U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
____X______ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended December 31, 1996.
__________ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
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
February 5, 1997)
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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
Six months Ended: Fiscal Quarter Ended:
12/31/96 12/31/95 12/31/96 12/31/95
(Current (Preceding (Current (Preceding
Year) Year) Year) Year)
---------------------------------- ----------------------------------
Gross sales less
discounts, returns $ 13,910,753 $ 12,170,623 $ 7,197,531 $ 6,202,227
------------ ------------ ------------ ------------
and allowances
Cost and expenses --
Cost of goods sold $ 9,031,931 $ 7,918,151 $ 4,671,997 $ 4,022,319
Selling, general and
administrative expenses 3,222,524 2,909,177 1,727,684 1,564,777
------------ ------------ ------------ ------------
Total cost and expenses $ 12,254,455 $ 10,827,328 $ 6,399,681 $ 5,587,096
------------ ------------ ------------ ------------
Operating income $ 1,656,298 $ 1,343,295 $ 797,850 $ 615,131
------------ ------------ ------------ ------------
Other income and (expenses)
Interest income $ 38,608 $ -- $ 22,030 $ --
Freight income 47,523 -- 22,643 --
Interest expense (51,189) (50,356) (13,576) (27,470)
------------ ------------ ------------ ------------
Total other income and (expenses) $ 34,942 $ (50,356) $ 31,097 $ (27,470)
------------ ------------ ------------ ------------
Income (or Loss) before
taxes on income and
extraordinary items $ 1,691,240 $ 1,292,939 $ 828,947 $ 587,661
Provision for taxes
on income 660,858 554,682 344,524 238,401
------------ ------------ ------------ ------------
Net income (or loss) $ 1,030,382 $ 738,257 $ 484,423 $ 349,260
============ ============ ============ ============
Earnings per share* $ 5.39 $ 3.86 $ 2.53 $ 1.83
============ ============ ============ ============
Dividends per share $ 1.50 $ 1.40 $ 1.50 $ 1.40
============ ============ ============ ============
* Based on 191,284 shares of Common Stock issued and
outstanding throughout the periods involved.
BRYAN STEAM CORPORATION
PERU, INDIANA
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited
ASSETS December 31, June 30,
1996 1996
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 1,017,844 $ 304,739
Investment securities 1,325,467 1,616,554
Accounts receivable (net) 4,404,096 4,793,663
Prepaid expenses 495,668 335,183
Prepaid income taxes 7,472 84,414
Inventory 3,830,222 4,202,010
----------- -----------
TOTAL CURRENT ASSETS $11,080,769 $11,336,563
----------- -----------
FIXED ASSETS
Land, buildings, equipment $ 8,194,621 $ 7,498,657
Less: Depreciation accumulated 3,159,374 2,930,437
----------- -----------
TOTAL FIXED ASSETS $ 5,035,247 $ 4,568,220
----------- -----------
OTHER ASSETS
Noncompete agreement (Net of amortization) $ 205,775 $ 240,000
Other amortizable assets (Net of amortization) 35,482 28,058
Deposits 5,171 5,171
----------- -----------
TOTAL OTHER ASSETS $ 246,428 $ 273,229
----------- -----------
TOTAL ASSETS $16,362,444 $16,178,012
=========== ===========
LIABILITIES AND NET WORTH
CURRENT LIABILITIES
Accounts payable - trade $ 341,666 $ 553,079
Loans payable 239,326 664,293
Accrued commissions 1,025,200 621,882
Accrued property taxes 237,078 224,006
Accrued taxes & other expenses 190,013 323,086
Deferred federal income tax 60,678 60,678
Deferred state income tax 13,963 13,963
----------- -----------
TOTAL CURRENT LIABILITIES $ 2,107,924 $ 2,460,987
----------- -----------
LONG-TERM LIABILITIES
Loans payable $ 29,576 $ 238,207
Deferred federal income tax 308,816 308,816
Deferred state income tax 70,845 70,845
Dividends payable 12,685 10,016
----------- -----------
TOTAL LONG-TERM LIABILITIES $ 421,922 $ 627,884
----------- -----------
TOTAL LIABILITIES $ 2,529,846 $ 3,088,871
----------- -----------
NET WORTH
Capital stock $ 810,272 $ 810,272
Treasury stock, at cost (28,727) (28,727)
Retained earnings 13,051,053 12,307,596
----------- -----------
TOTAL NET WORTH $13,832,598 $13,089,141
----------- -----------
TOTAL LIABILITIES AND NET WORTH $16,362,444 $16,178,012
=========== ===========
BRYAN STEAM CORPORATION
PERU, INDIANA
COMPARATIVE CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
Jul 01, 1996 Jul 01, 1995
to to
Dec 31, 1996 Dec 31, 1995
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,030,382 $ 738,257
Non-cash items included in net income
Amortization 26,801 10,606
Depreciation 228,938 215,932
Changes in:
Inventory 371,788 161,763
Accounts receivable 389,567 (1,268,095)
Prepaid expenses (160,485) (33,726)
Prepaid income taxes 76,942 --
Accounts payable (211,413) (242,030)
Commissions payable 403,318 391,882
Accrued county property taxes 13,072 6,067
Accrued taxes & other expenses (133,073) 14,035
Federal income taxes payable -- (39,839)
State income taxes payable -- (10,711)
---------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $2,035,837 $ (55,859)
---------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Noncompetition payments $ -- $ (300,000)
Purchases of plant and equipment (695,964) (1,152,929)
Redemptions of investment securities 291,087 467,615
---------- -----------
NET CASH (USED) BY INVESTING ACTIVITIES $ (404,877) $ (985,314)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt $ (633,598) $ (68,624)
Dividends paid (284,257) (242,117)
---------- -----------
NET CASH (USED) BY FINANCING ACTIVITIES $ (917,855) $ (310,741)
---------- -----------
NET INCREASE (DECREASE) IN CASH & EQUIVALENTS $ 713,105 $(1,351,914)
========== ===========
CASH & CASH EQUIVALENTS
July 01, $ 304,739 $ 2,192,946
December 31, 1,017,844 841,032
---------- -----------
NET INCREASE (DECREASE) IN CASH & EQUIVALENTS $ 713,105 $(1,351,914)
========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (Net of amount capitalized) $ 51,189 $ 50,356
Income taxes $ 498,346 $ 369,036
Item 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The unaudited interim consolidated financial statements to
which this management's discussion and analysis is attached
reflect all adjustments which are, in the opinion of
management, 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 subsidiary.
