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 September 30, 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)
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(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: 10,065,572 shares
outstanding as of September 30, 1994
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BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q__September 30, 1994
INDEX
Part I Financial Information: Page No.
Item 1. Financial Statements.
Consolidated Statements of Income (Unaudited)
-Three Months and Nine Months Ended
September 30, 1994 and 1993..................... 2
Consolidated Balance Sheets
-September 30, 1994 (Unaudited) and
December 31, 1993............................... 3 & 4
Consolidated Statements of Cash Flows (Unaudited)
-Three Months and Nine Months Ended
September 30, 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 Nine Months Ended
September 30 September 30
1994 1993 1994 1993
(Dollar amounts in thousands)
<S> <C> <C> <C> <C>
NET SALES . . . . . . . . . . . . . . . $ 29,042 $ 22,914 $ 86,907 $ 75,954
Costs and expenses:
Cost of goods sold. . . . . . . . . . 22,037 17,983 65,871 59,233
Administrative and selling expenses . 3,359 2,932 9,833 8,887
25,396 20,915 75,704 68,120
Operating income. . . . . . . . . . . 3,646 1,999 11,203 7,834
Other income (expense). . . . . . . . 22 ( 117) ( 113) ( 356)
3,668 1,882 11,090 7,478
Gain on sale of assets. . . . . . . . 1,056
Special charge for environmental
expenditures. . . . . . . . . . . . ( 1,490)
Income before income taxes. . . . . . 3,668 1,882 10,656 7,478
Income taxes. . . . . . . . . . . . . 1,450 724 4,217 2,878
NET INCOME. . . . . . . . . . . . . . . $ 2,218 $ 1,158 $ 6,439 $ 4,600
======== ======== ======== ========
Net income per share. . . . . . . . . . $ .22 $ .11 $ .64 $ .46
Dividends declared per share. . . . . . $ .06 $ .05 $ .16 $ .15
Average number of shares
outstanding . . . . . . . . . . . . . 10,059 9,981 10,041 9,923
<FN>
See accompanying notes to Consolidated Financial Statements.
2
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BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30 December 31
1994 1993
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . $ 8,531 $ 3,582
Accounts receivable. . . . . . . . . . . . . . . . . . 15,872 14,565
Inventories:
Finished goods . . . . . . . . . . . . . . . . . . . 4,137 4,814
Work in process. . . . . . . . . . . . . . . . . . . 9,082 9,437
Raw material . . . . . . . . . . . . . . . . . . . . 3,225 1,878
16,444 16,129
Less: Lifo reserve. . . . . . . . . . . . . . . . . 1,586 1,225
14,858 14,904
Prepaid expenses . . . . . . . . . . . . . . . . . . . 1,431 1,452
Deferred income taxes. . . . . . . . . . . . . . . . . 1,552 1,902
Income taxes recoverable . . . . . . . . . . . . . . . 245 668
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . 42,489 37,073
Other Assets - Investments at Cost . . . . . . . . . . . 51 51
Property and Equipment:
Land and improvements. . . . . . . . . . . . . . . . . 2,803 2,770
Buildings. . . . . . . . . . . . . . . . . . . . . . . 11,690 11,387
Machinery and equipment. . . . . . . . . . . . . . . . 84,346 83,466
98,839 97,623
Less: Accumulated depreciation. . . . . . . . . . . . 64,731 64,945
TOTAL PROPERTY AND
EQUIPMENT. . . . . . . . . . . . . . . . . . . . . . 34,108 32,678
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $ 76,648 $ 69,802
======== ========
<FN>
See accompanying notes to Consolidated Financial Statements.
