<PAGE> 1
FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1994
---------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ----------------------
Commission File Number 1-2299
----------------
BEARINGS, INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0117420
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3600 Euclid Avenue, Cleveland, Ohio 44115
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 881-2838
---------------------------
None
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
------- -------
Shares of common stock outstanding on March 31, 1994 7,528,891
------------------------------------------
(No par Value)
<PAGE> 2
BEARINGS, INC.
--------------
INDEX
__________________________________________________________________________
Page No.
Part I: FINANCIAL INFORMATION
Item 1: Financial Statements
Statements of Consolidated Income -
Three Months and Nine Months
Ended March 31, 1994 and 1993 2
Consolidated Balance Sheets -
March 31, 1994 and June 30, 1993 3
Statements of Consolidated Cash Flows
Nine Months Ended March 31, 1994 and 1993 4
Statements of Consolidated Shareholders' Equity -
Nine Months Ended March 31, 1994 and
Year Ended June 30, 1993 5
Notes to Consolidated Financial Statements 6 - 9
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 13
Part II: OTHER INFORMATION
Item 1: Legal Proceedings 14
Item 6: Exhibits and Reports on Form 8-K 14 - 16
Signatures 16
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM I: Financial Statements
BEARINGS, INC. AND SUBSIDIARIES
---------------------------------
STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
(Thousands, except per share amounts)
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________________
Three Months Ended Nine Months Ended
March 31 March 31
1994 1993 1994 1993
----------------------------- ----------------------------
<S> <C> <C> <C> <C>
Net Sales $239,743 $210,789 $688,740 $613,499
-------- -------- -------- --------
Cost and Expenses
Cost of sales 174,245 156,116 505,043 456,636
Selling, distribution
and administrative 59,018 49,180 166,341 143,704
-------- -------- -------- --------
233,263 205,296 671,384 600,340
-------- -------- ------- --------
Operating income 6,480 5,493 17,356 13,159
-------- ------ -------- --------
Interest
Interest expense 1,401 1,623 4,601 3,989
Interest income (50) (70) (165) (258)
-------- -------- -------- --------
1,351 1,553 4,436 3,731
-------- -------- -------- --------
Income before income taxes 5,129 3,940 12,920 9,428
-------- -------- -------- --------
Income taxes
Federal 1,827 1,337 4,333 3,171
State and local 416 225 989 619
-------- ------- -------- --------
2,243 1,562 5,322 3,790
-------- -------- -------- --------
Net income $ 2,886 $ 2,378 $ 7,598 $ 5,638
======== ======== ======== ========
Net income per share $ .38 $ .33 $ 1.01 $ .78
======== ======== ======== ========
Cash dividend per common
share $ .16 $ .16 $ .48 $ .48
======== ======== ======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
2
<PAGE> 4
<TABLE>
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<CAPTION>
March 31 June 30
1994 1993
---------- ----------
Assets (Unaudited)
------
<S> <C> <C>
Current assets
Cash and temporary investments $ 6,855 $ 4,634
Accounts receivable, less
allowance of $3,093 and $2,000 126,919 112,971
Inventories (at LIFO) 114,240 95,015
Other current assets 2,069 8,613
-------- --------
Total current assets 250,083 221,233
-------- --------
Property - at cost
Land 11,806 11,265
Buildings 53,767 52,001
Equipment 68,278 66,479
-------- --------
133,851 129,745
Less accumulated depreciation 52,067 49,695
-------- --------
Property - net 81,784 80,050
-------- --------
Other assets 13,704 14,652
-------- --------
TOTAL ASSETS $345,571 $315,935
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Notes payable $ 29,195 $ 22,678
Accounts payable 55,217 42,573
Compensation and related benefits 18,840 18,770
Other accrued liabilities 7,598 6,352
-------- --------
Total current liabilities 110,850 90,373
Long-term debt 80,000 80,000
Deferred income taxes 3,271 5,706
Other liabilities 5,406 4,916
-------- --------
TOTAL LIABILITIES 199,527 180,995
-------- --------
Shareholders' equity
Preferred stock - no par value;
2,500 shares authorized; none
issued or outstanding
Common stock - no par value; 30,000
shares authorized; 9,303 shares
issued 10,000 10,000
Additional paid-in capital 6,711 6,710
Income retained for use in the business 161,928 155,908
Less 1,774 and 1,984 treasury shares -
at cost (32,595) (35,489)
Less unearned restricted common
stock compensation (2,189)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 146,044 134,940
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $345,571 $315,935
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
3
<PAGE> 5