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 December 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 second quarter of $484,423 is
up (38.70%) from the net income of $349,260 for the
corresponding quarter last year. The increase in consolidated
net income results primarily from the significant $243,641
increase in net income of Bryan Steam Corporation (the Parent)
for the quarter, as compared to the corresponding quarter of
the prior fiscal year. The Parent's increase in net income
results from improved sales, which offset a corresponding
increase in cost of goods sold and a smaller increase in
selling, general and administrative expenses.
Consolidated sales for the quarter increased 16.05% from the
corresponding quarter last year, and increased 8.38% over the
same year to date period last year. Cost of goods sold
increased a corresponding 16.15% from the same quarter a year
ago, and increased 14.07% over last year for the year to date.
The $995,304 increase in consolidated sales for the quarter
results primarily from the Parent's sales for the quarter
having increased $798,908 over the corresponding quarter last
year. This increase results from the Parent having shipped
more large boiler units during the current quarter than during
the same quarter a year ago. Consolidated selling, general and
administrative expenses increased 10.41% from the
corresponding quarter a year ago, and 10.77% for the year to
date, primarily from the addition of the selling, general and
administrative expenses of Monticello Exchanger and
Manufacturing Company, an indirect subsiderary formed in March
of 1996.
The consolidated working capital ratio at December 31, 1996 of
5.26 to 1, is up from 4.61 to 1 at year-end, and down from the
6.03 ratio of a year ago. Consolidated cash and equivalents
are up $713,105 (234.01%) from year-end, and up $176,812
(21.02%) from the same quarter a year ago as a result of
collections from higher sales and an increase in more liquid
investments. Consolidated investment securities decreased
$291,087 (18.01%) from year-end, and decreased $135,322 (
9.26%) from the same quarter a year ago. Accounts receivable
are down (8.13%) from year-end, and up (3.12%) from the same
quarter a year ago, as a result of having shipped more large
boiler units than during the same period last year.
6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND CONSOLIDATED RESULTS OF OPERATIONS (CONTINUED)
Inventory dropped $371,788 (8.85%) from year-end as more
work-in-progress was brought to finished, saleable condition,
and decreased $189,528 (4.71%) over the same quarter a year
ago.
Consolidated trade accounts payable decreased $211,413 (
38.22%) to a historically customary level from year-end, but
increased $263,624 from a year ago, as a result of increased
materials purchases. Consolidated accrued commissions
increased $403,318 (64.85%) from year-end as a result of a
recent increase in accounts receivable.
Production continues at near capacity. The consolidated
backlog of orders at December 31, 1996, was steady at
$5,083,000, with the Parent's backlog being down about
$300,000 from year-end. The plants are operating first shifts
totalling 209 employees on a 40 hour work week. Twenty workers
are on layoff from the second shift. . The Parent has $800,000
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 $850,000 (of
which approximately $520,000 has been utilized, primarily for
a building addition at the Parent's plant), will continue to
be funded internally.
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PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Annual Meeting of the Stockholders held October 3,
1996, the following votes were cast in respect of the nominees
for director:
VOTES
----------------------------------------------
Director For Withheld Abstentions
-------- ------- -------- -----------
Harold V. Koch 157,706 32 0
Albert J. Bishop 157,738 0 0
H. Jesse McVay 157,702 36 0
G.N. Summers 133,341 24,397 0
Jack B. Jackson 157,738 0 0
James B. Lockhart, Jr. 157,738 0 0
Bryan D. Herd 157,738 0 0
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits - The following exhibit is filed as part of this
report.
Exhibit 27 - Finanacial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
8
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 there unto duly
authorized.
BRYAN STEAM CORPORATION
By: /s/ H. Jesse McVay
----------------------------------
H. Jesse McVay, President
Date: February 14, 1997
----------------------------------
By: /s/ Kurt Krauskopf
----------------------------------
Kurt Krauskopf, Secretary
Date: February 14, 1997
----------------------------------
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