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, 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 zip 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
February 5, 1998)
1
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:
31-Dec-97 31-Dec-96 31-Dec-97 31-Dec-96
(Current (Prior (Current (Prior
Year) Year) Year) Year)
------------------------------ -------------------------------
Gross sales less
discounts, returns
and allowances $ 14,574,659 $ 13,910,753 $ 7,291,174 $ 7,197,531
------------ ------------ ------------ ------------
Cost and expenses --
Cost of goods sold $ 9,644,806 $ 9,031,931 $ 4,891,292 $ 4,671,997
Selling, general and
administrative expenses 3,153,847 3,222,524 1,726,894 1,727,684
Total cost and expenses $ 12,798,653 $ 12,254,455 $ 6,618,186 $ 6,399,681
Operating income $ 1,776,006 $ 1,656,298 $ 672,988 $ 797,850
Other income and (expenses)
Interest income $ 34,231 $ 38,608 $ 24,851 $ 22,030
Freight income 48,812 47,523 4,735 22,643
Interest expense (11,641) (51,189) (10,035) (13,576)
------------ ------------ ------------ ------------
Total other income and (expenses) $ 71,402 $ 34,942 $ 19,551 $ 31,097
------------ ------------ ------------ ------------
Income (or Loss) before
taxes on income and
extraordinary items $ 1,847,408 $ 1,691,240 $ 692,539 $ 828,947
------------ ------------ ------------ ------------
Provision for taxes
on income 770,400 660,858 287,107 344,524
------------ ------------ ------------ ------------
Net income (or loss) $ 1,077,008 $ 1,030,382 $ 405,432 $ 484,423
============ ============ ============ ============
Earnings per share* $ 5.63 $ 5.39 $ 2.12 $ 2.53
============ ============ ============ ============
Dividends per share $ 2.00 $ 1.50 $ 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
ASSETS December 31, June 30,
1997 1997
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 590,500 $ 368,879
Investment securities 1,330,331 1,466,686
Accounts receivable (net) 5,128,759 4,814,745
Prepaid expenses 390,544 282,644
Prepaid income taxes -- 27,528
Inventory 4,453,598 4,479,203
------------ ------------
TOTAL CURRENT ASSETS $ 11,893,732 $ 11,439,685
------------ ------------
FIXED ASSETS
Land, buildings, equipment $ 9,171,595 $ 8,976,634
Less: Accumulated depreciation 3,624,795 3,400,512
------------ ------------
TOTAL FIXED ASSETS $ 5,546,800 $ 5,576,122
------------ ------------
OTHER ASSETS
Noncompete agreement (Net of amortization) $ 140,726 $ 180,000
Other amortizable assets (Net of amortization) 19,701 21,791
Deposits 5,171 5,171
------------ ------------
TOTAL OTHER ASSETS $ 165,598 $ 206,962
------------ ------------
TOTAL ASSETS $ 17,606,130 $ 17,222,769
============ ============
LIABILITIES AND NET WORTH
CURRENT LIABILITIES
Accounts payable - trade $ 302,407 $ 851,512
Capital lease obligations 44,710 8,632
Loans payable - Line of Credit - Norwest Bank 45,400 45,400
Accrued commissions 1,236,579 807,617
Accrued property taxes 238,526 254,251
Accrued federal income tax 56,106 --
Accrued state income tax 4,837 4,837
Accrued taxes & other expenses 155,913 365,624
Current portion of long-term debt 1,257 24,300
Deferred federal income tax 70,071 70,071
Deferred state income tax 16,085 16,085
------------ ------------
TOTAL CURRENT LIABILITIES $ 2,171,891 $ 2,448,329
------------ ------------
LONG-TERM LIABILITIES
Long-term debt $ 45,272 $ 45,272
Capital lease obligations 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 $ 2,519,807 $ 2,830,938
------------ ------------
NET WORTH
Capital stock $ 810,272 $ 810,272
Treasury stock, at cost (28,727) (28,727)
Retained earnings 14,304,778 13,610,286
------------ ------------
TOTAL NET WORTH $ 15,086,323 $ 14,391,831
------------ ------------
TOTAL LIABILITIES AND NET WORTH $ 17,606,130 $ 17,222,769
============ ============
BRYAN STEAM CORPORATION
PERU, INDIANA
COMPARATIVE CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
Jul 01, 1997 Jul 01, 1996
to to
Dec 31, 1997 Dec 31, 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,077,008 $ 1,030,382
Non-cash items included in net income
Amortization 41,364 26,801
Depreciation 224,283 228,938
Changes in:
Inventory 25,605 371,788
Accounts receivable (314,014) 389,567
Prepaid expenses (107,900) (160,485)
Prepaid income taxes 27,528 76,942
Accounts payable (549,105) (211,413)
Commissions payable 428,962 403,318
Accrued county property taxes (15,725) 13,072
Accrued taxes & other expenses (209,711) (133,073)
Federal income taxes payable 56,106 --
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 684,401 $ 2,035,837
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of plant and equipment $ (194,961) $ (695,964)
Redemptions of investment securities 136,355 291,087
----------- -----------
NET CASH (USED) BY INVESTING ACTIVITIES $ (58,606) $ (404,877)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt $ (23,746) $ (633,598)
Dividends paid (380,428) (284,257)
----------- -----------
NET CASH (USED) BY FINANCING ACTIVITIES $ (404,174) $ (917,855)
----------- -----------
NET INCREASE (DECREASE) IN CASH & EQUIVALENTS $ 221,621 $ 713,105
CASH & CASH EQUIVALENTS
July 01, $ 368,879 $ 304,739
December 31, 590,500 1,017,844
----------- -----------
NET INCREASE (DECREASE) IN CASH & EQUIVALENTS $ 221,621 $ 713,105
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (Net of amount capitalized) $ 11,641 $ 51,189
Income taxes $ 661,603 $ 498,346
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 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 December 31, 1997 are not material to the accompanying
consolidated financial statements and are not reported
therein.