<TABLE>
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<CAPTION>
NINE MONTHS ENDED
MARCH 31
1994 1993
------------------------------
<S> <C> <C>
______________________________________________________________________________
CASH PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
Received from customers $677,556 $612,191
Paid to suppliers and employees (656,370) (595,496)
Income taxes paid (3,378) (2,421)
Interest paid (4,532) (3,364)
Interest received 165 258
______________________________________________________________________________
Total Operating Activities 13,441 11,168
______________________________________________________________________________
INVESTING ACTIVITIES
Property purchases (12,943) (10,337)
Proceeeds from property sales 2,859 3,135
Other 273 (694)
______________________________________________________________________________
Total Investing Activities (9,811) (7,896)
______________________________________________________________________________
FINANCING ACTIVITIES
Borrowings (repayments) under:
Line-of-credit agreements - net 4,069 (79,410)
Long-term notes payable 80,000
Purchase of treasury stock (1,945)
Dividends paid (3,533) (3,468)
______________________________________________________________________________
Total Financing Activities (1,409) (2,878)
______________________________________________________________________________
Increase in cash and
temporary investments 2,221 394
Cash and temporary investments
at beginning of period 4,634 9,299
______________________________________________________________________________
CASH AND TEMPORARY INVESTMENTS
AT END OF PERIOD $ 6,855 $ 9,693
______________________________________________________________________________
______________________________________________________________________________
<FN>
See notes to consolidated financial statements.
</TABLE>
4
<PAGE> 6
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
For the Nine Months Ended March 31, 1994 (Unaudited)
and Year Ended June 30, 1993
(Amounts in Thousands)
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________________
Income Unearned
Shares of Additional Retained Treasury Restricted Total
Common Stock Common Paid-in for Use in Shares Stock Shareholders'
Outstanding Stock Capital the Business - at Cost Compensation Equity
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1992 7,104 $10,000 $6,636 $151,530 ($39,336) $128,830
Net income 8,927 8,927
Cash dividends-$.64 per share (4,640) (4,640)
Treasury shares issued for:
401-k Savings Plan contribution 44 86 770 856
Exercise of stock options 30 (19) 543 524
Restricted common stock awards 140 (2) 2,505 ($2,503) 0
Other 1 9 29 38
Amortization of restricted common stock
compensation 314 314
Other 91 91
____________________________________________________________________________________________________________________________________
BALANCE AT JUNE 30, 1993 7,319 10,000 6,710 155,908 (35,489) (2,189) 134,940
Pooling of interests with Mainline 196 (1,409) 1,955 3,542 4,088
____________________________________________________________________________________________________________________________________
BALANCE AT JULY 1, 1993 7,515 10,000 5,301 157,863 (31,947) (2,189) 139,028
Net income 7,598 7,598
Cash dividends-$.48 per share (3,533) (3,533)
Purchase of common stock
for treasury (59) (1,945) (1,945)
Treasury shares issued for:
401-k Savings Plan contribution 43 326 773 1,099
Exercise of stock options 10 43 185 228
Restricted common stock awards 13 53 233 (286) 0
Other 7 41 106 147
Amortization of restricted common stock
compensation 947 2,475 3,422
____________________________________________________________________________________________________________________________________
BALANCE AT MARCH 31, 1994 7,529 $10,000 $6,711 $161,928 ($32,595) $0 $146,044
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
<FN>
See notes to consolidated financial statements.
</TABLE>
5
<PAGE> 7
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands) (Unaudited)
- - -------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position as
of March 31, 1994 and June 30, 1993, and the results of operations for the
three months and nine months ended March 31, 1994 and 1993, and cash flows
for the nine months ended March 31, 1994 and 1993.
The results of operations for the three and nine month periods ended March
31, 1994 are not necessarily indicative of the results to be expected for
the fiscal year.
For its interim statements of consolidated income the Company uses estimated
gross profit percentages to compute cost of sales. Adjustments to actual
cost are made based on the annual physical inventory.
2. NET INCOME PER SHARE
Net income per share was computed using the weighted average number of common
shares outstanding for the period.
