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 September 30, 1997.
__________ 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 area code)
(765) 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
November 11, 1997)
PART. I FINANCIAL INFORMATION
Item 1. Financial Statements
BRYAN STEAM CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
For the
Three Months Ended
9/30/9 9/30/96
(Current Year) (Preceding Year)
---------------------------------
Gross sales less
discounts, returns
and allowances $7,283,485 $6,713,222
---------- ----------
Cost and expenses --
Cost of goods sold $4,753,514 $4,359,934
Selling, general and
administrative expenses 1,426,953 1,494,840
---------- ----------
Total cost and expenses $6,180,467 $5,854,774
---------- ----------
Operating income $1,103,018 $ 858,448
---------- ----------
Other income and (expense)
Interest income $ 9,380 $ 16,578
Freight income 44,077 24,880
Interest expense (1,606) (37,613)
---------- ----------
Total other income and (expense) $ 51,851 $ 3,845
---------- ----------
Income (or loss) before
taxes on income and
extraordinary items $1,154,869 $ 862,293
Provisions for taxes
on income 483,293 316,334
---------- ----------
Net income (or loss) $ 671,576 $ 545,959
========== ==========
Earnings per share* $ 3.51 $ 2.85
========== ==========
Dividends per share $ 2.00 $ 1.50
========== ==========
* 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
September 30 30-Jun
1997 1997
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 616,983 $ 368,879
Investment securities 1,317,750 1,466,686
Accounts receivable (net) 5,071,527 4,814,745
Due from employees 18,368 --
Prepaid expenses 381,804 282,644
Prepaid income taxes -- 27,528
Inventory 4,309,921 4,479,203
----------- -----------
TOTAL CURRENT ASSETS $11,716,353 $11,439,685
----------- -----------
FIXED ASSETS
Land, buildings, equipment $ 8,990,303 $ 8,976,634
Accumulated depreciation 3,494,094 3,400,512
----------- -----------
TOTAL FIXED ASSETS $ 5,496,209 $ 5,576,122
----------- -----------
OTHER ASSETS
Noncompete agreement (net of amortization) $ 165,000 $ 180,000
Other amortizable assets (net of amortization) 20,453 21,791
Deposits 5,171 5,171
----------- -----------
TOTAL OTHER ASSETS $ 190,624 $ 206,962
----------- -----------
TOTAL ASSETS $17,403,186 $17,222,769
=========== ===========
LIABILITIES AND NET WORTH
CURRENT LIABILITIES
Accounts payable - trade $ 264,123 $ 851,512
Capital lease obligations 48,802 8,632
Line of credit - Norwest Bank 45,400 45,400
Accrued commissions 1,033,830 807,617
Accrued property taxes 281,737 254,251
Accrued taxes & other expenses 162,221 365,624
Accrued federal income tax 365,416 --
Accrued state income tax 84,837 4,837
Current portion of long-term debt 1,855 24,300
Deferred federal income tax 70,071 70,071
Deferred state income tax 16,085 16,085
----------- -----------
TOTAL CURRENT LIABILITIES $ 2,374,377 $ 2,448,329
----------- -----------
LONG-TERM LIABILITIES
Capital lease obligations $ 45,272 $ 45,272
Long-term debt 8,187 44,968
Deferred federal income tax 229,926 229,926
Deferred state income tax 50,609 50,609
Dividends payable 13,922 11,834
----------- -----------
TOTAL LONG-TERM LIABILITIES $ 347,916 $ 382,609
----------- -----------
TOTAL LIABILITIES $ 2,722,293 $ 2,830,938
----------- -----------
NET WORTH
Capital stock $ 810,272 $ 810,272
Treasury stock, at cost (28,727) (28,727)
Retained earnings 13,899,348 13,610,286
----------- -----------
TOTAL NET WORTH $14,680,893 $14,391,831
----------- -----------
TOTAL LIABILITIES AND NET WORTH $17,403,186 $17,222,769
=========== ===========
BRYAN STEAM CORPORATION
PERU, INDIANA
CONSOLIDATED COMPARATIVE STATEMENT OF CASH FLOWS
Unaudited Unaudited
July 01, 1997 July 01, 1996
to to
Sept. 30, 1997 Sept. 30, 1996
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 671,576 $ 545,959
Non-cash items included in net income
Amortization 16,338 15,887
Depreciation 93,582 113,597
Changes in:
Inventory 169,282 (54,943)
Accounts receivable (275,150) 111,977
Prepaid expenses (99,160) (28,026)
Prepaid income taxes -- 44,350
Accounts payable (587,389) (288,888)
Accrued liabilities 50,296 135,042
Federal income taxes payable 392,944 225,295
State income taxes payable 80,000 39,389
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 512,319 $ 859,639
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Deposits with utilities $ -- $ 1,581
Noncompetition payments -- --
Purchases of plant and equipment (13,669) (179,076)
Redemptions of investment securities 148,936 197,298
--------- ---------
NET CASH (USED) BY INVESTING ACTIVITIES $ 135,267 $ 19,803
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
New short-term borrowings $ -- $ 17,000
Payments on short-term debt -- (1,636)
Payments on long-term debt (19,056) (379,153)
