UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[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 0-6839
BRENCO, INCORPORATED
(Exact name of registrant as specified in its charter)
Virginia #54-0493835
(State of incorporation) (IRS Employer Identification No.)
One Park West Circle, Midlothian, VA 23113
(Address of principal executive offices) (Zip Code)
(804) 794-1436
(Telephone number)
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.
YESX. NO_.
Common stock, par value $1.00 per share: 10,036,180 shares
outstanding as of March 31, 1994
BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q__March 31, 1994
INDEX
Part I Financial Information: Page No.
Item 1. Financial Statements.
Consolidated Statements of Income (Unaudited)
-Three Months Ended March 31, 1994 and 1993 ....... 2
Consolidated Balance Sheets
-March 31, 1994 (Unaudited) and December 31, 1993.. 3 & 4
Consolidated Statements of Cash Flows (Unaudited)
-Three Months Ended March 31, 1994 and 1993 ....... 5
Notes to Consolidated Financial Statements ........ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 7
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K .................. 8
1
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BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended
March 31
1994 1993
(Dollar amounts in thousands)
<S> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . . . . . . $28,124 $25,613
Cost and expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . 21,493 19,890
Administrative and selling expenses . . . . . . . . . 3,215 2,913
24,708 22,803
Operating income . . . . . . . . . . . . . . . . . . 3,416 2,810
Other income (expense) . . . . . . . . . . . . . . . ( 143) ( 86)
3,273 2,724
Gain on sale of assets . . . . . . . . . . . . . . . 1,056
Special charge for environmental expenditures . . . . ( 1,300)
Income before income taxes . . . . . . . . . . . . . 3,029 2,724
Income taxes . . . . . . . . . . . . . . . . . . . . 1,165 1,049
NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 1,864 $ 1,675
======= =======
Net income per share . . . . . . . . . . . . . . . . . $ .19 $ .17
Dividends declared per share . . . . . . . . . . . . . $ .05 $ .05
Average number of shares outstanding . . . . . . . . . 10,023 9,874
<FN>
See accompanying notes to Consolidated Financial Statements.
2
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<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
March 31 December 31
1994 1993
(In thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . $ 5,295 $ 3,582
Accounts receivable . . . . . . . . . . . . . . . . . 15,664 14,565
Inventories:
Finished goods . . . . . . . . . . . . . . . . . . . 3,823 4,814
Work in process . . . . . . . . . . . . . . . . . . 10,140 9,437
Raw material . . . . . . . . . . . . . . . . . . . . 2,511 1,878
16,474 16,129
Less: Lifo reserve . . . . . . . . . . . . . . . . 1,586 1,225
14,888 14,904
Prepaid expenses . . . . . . . . . . . . . . . . . . . 1,882 1,452
Deferred income taxes . . . . . . . . . . . . . . . . 1,933 1,902
Income taxes recoverable . . . . . . . . . . . . . . . 668
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . 39,662 37,073
Other Assets - Investments at Cost . . . . . . . . . . . 51 51
Property and Equipment:
Land and improvements . . . . . . . . . . . . . . . . 2,777 2,770
Buildings . . . . . . . . . . . . . . . . . . . . . . 11,380 11,387
Machinery and equipment . . . . . . . . . . . . . . . 83,660 83,466
97,817 97,623
Less: Accumulated depreciation . . . . . . . . . . . 65,073 64,945
TOTAL PROPERTY AND
EQUIPMENT . . . . . . . . . . . . . . . . . . . . . 32,744 32,678
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $72,457 $69,802
======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
3
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<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
March 31 December 31
1994 1993
(In thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . $ 2,770 $ 3,414
Dividends payable . . . . . . . . . . . . . . . . . . 502 500
Pension . . . . . . . . . . . . . . . . . . . . . . . 555 455
Compensated absences . . . . . . . . . . . . . . . . . 662 616
Accrued liabilities . . . . . . . . . . . . . . . . . 2,804 747
Income taxes payable . . . . . . . . . . . . . . . . . 373 151
Environmental expenditures . . . . . . . . . . . . . . 1,833 2,884
TOTAL CURRENT
LIABILITIES . . . . . . . . . . . . . . . . . . . 9,499 8,767
Deferred Income Taxes . . . . . . . . . . . . . . . . . 2,911 2,746
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . 10,150 10,000
Shareholders' Equity:
Preferred stock, par value $1 per share,
authorized 1,000,000 shares; none issued
Common stock, par value $1 per share,
authorized 15,000,000 shares; issued
10,036,180 shares (1993-10,005,345
shares) . . . . . . . . . . . . . . . . . . . . . . 10,036 10,005
Additional paid in capital . . . . . . . . . . . . . . 1,397 1,182
Retained earnings . . . . . . . . . . . . . . . . . . 38,464 37,102
TOTAL SHAREHOLDERS'
EQUITY . . . . . . . . . . . . . . . . . . . . . 49,897 48,289
TOTAL LIABILITIES AND
EQUITY . . . . . . . . . . . . . . . . . . . . . $72,457 $69,802