Average shares outstanding for the computation of net income per share were
as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1994 1993 1994 1993
------------------ -----------------
<S> <C> <C> <C>
7,553 7,294 7,549 7,212
</TABLE>
3. INVENTORY
Effective July 1, 1993 the Company changed its application of the Last-In,
First-Out (LIFO) method used to determine its inventory amounts for financial
reporting purposes. This change revised the Company's LIFO pools to
establish Company-wide inventory pools for each of the major classes of
products. Previously the LIFO inventory pools were established by legal
entity, rather than by class of product. Management believes that using
inventory pools grouped by product is more consistent with how the Company
currently manages its operations and will more accurately measure the effects
of changes in inventory levels and costs.
The cumulative effect on previous years from this change in LIFO pools is not
determinable. Through March 31, 1994 this change has had no significant
effect on the Company's results of operations for the current fiscal year.
6
<PAGE> 8
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands) (Unaudited)
- - -------------------------------------------------------------------------------
4. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," effective July 1, 1993. This Statement
supersedes Accounting Principles Board Opinion No. 11. As permitted by SFAS
No. 109, the Company has elected not to restate the financial statements of
any prior years. There was no significant cumulative effect on the
Statements of Consolidated Income for adopting SFAS 109.
Deferred income taxes reflect the estimated future tax consequences of (a)
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes
and (b) tax credit carryforwards. The significant components of the
Company's net deferred tax liability as of July 1, 1993 are as follows:
<TABLE>
<S> <C>
Deferred tax liabilities:
Differences between the book and tax basis of:
Property $ 5,742
Inventory 7,465
Other 734
-------
13,941
Deferred tax assets:
Compensation liabilities not currently
deductible 3,491
Reserves not currently deductible 3,471
Tax loss and credit carryforwards 1,357
Other 995
-------
9,314
Valuation allowance (243)
-------
Net deferred tax liability $ 4,870
=======
<FN>
The valuation allowance was established due to the Company's estimation that
certain state income tax loss carryforwards may expire unused.
</TABLE>
7
<PAGE> 9
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands) (Unaudited)
- - -----------------------------------------------------------------------------
5. SUPPLEMENTAL CASH FLOW INFORMATION
The following is a reconciliation of net income to total cash provided from
(used for) operating activities:
<TABLE>
<CAPTION>
Nine Months Ended
March 31
1994 1993
----------------------
<S> <C> <C>
_______________________________________________________________
Net income $ 7,598 $ 5,638
Depreciation 10,036 9,665
Provision for losses on
accounts receivable 1,036 1,404
Gain on sale of property (725) (42)
Amortization of restricted common
stock compensation and goodwill 2,675 410
Treasury shares contributed
to employee benefit plans 1,099 611
Changes in current assets and
liabilities:
Accounts receivable (11,083) (1,308)
Inventories (10,049) (396)
Other current assets 1,094 483
Accounts payable and
accrued expenses 10,596 (5,671)
Other - net 1,164 374
---------------------------------------------------------------
Total cash provided from
operating activities $ 13,441 $ 11,168
===============================================================
</TABLE>
The Company considers all temporary investments with maturities of three
months or less to be cash equivalents for purposes of the statements of
consolidated cash flows.
6. PERFORMANCE ACCELERATED RESTRICTED COMMON STOCK
During the quarter ended March 31, 1994, accelerated vesting occurred for the
remaining half of the outstanding performance accelerated restricted common
stock (PARS). Previously, these PARS shares had been vesting over a six year
period. With the acceleration of vesting, additional expense relating to
amortization of PARS compensation of $1,126 was recorded in the quarter ended
March 31, 1994. Net of income taxes this charge decreased net income by
$676, or $.09 per share. Additional accelerated vesting also occurred in the
quarter ended December 31, 1993. For the nine months ended March 31, 1994,
total additional expense relating to accelerated vesting of PARS amortization
was $2,126. Net of income taxes, this additional expense reduced net income
for the nine months ended March 31, 1994 by $1,276, or $.17 per share.
8
<PAGE> 10
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands) (Unaudited)
- - -------------------------------------------------------------------------------
7. BUSINESS COMBINATION
On March 10, 1994, the Company acquired Mainline Industrial Distributors,
Inc., a high quality applied technology distributor of drive systems, rubber
products and bearings in exchange for 196,000 shares of Bearings, Inc. common
stock. The business combination has been accounted for as a pooling of
interests. The Company's previously reported statements of consolidated
income have been restated to reflect the Mainline acquisition for the current
fiscal year. The prior years' consolidated financial statements have not
been restated because the effects are not material.