3
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<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30 December 31
1994 1993
(Unaudited)
(In thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . $ 3,936 $ 3,414
Dividends payable . . . . . . . . . . . . . . . . . . 604 500
Pension . . . . . . . . . . . . . . . . . . . . . . . 794 455
Compensated absences. . . . . . . . . . . . . . . . . 550 616
Accrued liabilities . . . . . . . . . . . . . . . . . 2,922 747
Income taxes payable. . . . . . . . . . . . . . . . . 190 151
Environmental expenditures. . . . . . . . . . . . . . 58 2,884
TOTAL CURRENT
LIABILITIES . . . . . . . . . . . . . . . . 9,054 8,767
Deferred Income Taxes . . . . . . . . . . . . . . . . . 3,059 2,746
Long-Term Debt. . . . . . . . . . . . . . . . . . . . . 10,947 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
10,065,572 shares (1993 - 10,005,345
shares) . . . . . . . . . . . . . . . . . . . . . . 10,066 10,005
Additional paid in capital. . . . . . . . . . . . . . 1,589 1,182
Retained earnings . . . . . . . . . . . . . . . . . . 41,933 37,102
TOTAL SHAREHOLDERS'
EQUITY . . . . . . . . . . . . . . . . . . . . 53,588 48,289
TOTAL LIABILITIES AND
EQUITY . . . . . . . . . . . . . . . . . . . . $ 76,648 $ 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 Nine Months Ended
September 30 September 30
1994 1993 1994 1993
(In thousands)
<S> <C> <C> <C> <C>
Cash Flows from Operations:
Net Income. . . . . . . . . . . . . . . $ 2,218 $ 1,158 $ 6,439 $ 4,600
Adjustments to Reconcile Net Income to
Net Cash Provided by Operations:
Depreciation . . . . . . . . . . . 974 816 2,859 2,211
Gain on sale of assets . . . . . . 2 ( 1,054)
Deferred income taxes. . . . . . . 108 664
Other. . . . . . . . . . . . . . . 12 ( 48)
Changes in the following:
Current assets . . . . . . . . . . ( 292) 23 ( 647) ( 1,886)
Current liabilities. . . . . . . . 832 1,488 183 3,601
Net cash provided by operations . . . . 3,842 3,497 8,444 8,478
Cash Flows from Investing Activities:
Acquisition of property and
equipment. . . . . . . . . . . . . ( 2,325) ( 2,038) ( 4,339) ( 7,431)
Proceeds from sale of property and
equipment. . . . . . . . . . . . . 6 7 1,104 10
Other investments . . . . . . . . . . . ( 51)
Net cash provided by (used in) investing
activities . . . . . . . . . . . . ( 2,319) ( 2,031) ( 3,235) ( 7,472)
Cash Flows from Financing Activities:
Cash dividends paid. . . . . . . . ( 503) ( 497) ( 1,505) ( 1,484)
Employee stock purchases . . . . . 119 373 298 765
Long-term debt . . . . . . . . . . ( 27) 947
Net cash provided by (used in) financing
activities . . . . . . . . . . . . ( 411) ( 124) ( 260) ( 719)
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . 1,112 1,342 4,949 287
Cash and cash equivalents at
beginning of quarter - year. . . . 7,419 5,163 3,582 6,218
Cash and cash equivalents at
end of quarter . . . . . . . . . . $ 8,531 $ 6,505 $ 8,531 $ 6,505
========= ========= ========= =========
<FN>
See accompanying notes to Consolidated Financial Statements.
5
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BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q September 30, 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of September 30, 1994, the
consolidated statements of income, and the consolidated statements of
cash flows for the three months and nine months ended September 30, 1994
and September 30, 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 September 30, 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 periods ended September 30, 1994 are not
necessarily indicative of the operating results for the full year.
6
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BRENCO, INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS:
Net sales were $86,907,000 for the first nine months of 1994,
compared to $75,954,000 for the same period last year, an increase of
14%. For the third quarter, sales were $29,042,000, compared to
$22,914,000 for the same quarter in 1993, an increase of 27%. The
higher sales were attributable to the continued strength in domestic
railcar construction, and virtually ensures a record sales year for
Brenco in 1994.
Net income was $6,439,000 or $.64 per share for the first nine
months, compared to $4,600,000 or $.46 per share for the comparable
period in 1993, an increase of 40%. For the quarter just ended, net
income was $2,218,000 or $.22 per share, compared to $1,158,000 or $.11
per share for the same quarter of last year. The increase is
attributable to record third-quarter volume, with railroad products up
32% over the prior year's third quarter. Overall, operating results were
excellent during a quarter that traditionally has been our weakest
quarter of the year. The third-quarter results and the nine-months
earnings were the company's best performance in the last fourteen years.
FINANCIAL CONDITION:
Cash and cash equivalents were up $1,112,000 for the quarter and
$4,949,000 since the beginning of the year. Working capital at the end
of the third quarter was $33,435,000, compared to $28,307,000 at last
year end, an increase of $5,128,000, mostly in cash.
The quarterly cash dividend, payable in October, was increased to
six cents per share in August. Quarterly dividends had been at the
rate of five cents per share since the first quarter of 1989.
Management believes that its current cash and cash equivalents,
together with anticipated earnings, are sufficient to cover both capital
and dividend requirements.
7
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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 filed during the quarter - none
8
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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: November 9, 1994 BY: J. Craig Rice
J. Craig Rice
President
DATED: November 9, 1994 BY: Jacob M. Feichtner
Jacob M. Feichtner
Executive Vice President
Secretary and Treasurer
9
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JUL-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 8531
<SECURITIES> 0
<RECEIVABLES> 15872
<ALLOWANCES> 0
<INVENTORY> 14858
<CURRENT-ASSETS> 42489
<PP&E> 98839
<DEPRECIATION> 64731
<TOTAL-ASSETS> 76648
<CURRENT-LIABILITIES> 9054
<BONDS> 0
<COMMON> 10066
0
0
<OTHER-SE> 43522
<TOTAL-LIABILITY-AND-EQUITY> 76648
<SALES> 86907
<TOTAL-REVENUES> 86907
<CGS> 65871
<TOTAL-COSTS> 75704
<OTHER-EXPENSES> (113)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10656
<INCOME-TAX> 4217
<INCOME-CONTINUING> 6439
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6439
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
