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, 1995
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)
<PAGE>
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 [ ]
Common stock, par value $1.00 per share: 10,150,967 shares
outstanding as of September 30, 1995
<PAGE>
BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q__September 30, 1995
INDEX
Part I Financial Information: Page No.
Item 1. Financial Statements.
Consolidated Statements of Income (Unaudited)
-Three Months and Nine Months Ended
September 30, 1995 and 1994..................... 2
Consolidated Balance Sheets
-September 30, 1995 (Unaudited) and
December 31, 1994............................... 3 & 4
Consolidated Statements of Cash Flows (Unaudited)
-Three Months and Nine Months Ended
September 30, 1995 and 1994..................... 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
<PAGE>
<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
(In thousands except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES -------------------- $ 29,793 $ 29,042 $ 97,667 $ 86,907
-------- -------- -------- --------
Costs and expenses:
Cost of goods sold---------- 21,992 22,037 72,088 65,871
Administrative and selling
expenses------------------- 3,715 3,359 11,095 9,833
-------- -------- -------- --------
25,707 25,396 83,183 75,704
-------- -------- -------- --------
Operating income-------------- 4,086 3,646 14,484 11,203
Interest expense-------------- ( 162)( 215)( 535)( 600)
Gain (loss) on sale of
assets---------------------- ( 156)( 2)( 162) 1,054
Special charge for
environmental expenditures-- ( 1,490)
Other income------------------ 262 239 665 489
-------- -------- -------- --------
Income before income taxes---- 4,030 3,668 14,452 10,656
Income taxes------------------ 1,590 1,450 5,666 4,217
-------- -------- -------- --------
NET INCOME-------------------- $ 2,440 $ 2,218 $ 8,786 $ 6,439
======== ======== ======== ========
Net income per share---------- $ .24 $ .22 $ .87 $ .64
Dividends declared per share-- $ .07 $ .06 $ .20 $ .16
Average number of shares
outstanding------------------ 10,148 10,059 10,127 10,041
<FN>
See accompanying notes to Consolidated Financial Statements.
2
</TABLE>
<PAGE>
<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
(In thousands)
September 30 December 31
------------ -----------
1995 1994
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents------------- $ 9,228 $ 6,650
Accounts receivable------------------- 19,738 18,304
Inventories:
Finished goods---------------------- 4,143 3,060
Work in process--------------------- 10,335 9,616
Raw material------------------------ 4,417 2,893
------- -------
18,895 15,569
Less: Lifo reserve----------------- 1,594 1,466
------- -------
17,301 14,103
------- -------
Prepaid expenses---------------------- 2,000 1,490
Deferred income taxes----------------- 1,815 908
Income taxes recoverable-------------- - 513
------- -------
TOTAL CURRENT ASSETS-------------- 50,082 41,968
------- -------
Other Assets - Investments at Cost------ 55 56
------- -------
Property and Equipment:
Land and improvements----------------- 3,925 4,056
Buildings----------------------------- 13,019 11,499
Machinery and equipment--------------- 76,438 77,043
------- -------
93,382 92,598
Less: Accumulated depreciation 57,066 58,053
------- -------
TOTAL PROPERTY AND
EQUIPMENT--------------------------- 36,316 34,545
------- -------
TOTAL ASSETS------------------------ $86,453 $76,569
======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
3
</TABLE>
<PAGE>
<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
(In thousands)
September 30 December 31
------------ -----------
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt-- $ 1,355 $ 1,354
Accounts payable---------------------- 3,354 2,665
Dividends payable--------------------- 711 605
Compensated absences------------------ 785 722
Accrued liabilities------------------- 3,444 1,706
Income taxes payable------------------ 525 438
Environmental expenditures------------ 7 41
------- -------
TOTAL CURRENT
LIABILITIES--------------------- 10,181 7,531
------- -------
Pension--------------------------------- 1,480 921
Deferred Income Taxes------------------- 3,876 3,052
Long-Term Debt-------------------------- 8,237 9,567
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
10,150,967 shares (1994 - 10,085,600
shares)----------------------------- 10,151 10,085
Additional paid in capital------------ 2,078 1,722
Retained earnings--------------------- 50,450 43,691
------- -------
TOTAL SHAREHOLDERS'
EQUITY-------------------------- 62,679 55,498
------- -------
TOTAL LIABILITIES AND
EQUITY-------------------------- $86,453 $76,569
======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
4
</TABLE>
<PAGE>
<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
(In thousands)
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash Flows from Operations:
Net Income-------------------- $ 2,440 $ 2,218 $ 8,786 $ 6,439
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operations:
Depreciation---------------- 1,113 974 3,280 2,859
(Gain)loss on sale of
assets-------------------- 156 2 162 ( 1,054)
Deferred income taxes------- 74 108 ( 83) 664
Pension--------------------- 195 127 559 339
Changes in the following:
Current assets-------------- 1,829 ( 292) ( 4,415) ( 647)
Current liabilities--------- ( 462) 705 2,543 ( 156)
-------- -------- -------- --------
Net cash provided by
operations------------------ 5,345 3,842 10,832 8,444
-------- -------- -------- --------
Cash Flows from Investing Activities:
Acquisition of property and
equipment------------------- ( 951) ( 2,325) ( 5,219) ( 4,339)
Proceeds from sale of property
and equipment--------------- - 6 7 1,104
Other investments------------- - - - -
-------- -------- -------- --------
Net cash used in
investing activities-------- ( 951) ( 2,319) ( 5,212) ( 3,235)
-------- -------- -------- --------
Cash Flows from Financing Activities:
Cash dividends paid----------- ( 710) ( 503) ( 1,922) ( 1,505)
Employee stock purchases------ 52 119 209 298
Long-term debt---------------- ( 26) ( 27) ( 1,329) 947
-------- -------- -------- --------
Net cash used in financing
activities------------------ ( 684) ( 411) ( 3,042) ( 260)
-------- -------- -------- --------
Net increase in cash and cash
equivalents------------------- 3,710 1,112 2,578 4,949
Cash and cash equivalents at
beginning of quarter-year----- 5,518 7,419 6,650 3,582
-------- -------- -------- --------
Cash and cash equivalents at
end of quarter---------------- $ 9,228 $ 8,531 $ 9,228 $ 8,531
======= ======= ======= =======
<FN>
See accompanying notes to Consolidated Financial Statements.
5
</TABLE>
<PAGE>
BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q September 30, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of September 30, 1995, the consolidated
statements of income, and the consolidated statements of cash flows for the
three months and nine months ended September 30, 1995 and September 30,
1994 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, 1995 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, 1994 annual report to shareholders. The results of
operations for the periods ended September 30, 1995 are not necessarily
indicative of the operating results for the full year.
6
<PAGE>
BRENCO, INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS:
Net sales were $97,667,000 for the first nine months of 1995, compared
to $86,907,000 for the same period last year, an increase of 12%. For the
third quarter, sales were $29,793,000, compared to $29,042,000, for the
same quarter in 1994, an increase of 3%. These were the highest sales for
a nine-month period in the Company's history. A strong freight car
construction market in the U.S. and Canada was primarily responsible for
the high level of demand for bearings. However, Quality Bearing Service,
the Company's bearing reconditioning subsidiary, also posted a 16% increase
in sales, compared to the first nine months of 1994 and export shipments
were up 35% year over year.
Net income was $8,786,000 or $.87 per share for the first nine months,
compared to $6,439,000 or $.64 per share for the comparable period in 1994,
an increase of 36%. For the quarter just ended, net income was $2,440,000
or $.24 per share, compared to $2,218,000 or $.22 per share for the same
quarter of last year. This was another excellent quarter, ahead of last
year, as well as the best third quarter results and nine-months earnings
for Brenco in over fifteen years.
FINANCIAL CONDITION:
Cash and cash equivalents were $9,228,000 at the end of the quarter,
an increase of $2,578,000 for the nine months. Working capital at the end
of the third quarter was $39,901,000, compared to $34,437,000 at last year
end, an increase of $5,464,000.
Management believes that its current cash and cash equivalents,
together with anticipated earnings, are sufficient to cover both capital
and dividend requirements for the balance of the year.
7
<PAGE>
BRENCO, INCORPORATED AND SUBSIDIARIES
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K filed during the quarter - none
8
<PAGE>
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, 1995 BY: J. Craig Rice
---------------------------
J. Craig Rice
President
DATED: November 9, 1995 BY: Jacob M. Feichtner
---------------------------
Jacob M. Feichtner
Executive Vice President
& Secretary
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 9228
<SECURITIES> 0
<RECEIVABLES> 19738
<ALLOWANCES> 0
<INVENTORY> 17301
<CURRENT-ASSETS> 50082
<PP&E> 93382
<DEPRECIATION> 57066
<TOTAL-ASSETS> 86453
<CURRENT-LIABILITIES> 10181
<BONDS> 0
<COMMON> 10151
0
0
<OTHER-SE> 52528
<TOTAL-LIABILITY-AND-EQUITY> 86453
<SALES> 97667
<TOTAL-REVENUES> 97667
<CGS> 72088
<TOTAL-COSTS> 83183
<OTHER-EXPENSES> ( 665)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 535
<INCOME-PRETAX> 14452
<INCOME-TAX> 5666
<INCOME-CONTINUING> 8786
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8786
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
</TABLE>