Net sales and net income for the separate companies prior to the acquisition
are as follows:
<TABLE>
<CAPTION>
Bearings, Inc. Mainline Combined
-------------- -------- --------
<S> <C> <C> <C>
Eight Months Ended
February 28, 1994
Net Sales $ 577,726 $ 21,433 $ 599,159
Net Income 4,128 101 4,229
</TABLE>
9
<PAGE> 11
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- - -------------------------------------------------------------------------------
The following is Management's discussion and analysis of certain significant
factors which have affected: (1) the Company's financial condition at March 31,
1994 and June 30, 1993 and (2) results of operations during the periods
included in the accompanying Statements of Consolidated Income and Consolidated
Cash Flows.
FINANCIAL CONDITION
Liquidity and Working Capital
- - -----------------------------
Cash provided from operating activities was $13.4 million in the nine months
ended March 31, 1994. This compares to $11.2 million of cash provided from
operating activities in the same period a year ago. Increases in cash received
from customers, resulting from increased sales, were partially offset by
increased payments to suppliers and employees. During the nine months ended
March 31, 1994 cash generated from operating activities were used for the
purchase of property, purchase of common stock for treasury and dividend
payments.
Cash flow from operations depends primarily upon generating operating income
and controlling the investment in inventory and receivables. The Company has
continuing programs to monitor and control these investments. During the nine
month period ended March 31, 1994 inventories increased, net of the effect of
adopting SFAS No. 109, approximately $13.6 million. Inventories increased by
$.4 million in the same period a year ago. This increase is primarily
attributed to increasing inventory levels to service the increase in sales
volume. Accounts receivable increased by $15.0 million from increased sales
volume.
Working capital at March 31, 1994 was $139.2 million compared to $130.9 million
at June 30, 1993. The current ratio was 2.3 at March 31, 1994 and 2.4 at June
30, 1993.
Capital Resources
- - -----------------
Capital resources are obtained from income retained in the business, borrowings
under the Company's lines of credit and long-term debt, and to a lesser extent,
from operating lease arrangements.
Average combined short-term and long-term borrowing was $104.8 million for the
nine months ended March 31, 1994 and $107.7 million during the year ended June
30, 1993. The average effective interest rate on the short-term borrowings for
the nine months ended March 31, 1994 decreased to 3.8% from an average rate of
4.0% for the year ended June 30, 1993 due to lower prevailing short-term
interest rates. The Company has $90 million of short-term lines of credit with
commercial banks which provide for payment of interest at various interest rate
options, none of which is in excess of the banks' prime rate. The Company had
$29.2 million of borrowings under these short-term bank lines of credit at
March 31, 1994. Unused bank lines of credit of $60.8 million are available for
future short-term financing needs.
10
<PAGE> 12
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- - -------------------------------------------------------------------------------
Management expects that capital resources provided from operations, available
lines of credit and long-term debt will be sufficient to finance normal working
capital needs and capital expenditure programs. Management also believes that
additional long-term debt and line-of-credit financing could be obtained if
desired.
RESULTS OF OPERATIONS
During the quarter the Company completed the acquisition of Mainline Industrial
Distributors, Inc., of Appleton, Wisconsin in exchange for 196,000 shares of
Bearings, Inc. common stock. This acquisition is being accounted for as a
pooling of interests. Mainline is a high quality applied technology
distributor of drive systems, rubber products and bearings with nine branches -
seven in Wisconsin, one in Minneapolis and one in Elmhurst, Illinois. Mainline
accounted for $9,100,000 of sales during the current quarter and $24,900,000 of
sales for the nine months ended March 31, 1994. Approximately, $700,000 of
non-recurring costs resulting from this business combination were expensed
during the quarter. The Company's previously reported statements of
consolidated income were restated for the current fiscal year. Prior years'
financial statements were not restated because the effects on the results of
operations, financial position and cash flows were not material.