(5)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND CONSOLIDATED RESULTS OF OPERATIONS
Consolidated net income for the second quarter of $405,432 is
down (16.30%) from the net income of $484,423 for the
corresponding quarter last year. The decrease in consolidated
net income results from the $132,880 decrease in net income of
Bryan Steam Corporation (the Parent) and the $14,737 decrease
in the net income of M.E.M.C.O. These decreases more than
offset the $68,626 increase in the net income of Wendland Mfg.
Co. for the quarter as compared to the corresponding quarter
of the prior fiscal year. The Parent's decrease in net income
results from an increase in labor costs which increased cost
of goods sold.
Consolidated sales for the quarter increased 1.30% from the
corresponding quarter last year, and increased 4.77% over the
same year to date period last year. Cost of goods sold
increased a corresponding 4.69% from the same quarter a year
ago, and increased 6.79% over last year for the year to date.
The $93,643 increase in consolidated sales for the quarter
results primarily from the Parent's sales for the quarter
having increased $148,666 over the corresponding quarter last
year. This increase results from the Parent having shipped
more units during the current quarter than during the same
quarter a year ago. Consolidated selling, general and
administrative expenses decreased .04% from the corresponding
quarter a year ago, and 2.13% for the year to date, primarily
from the efforts of all companies to control selling, general
and administrative expenses.
The consolidated working capital ratio at December 31, 1997 of
5.47 to 1 is up from 4.67 to 1 at year-end, and up from the
5.26 ratio of a year ago. Consolidated cash and equivalents
are up $221,621 (60.01%) from year-end, and down $427,344
(41.99%) 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
$136,355 (9.30%) from year-end, and increased $4,864 (.37%)
from the same quarter a year ago. Accounts receivable are up
(6.52%) from year-end, and up (14.13%) from the same quarter a
year ago, as a result of having increased sales during the
current period as compared to 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 $25,605 (.57%) from year-end. Inventory
increased $623,376 (16.28%) over the same quarter a year ago,
as the company built up its inventory to meet increased
demand.
Consolidated trade accounts payable decreased $549,105
(64.49%) to a historically customary level from year-end, and
decreased $39,259 from a year ago. Consolidated accrued
commissions increased $428,962 (53.11%) from year-end as a
result of an increase in accounts receivable and somewhat
slightly slower collections.
Production continues at near capacity. The consolidated
backlog of orders at December 31, 1997, was steady at
$4,404,928. The plants are operating first shifts totalling
176 employees and second shifts totalling 14 employees.
Thirteen workers are on layoff from the first shift. . The
Parent 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 $194,961 has been utilized) will continue
to be funded internally.
(7)
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,
1997, the following votes were cast in respect of the nominees for director:
VOTES
----------------------------------------------
Director For Withheld Abstentions
-------- ------- -------- -----------
Harold V. Koch 153,439 0 0
Albert J. Bishop 153,439 0 0
H. Jesse McVay 153,439 0 0
G.N. Summers 129,041 24,398 0
Jack B. Jackson 153,438 1 0
James B. Lockhart, Jr. 153,316 123 0
Bryan D. Herd 153,439 0 0
Item 5. Other Information
Certain significant shareholders of the Company have approached the board
of directors to discuss potential opportunities to liquidate a portion or all of
their interests in the Company. In response to these inquiries, the board is
exploring alternatives available to the Company to facilitate such a liquidation
opportunity.
Item 6. Exhibits and reports on Form 8-K
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1997.
(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 thereunto duly authorized.
BRYAN STEAM CORPORATION
By: /s/ H. Jesse McVay
------------------------------
H. Jesse McVay, President
Date: February 16, 1998
By: /s/ Kurt Krauskopf
------------------------------
Kurt Krauskopf, Secretary
Date: February 16, 1998
(9)