustments are of a normal, recurring
nature.
The accompanying consolidated financial statements include the
accounts of the Company and of its wholly-owned subsidiaries.
Intercompany transactions and balances have been eliminated in
consolidation.
Pension benefits are based on taxable earnings and years of service.
The Company's policy is to fund at least the minimum amounts required
by Federal law and regulation.
The Company's policy regarding investment securities is to classify
them as current assets. None of the investment securities are
considered to be available-for-sale or trading securities by the
Company. Gross unrealized holding gains and losses on investment
securities classified as held to maturity at March 31, 1996 are not
material to the accompanying consolidated financial statements and are
not reported therein.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND CONSOLIDATED RESULTS OF OPERATIONS
Consolidated net income for the third quarter of $86,000 represented
an increase of $140,288 from the net loss of $(54,288) for the
corresponding quarter last year. The increase in consolidated net
income resulted primarily from $69,339 increase in net income of Bryan
Steam Corporation (the Parent) for the quarter, as compared to the
corresponding quarter of the prior fiscal year. Consolidated net
income for the nine months ended March 31, 1996 totaled $824,257, an
increase of $437,881 or 113.33% over the corresponding period in the
prior year. The Parent's increases in net income resulted from
improved sales, which offset smaller increases in cost of goods sold
and selling, general and administrative expenses.
Consolidated sales for the quarter increased 22.47% from the
corresponding quarter last year, and increased 26.40% over the same
year to date period last year. Cost of goods sold increased a
corresponding 17.83% from the same quarter a year ago, and increased
23.67% over last year for the year to date. The $871,391 increase in
consolidated sales for the quarter resulted from two causes. Wendland
Manufacturing Corp. (the Subsidiary) contributed $719,349 of sales for
the quarter to total consolidated sales, and the Parent's sales for
the quarter increased $152,042 over the corresponding quarter last
year. This increase resulted from the Parent having shipped 6.35% more
units during the current quarter than during the same quarter a year
ago. The Subsidiary contributed $1,884,532 of sales for the nine
months ended March 31, 1996, and the Parent had increased sales for
the same period when compared to the corresponding period in 1995 as a
result of having shipped 28.05% more units than the same nine-month
period last year Consolidated selling, general and administrative
expenses increased 15.45% from the corresponding quarter a year ago,
and 15.80% for the year to date, primarily from the addition of the
Subsidiary's selling, general and administrative expenses.
The consolidated working capital ratio at March 31, 1996 of 8.71 to 1,
increased from 6.59 to 1 at year-end, and from 8.32 to 1 a year ago.
Consolidated cash and equivalents decreased $1,178,316 (53.73%) from
year-end. Consolidated investment securities decreased $302,889
(15.71%) from year-end. Accounts receivable increased from year-end,
as a result of having shipped 315 more units than during the same
period last year. The increase in shipments resulted from increased
production from two shifts operating overtime during the first
quarter, and expected seasonally strong sales. Accounts receivable of
the Subsidiary totalled $469,359 at the end of the current quarter.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND CONSOLIDATED RESULTS OF OPERATIONS (CONTINUED)
Inventory decreased $236,724 (5.66%) from year-end as more
work-in-progress was brought to finished, saleable condition.
Consolidated trade accounts payable decreased $222,263 (69.44%) to a
historically customary level from year-end. Consolidated accrued
commissions decreased $201,313 (28.97%) from year-end as a result of
expected collections of accounts receivable. Accrued income taxes
decreased $67,183 (43.29%) from year-end as a result of greater net
income.
Production continues at near capacity. The backlog of orders at March
31, 1996, was $3,988,000, down (13.30%) from year-end, and up (14.93%)
from a year ago. The Parent's plant is operating a first shift of 120
employees on a 40 hour work week. Nineteen workers are on layoff.
The Company has $342,203 available on its $1,000,000 revolving line of
credit and $500,000 available on its $500,000 operating line of
credit.
Planned capital expenditures this year of up to $500,000 (of which
approximately $355,000 has been utilized), primarily for manufacturing
equipment, will continue to be funded internally.
On March 15, 1996 the Subsidiary exchanged all the net assets of its
heat exchanger division for 100% of the outstanding stock of
Monticello Exchanger and Manufacturing Company (Monticello). The
financial condition and results of operations of Monticello have been
consolidated with those of Wendland for the purpose of this analysis.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibit is filed as a part of this report:
(27) Financial Data Schedule (nine months ended March 31, 1996)
(b) No reports on Form 8-K were filed during the quarter ended March
31, 1996.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRYAN STEAM CORPORATION
By: /s/ Albert J. Bishop
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Albert J. Bishop, President
Date: May 13, 1996
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By: /s/ Kurt Krauskopf
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Kurt Krauskopf, Chief Financial Officer
Date: May 13, 1996
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