A summary of the period-to-period changes in principal items included in the
statements of consolidated income follows:
<TABLE>
<CAPTION>
Increase (Decrease)
(Dollars in thousands)
Three Months Ended Nine Months Ended
March 31 March 31
1994 and 1993 1994 and 1993
------------------ -------------------
Percent Percent
Amount Change Amount Change
------- ------ -------- ------
<S> <C> <C> <C> <C>
Net sales $28,954 13.7% $ 75,241 12.3%
Cost of sales 18,129 11.6% 48,407 10.6%
Selling, distribution
and administrative
expenses 9,838 20.0% 22,637 15.8%
Operating income 987 18.0% 4,197 31.9%
Interest expense - net (202) (13.0)% 705 18.9%
Income before income
taxes 1,189 30.2% 3,492 37.0%
Income taxes 681 43.6% 1,532 40.4%
Net income 508 21.4% 1,960 34.8%
</TABLE>
11
<PAGE> 13
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
- - ------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
Increases in sales for the quarter were primarily due to volume increases and
the acquisition of Mainline. Gross profit, as a percentage of sales, increased
from 25.9% to 27.3% from an adjustment of estimated year-to-date costs used to
determine cost of sales.
Selling, distribution and administrative expenses increased by 20.0% from
higher incentive costs due to the implementation of a new sales commission
program for account representatives and sales management, increased advertising
costs due to additional marketing programs, higher rental expense due to the
leasing of a new mainframe computer, costs associated with the acquisition of
Mainline and the vesting of performance accelerated restricted stock (PARS)
based upon the price performance of the Company's common stock during the
quarter.
Interest expense-net for the quarter decreased by 13.0% through a combination
of lower short-term interest rates, lower average indebtedness and offsets of
interest expense from interest rate swap agreements.
Income taxes as a percentage of income before taxes were 43.7% in the three
months ended March 31, 1994 and 39.6% in the three months ended March 31, 1993.
The increase is attributed to the increase in Federal tax rates in the current
year and an overall increase in our effective Federal, State and local tax
rates from non-deductible expenses.
As a result of the above factors, net income increased by 21.4% compared to the
same quarter of last year.
NINE MONTHS ENDED MARCH 31, 1994 AND 1993
Increases in sales for the period were principally due to volume increases and
the acquisition of Mainline. Gross profit, as a percentage of sales, increased
from 25.6% to 26.7% from higher purchase discounts and allowances and an
adjustment of estimated year-to-date costs used to determine cost of sales.
Selling, distribution and administrative expenses increased by 15.8% from
higher 401-K contributions due to an enhancement of the 401-K plan, higher
incentive costs due to the implementation of a new sales commission program for
account representatives and sales management, higher rental expense due to the
leasing of a new mainframe computer, costs associated with the acquisition of
Mainline, increased advertising costs due to additional marketing programs and
the vesting of the PARS based upon the price performance of the Company's
common stock during the period.
Interest expense - net for the period increased 18.9% as a result of the
issuance of $80 million of long-term debt in December of 1992 and repayment of
previously existing short-term debt. As long-term interest rates are higher
than short-term interest rates, interest expense increased. The increased
expense was partially offset by net interest earned under interest rate swap
agreements and lower average borrowings during the period.
Income taxes as a percentage of income before income taxes were 41.2% in the
nine months ended March 31, 1994 and 40.2% in the nine months ended March 31,
1993. This increase is primarily due to higher effective Federal tax rates.
12
<PAGE> 14
BEARINGS, INC. AND SUBSIDIARIES
-------------------------------
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- - -----------------------------------------------------------------------------
As a result of the above factors, net income increased by 34.8% compared to the
same period of last year.
ADDITIONAL COMMENTARY
Improved operating results for the period were achieved through improvement in
sales and higher gross margins. The Company should achieve further sales
gains compared with prior year during the final quarter of its fiscal year
ended June 30, 1994.
13
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
------------------
Registrant incorporates by reference herein the description of the
case captioned SAMMIE ADKINS, ET AL. VS. A. P. GREEN INDUSTRIES,
INC., ET AL., Summit County Court of Common Pleas, Case No. ACV
88-7- 2398 (and related cases) found in Item 3 "Pending Legal
Proceedings" contained in the Registrant's Form 10-K for the fiscal
year ended June 30, 1993. Notwithstanding possible indemnification
from suppliers and insurance, Registrant believes, based upon
circumstances presently known, that such cases are not material to
its business or its financial condition.
Registrant also incorporates by reference herein the description of
the case captioned KING BEARING, INC. VS. CARYL EDMUND ORANGES, ET
AL., Superior Court of the State of California, County of Orange,
Case No. 53-42-31 found in Item 3 "Pending Legal Proceedings"
contained in the Registrant's Form 10-K for the fiscal year ended
June 30, 1993. The case is now pending in the California Court of
Appeal. Registrant believes that such case will have no material
adverse effect on its business or financial condition.