======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
4
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<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION> Three Months Ended
March 31
1994 1993
(In thousands)
<S> <C> <C>
Cash Flows from Operations:
Net Income . . . . . . . . . . . . . . . . . . . . . . $ 1,864 $ 1,675
Adjustments to Reconcile Net Income
to Net Cash Provided by Operations:
Depreciation . . . . . . . . . . . . . . . . . . . . 909 694
Gain on sale of assets . . . . . . . . . . . . . . . ( 1,056)
Deferred income taxes . . . . . . . . . . . . . . . 134
Other . . . . . . . . . . . . . . . . . . . . . . . ( 9)
Changes in the following:
Current assets . . . . . . . . . . . . . . . . . . . ( 686) ( 5,076)
Current liabilities . . . . . . . . . . . . . . . . 732 3,336
Net cash provided by operations . . . . . . . . . . . 1,897 620
Cash Flows from Investing Activities:
Acquisition of property and
equipment . . . . . . . . . . . . . . . . . . . . ( 1,018) ( 2,574)
Proceeds from sale of property and equipment . . . . 1,098
Net cash provided by (used in) investing
activities . . . . . . . . . . . . . . . . . . . . . 80 ( 2,574)
Cash Flows from Financing Activities:
Cash dividends paid . . . . . . . . . . . . . . . . ( 500) ( 493)
Employee stock purchases . . . . . . . . . . . . . . 86 112
Long-term debt . . . . . . . . . . . . . . . . . . . 150
Net cash (used in) financing
activities . . . . . . . . . . . . . . . . . . . . . ( 264) ( 381)
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . 1,713 ( 2,335)
Cash and cash equivalents at beginning
of year . . . . . . . . . . . . . . . . . . . . . . 3,582 6,218
Cash and cash equivalents at end of quarter . . . . . $ 5,295 $ 3,883
======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
5
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BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q__March 31, 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 1994, the consolidated
statements of income, and the consolidated statements of cash flows for
the three months ended March 31, 1994 and March 31, 1993 have been
prepared by the Company, without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position at March 31, 1994 and
the results of operations and cash flows for all periods presented have
been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's December 31, 1993 annual report to shareholders. The results
of operations for the period ended March 31, 1994 are not necessarily
indicative of the operating results for the full year.
6
BRENCO, INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS:
Net sales were $28,124,000 for the first three months of 1994,
compared to $25,613,000 for the same period last year. These were the
highest sales for a quarter in the Company's history. Domestic
construction of new freight cars has increased substantially from the
prior year. Sales of new bearings for the OEM market were up 78%
compared to the first quarter of 1993. In addition, bearing
reconditioning was up 48% and third-party contract switching was up 21%,
contributing to the record level of sales.
Net income was $1,864,000, or $.19 per share for the quarter,
compared to $1,675,000, or $.17 per share for the comparable period in
1993. Included in the results for the current year is a gain on the
sale of assets of $650,000, or $.07 per share and a special charge for
environmental expenditures of $800,000, or $.08 per share. Even when
excluding the non-reoccurring items, this was the best performance for a
quarter in over fourteen years. The increased sales and earnings over
the prior year's first quarter were attributable to the greatly
increased level of new freight car construction in the U.S., a strong
automotive market, and continued growth and improved efficiencies in our
reconditioning business. These more than offset a 50% decline in our
export sales, which although still excellent by any usual standard,
could not compare with the exceptional volume of export shipments in the
first quarter of last year.
LIQUIDITY AND CAPITAL COMMITMENTS:
The 1994 Capital Program is budgeted at $9,613,000, which
incorporates $2,890,000 of carryovers from prior years, plus $6,723,000
in new projects approved for 1994. The major project in the 1994 budget
is a new reconditioning facility in Little Rock, Arkansas. Construction
is scheduled to be completed in the third quarter.
Cash and cash equivalents were increased by $1,713,000 during the
quarter, while working capital increased by $1,857,000 to $30,163,000.
Management believes that its current cash and cash equivalents,
together with expected earnings, will be sufficient to cover both
capital and dividend requirements for the balance of 1994.
7
BRENCO, INCORPORATED AND SUBSIDIARIES
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRENCO, INCORPORATED
(Registrant)
DATED: May 13, 1994 BY: J. Craig Rice
J. Craig Rice
President
DATED: May 13, 1994 BY: Jacob M. Feichtner
Jacob M. Feichtner
Executive Vice President
Secretary and Treasurer
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