Dividends paid (380,426) (284,257)
--------- ---------
NET CASH (USED) BY FINANCING ACTIVITIES $(399,482) $(648,046)
--------- ---------
NET INCREASE (DECREASE) IN CASH & EQUIVALENTS $ 248,104 $ 231,396
========= =========
CASH & CASH EQUIVALENTS
July 01, $ 368,879 $ 304,739
September 30, 616,983 536,135
--------- ---------
NET INCREASE (DECREASE) IN CASH & EQUIVALENTS $ 248,104 $ 231,396
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (Net of amount capitalized) $ 1,606 $ 37,613
Income taxes $ 10,349 $ 7,300
Item 1. 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 Bryan Steam Corporation and of its wholly-owned
subsidiary (collectively, the "Company"). 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 September 30, 1997 are not material to the accompanying
consolidated financial statements and are not reported
therein.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Net income for the first quarter of $671,576 is up (23.01%)
from the net income of $545,959 for the corresponding quarter
last year. The increase in net income results from the
$152,986 increase in the net income of Bryan Steam Corporation
("Bryan"). Bryan's increase in net income results from
improved sales and decreases in interest and pension expense.
Sales for the quarter increased 8.49% from the corresponding
quarter last year, and cost of goods sold increased a
corresponding 9.03% from the same quarter a year ago. The
$570,263 increase in sales for the quarter resulted despite
the fact that Monticello Exchange & Manufacturing Co.
("M.E.M.C.O.") contributed $20,874 less to the consolidated
sales this quarter than during the corresponding quarter last
year. Bryan and Wendland Manufacturing Company ("Wendland")
contributed $499,577 and $91,560, respectively, more this
quarter to total consolidated sales than during the
corresponding quarter last year. This increase results from
Bryan having shipped more boilers during the current quarter
than during the same quarter a year ago. Selling, general and
administrative expenses decreased 4.54% from the corresponding
quarter a year ago. Bryan, Wendland and M.E.M.C.O. reduced
selling, general and administrative expenses $49,693 (4.02%),
$14,746 (9.24%) and $3,448 (3.53%), respectively, from the
corresponding quarter last year.
The Company's working capital ratio at September 30, 1997 of 4.93 to 1, is up
from 4.67 to 1 at year-end, and is down slightly from the 4.96 ratio of a year
ago. Consolidated cash and equivalents are up $248,104 (67.26%) from year-end,
and up $80,848 (15.08%) from the same quarter a year ago. Investment securities
decreased $148,936 (10.15%) from year-end, and decreased $101,486 (7.15%) from
the same quarter a year ago. Accounts receivable are up $256,782 (5.33%) from
year-end, and up (8.33%) over the same quarter a year ago, as a result of the
increased sales. The Company's inventory decreased $169,282 (3.78%) from
year-end as the result of lower stocks of finished goods and work-in-process on
hand and increased $52,968 (0.12%) over the same quarter a year ago, as the
Company finished more stock boilers to be available for quick shipment to
customers. Trade accounts payable decreased $587,389 (68.98%) to a historically
customary level from year-end. Accrued commissions increased $226,213 (28.01%)
from year-end as a result of an increase in sales, and are up (25.14%) from the
same quarter a year ago, as a result of having shipped more units through
manufacturers' representatives, who charge Bryan a commission. Accrued income
taxes increased $445,416 from year-end as a result of greater net income, and
are up $185,569 (70.11%) from the same quarter last year, because of increased
tax liabilities for the prior year and the increased tax due on the greater net
income of the current period.
Production continues at near capacity. Bryan's backlog of orders at September
30, 1997, was $5,010,909, down (8.63%) from year-end, and down (5.23%) from a
year ago. The plant is operating a first shift of 146 employees and a second
shift of 32 employees. Both shifts operate on a 43 hour work week. Wendland's
backlog at September 30, 1997 was normal for this time of year. The plant is
operating with 27 employees on a 40 hour work week. M.E.M.C.O.'s backlog at
September 30, 1997 was $206,354. M.E.M.C.O. is currently operating with 10
employees on a 36 hour work week.
The Company has $1,000,000 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 $450,000 (of which approximately
$73,000 has been utilized), primarily for manufacturing equipment, will continue
to be funded internally.
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: November 13, 1997
By: /s/ Kurt Krauskopf
--------------------------------
Kurt Krauskopf, Secretary
Date: November 13, 1997