ITEM 6. Exhibits and Reports on Form 8-K.
---------------------------------
<TABLE>
<CAPTION>
(a) Exhibits.
---------
Exhibit No. Description
----------- -----------
<S> <C>
4(a) Amended and Restated Articles of Incorporation of
Bearings, Inc., filed with the Ohio Secretary of
State on October 18, 1988 (filed as Exhibit 4(a)
to the Bearings, Inc. Form 8-K dated October 21,
1988, SEC File No. 1-2299, and incorporated here
by reference).
4(b) Code of Regulations of Bearings, Inc., adopted
September 6, 1988 (filed as Exhibit 4(b) to the
Bearings, Inc. Form 8-K dated October 21, 1988,
SEC File No. 1-2299, and incorporated here by
reference).
4(c) Certificate of Amendment of Amended and Restated
Articles of Incorporation of Bearings, Inc. filed
with the Ohio
</TABLE>
14
<PAGE> 16
<TABLE>
<S> <C>
Secretary of State on October 27, 1988 (filed as
Exhibit 4(c) to the Bearings, Inc. Form 10-Q for
the Quarter Ended September 30, 1988, SEC File No.
1-2299, and incorporated here by reference).
4(d) Certificate of Merger of Bearings, Inc. (Ohio)
and Bearings, Inc. (Delaware) filed with the
Ohio Secretary of State on October 18, 1988
(filed as Exhibit 4 to the Bearings, Inc.
Form 10-K for the fiscal year ended
June 30, 1989, SEC File No. 1- 2299, and
incorporated here by reference).
4(e) Certificate of Amendment of Amended and Restated
Articles of Incorporation of Bearings, Inc. filed
with the Ohio Secretary of State on October 17,
1990 (filed as Exhibit 4(e) to the Bearings, Inc.
Form 10-Q for the quarter ended September 30,
1990, SEC File No. 1-2299, and incorporated here
by reference).
4(f) $80,000,000 Maximum Aggregate Principal Amount
Note Purchase and Private Shelf Facility dated
October 31, 1992 between Bearings, Inc. and The
Prudential Insurance Company of America (filed as
Exhibit 4(f) to the Bearings, Inc. Form 10-Q for
the quarter ended September 30, 1992, SEC File No.
1-2299, and incorporated here by reference).
10 Schedule pursuant to Instruction 2 of Item 601(a)
of Regulation S-K identifying the directors and
executive officers executing Director and Officer
Indemnification Agreements, in the form filed as
Appendix A to the Bearings, Inc. Proxy Statement
dated September 17, 1992, SEC File No. 1-2299, and
incorporated here by reference. The Schedule
reflects the addition of Dr. Jerry Sue Owens, who
was elected a Director of Class I on January 20,
1994, as was reported in the Registrant's Form
10-Q for the quarter ended December 31, 1993.
11 Computation of Net Income Per Share.
</TABLE>
15
<PAGE> 17
<TABLE>
<S> <C>
(b) The Registrant did not file, nor was it required
to file, a Report on Form 8-K with the Securities
and Exchange Commission during the quarter ended
March 31, 1994.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BEARINGS, INC.
(Registrant)
<TABLE>
<S> <C>
Date: May 13, 1994 By: /s/ John R. Whitten
----------------------------
John R. Whitten
Vice President--Finance &
Treasurer
(Principal Financial
Officer)
Date: May 13, 1994 By: /s/ Mark O. Eisele
---------------------------
Mark O. Eisele
Controller
(Chief Accounting Officer)
</TABLE>
16
<PAGE> 18
BEARINGS, INC.
EXHIBIT INDEX
TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1994
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
<S> <C>
4(a) Amended and Restated Articles of Incorporation of
Bearings, Inc., filed with the Ohio Secretary of
State on October 18, 1988 (filed as Exhibit 4(a) to
the Bearings, Inc. Form 8-K dated October 21, 1988,
SEC File No. 1-2299,and incorporated here by
reference).
4(b) Code of Regulations of Bearings, Inc., adopted
September 6, 1988 (filed as Exhibit 4(b) to the
Bearings, Inc. Form 8-K dated October 21, 1988, SEC
File No. 1-2299, and incorporated here by
reference).
4(c) Certificate of Amendment of Amended and Restated
Articles of Incorporation of Bearings, Inc., filed
with the Ohio Secretary of State on October 27,
1988 (filed as Exhibit 4(c) to the Bearings, Inc.
Form 10-Q for the Quarter Ended September 30, 1988,
SEC File No. 1-2299, and incorporated here by
reference).
4(d) Certificate of Merger of Bearings, Inc. (Ohio) and
Bearings, Inc. (Delaware) filed with the Ohio
Secretary of State on October 18, 1988 (filed as
Exhibit 4 to the Bearings, Inc. Form 10-K for the
fiscal year ended June 30, 1989, SEC File No.
1-2299, and incorporated here by reference).
</TABLE>
<PAGE> 19
<TABLE>
<S> <C> <C>
4(e) Certificate of Amendment of Amended and Restated
Articles of Incorporation of Bearings, Inc. filed
with the Ohio Secretary of State on October 17,
1990 (filed as Exhibit 4(e) to the Bearings, Inc.
Form 10-Q for the quarter ended September 30,
1990, SEC File No. 1-2299, and incorporated here
by reference).
4(f) $80,000,000 Maximum Aggregate Principal Amount
Note Purchase and Private Shelf Facility dated
October 31, 1992 between Bearings, Inc. and The
Prudential Insurance Company of America (filed as
Exhibit 4(f) to the Bearings, Inc. Form 10-Q for
the quarter ended September 30, 1992, SEC File No.
1-2299, and incorporated here by reference).
10 Schedule pursuant to Instruction 2 of Item 601(a) Attached
of Regulation S-K identifying the directors and
executive officers executing Director and Officer
Indemnification Agreements in the form filed as
Appendix A to the Bearings, Inc. Proxy Statement
dated September 17, 1992, SEC File No. 1-2299, and
incorporated here by reference. The Schedule
reflects the addition of Dr. Jerry Sue Owens, who
was elected a Director of Class I on January 20,
1994, as was reported in the Registrant's Form
10-Q for the quarter ended December 31, 1993.
11 Computation of Net Income Per Share. Attached
</TABLE>
<PAGE> 1
EXHIBIT 10
BEARINGS, INC. FORM 10-Q
QUARTER ENDED MARCH 31, 1994
SCHEDULE
PURSUANT TO INSTRUCTION 2
ITEM 601(a) OF REGULATION S-K
The Director and Officer Indemnification Agreements presently in effect for the
Company's directors and executive officers are identical in all material
respects. The Directors having executed such form of Agreement are:
W. G. Bares
W. E. Butler
J. C. Dannemiller
R. B. Every
R. R. Gifford
L. T. Hiltz
J. J. Kahl
G. L. LaMore
J. S. Owens
J. C. Robinson
The Officers having executed such form of Agreement are (in addition to Messrs.
Dannemiller and Robinson):
<TABLE>
<S> <C>
T. L. Bradley - Vice President-Operations
D. R. Eshleman - Vice President-Information Services
F. A. Martins - Vice President-Marketing
F. L. Mohr - Vice President-Sales & Marketing
J. L. Mugnano - Vice President-Human Resources
R. C. Shaw - Vice President-Communications &
Public Relations
R. C. Stinson - Vice President-General Counsel &
Secretary
J. R. Whitten - Vice President-Finance & Treasurer
M. O. Eisele - Controller
</TABLE>
<PAGE> 1
EXHIBIT 11
BEARINGS, INC. AND SUBSIDIARIES
Computation of Net Income Per Share
(Unaudited)
(Thousands, except per share data)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Average Shares Outstanding
--------------------------
1. Average common shares
outstanding 7,553 7,294 7,549 7,212
2. Net additional shares
outstanding assuming stock
options exercised and
proceeds used to purchase
treasury stock 155 69 156 72
------ ----- ----- -----
3. Adjusted average common
shares outstanding for
fully diluted computation 7,708 7,363 7,705 7,284
===== ===== ===== =====
Net Income
----------
4. Net income as reported in
statements of consolidated
income $2,886 $2,378 $7,598 $5,638
====== ====== ====== ======
Net Income Per Share
--------------------
5. Net Income per average
common share outstanding
(4/1) $ .38 $ .33 $ 1.01 $ .78
====== ====== ====== ======
6. Net income per common
share on a fully
dilutive basis (4/3) $ .37(A) $ .32(A) $ .99(A) $ .77(A)
====== ====== ====== ======
<FN>
(A) Fully diluted net income per share is not presented as the dilutive
effect is less than 3%
</TABLE>
