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, 1996
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: 10,204,386 shares
outstanding as of March 31, 1996
<PAGE>
BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q__March 31, 1996
INDEX
Part I Financial Information: Page No.
Item 1. Financial Statements.
Consolidated Statements of Income (Unaudited)
-Three Months Ended March 31, 1996 and 1995 ....... 2
Consolidated Balance Sheets
-March 31, 1996 (Unaudited) and December 31, 1995.. 3 & 4
Consolidated Statements of Cash Flows (Unaudited)
-Three Months Ended March 31, 1996 and 1995 ....... 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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<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
(In thousands except
per share data)
Three Months Ended
March 31
--------------------
1996 1995
------- -------
<S> <C> <C>
NET SALES ------------------------------- $32,875 $35,232
------- -------
Costs and expenses:
Cost of goods sold -------------------- 25,000 25,500
Administrative and selling expenses --- 3,825 3,724
------- -------
28,825 29,224
------- -------
Operating income ------------------------ 4,050 6,008
Interest expense ------------------------ ( 178) ( 214)
Loss on sale of assets ------------------ - ( 1)
Other income ---------------------------- 251 186
------- -------
Income before income taxes -------------- 4,123 5,979
Income taxes ---------------------------- 1,552 2,339
------- -------
NET INCOME ------------------------------ $ 2,571 $ 3,640
======= =======
Net income per share -------------------- $ .25 $ .36
Dividends declared per share ------------ $ .07 $ .06
Average number of shares outstanding ---- 10,189 10,102
<FN>
See accompanying notes to Consolidated Financial Statements.
2
</TABLE>
<PAGE>
<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(In thousands)
March 31 December 31
1996 1995
-------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ------------- $ 13,366 $ 10,484
Accounts receivable ------------------- 22,471 19,194
Inventories:
Finished goods ---------------------- 5,352 4,922
Work in process --------------------- 9,241 9,779
Raw material ------------------------ 3,541 2,981
------- -------
18,134 17,682
Less: Lifo reserve ----------------- 1,331 1,716
------- -------
16,803 15,966
------- -------
Prepaid expenses ---------------------- 2,005 1,974
Deferred income taxes ----------------- 2,135 875
Income taxes recoverable -------------- - 1,026
------- -------
TOTAL CURRENT ASSETS ---------------- 56,780 49,519
------- -------
Other Assets ---------------------------- 671 671
------- -------
Property and Equipment:
Land and improvements ----------------- 4,094 4,094
Buildings ----------------------------- 13,051 13,051
Machinery and equipment --------------- 76,472 76,464
------- -------
93,617 93,609
Less: Accumulated depreciation ------- 58,027 57,521
------- -------
TOTAL PROPERTY AND
EQUIPMENT --------------------------- 35,590 36,088
------- -------
TOTAL ASSETS ------------------------ $ 93,041 $ 86,278
======== ========
<FN>
See accompanying notes to Consolidated Financial Statements.
3
</TABLE>
<PAGE>
<TABLE>
BRENCO, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(In thousands)
March 31 December 31
1996 1995
--------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt -- $ 1,355 $ 1,354
Accounts payable ---------------------- 3,540 3,610
Dividends payable --------------------- 713 711
Compensated absences ------------------ 602 719
Accrued liabilities ------------------- 3,748 1,705
Income taxes payable ------------------ 2,004 339
------- -------
TOTAL CURRENT
LIABILITIES ----------------------- 11,962 8,438
------- -------
Pension---------------------------------- 2,669 2,412
Deferred Income Taxes ------------------- 4,092 3,217
Long-Term Debt -------------------------- 8,184 8,212
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
10,204,386 shares (1995-10,166,666
shares) ------------------------------ 10,204 10,167
Additional paid in capital ------------- 2,461 2,220
Retained earnings ---------------------- 53,469 51,612
------- -------
TOTAL SHAREHOLDERS'
EQUITY ----------------------------- 66,134 63,999
------- -------
TOTAL LIABILITIES AND
EQUITY ----------------------------- $ 93,041 $ 86,278
======== ========
<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
March 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Cash Flows from Operations:
Net Income ---------------------------- $ 2,571 $ 3,640
Adjustments to Reconcile Net Income
to Net Cash from Operations:
Depreciation ------------------------ 1,185 1,066
Loss on sale of assets -------------- - 1
Deferred income taxes --------------- ( 386) ( 171)
Pension ----------------------------- 257 164
Changes in the following:
Current assets ---------------------- ( 2,891) ( 3,818)
Current liabilities ----------------- 3,521 4,763
------- -------
Net cash provided by operations ------- 4,257 5,645
------- -------
Cash Flows from Investing Activities:
Acquisition of property and
equipment ------------------------- ( 687) ( 2,043)
Proceeds from sale of property and
equipment ------------------------- - 6
------- -------
Net cash (used in) investing
activities -------------------------- ( 687) ( 2,037)
------- -------
Cash Flows from Financing Activities:
Cash dividends paid ----------------- ( 712) ( 605)
Employee stock purchases ------------ 50 31
Long-term debt ---------------------- ( 26) ( 26)
------- -------
Net cash (used in) financing
activities -------------------------- ( 688) ( 600)
------- -------
Net increase in cash and cash
equivalents ------------------------- 2,882 3,008
Cash and cash equivalents at beginning
of year ----------------------------- 10,484 6,650
------- -------
Cash and cash equivalents at end of
quarter ----------------------------- $13,366 $ 9,658
======= ========
<FN>
See accompanying notes to Consolidated Financial Statements.
5
</TABLE>
<PAGE>
BRENCO, INCORPORATED AND SUBSIDIARIES
FORM 10-Q__March 31, 1996
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 1996, the consolidated
statements of income, and the consolidated statements of cash flows for the
three months ended March 31, 1996 and March 31, 1995 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, 1996 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, 1995 annual report to shareholders. The results of
operations for the period ended March 31, 1996 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 $32,875,000 for the first three months of 1996,
compared to $35,232,000 for the same period last year, a decrease of seven
percent. Sales of new bearings for the OEM market were down 28%, compared
to the first quarter of 1995. We expect that construction of new freight
cars for the OEM market will be off approximately 25% in 1996 from the peak
levels attained in 1995. Export sales for the first three months of 1996
were up 31% compared to the first quarter of last year, when we established
what was then an all-time high for export sales for the Company. The
strong demand in the export market should continue.
Net income was $2,571,000, or $.25 per share for the quarter, compared
to $3,640,000, or $.36 per share for the comparable period in 1995. The
first quarter of 1995 was an exceptional quarter in almost every respect.
This year's first quarter was also a good quarter, even if it suffered by
comparison. The decrease in sales of new bearings to the domestic OEM
market, our largest market, was partially made up by increased export
business. Reduced margin on this business, however, coupled with the
overall decrease in volume, reduced earnings for the quarter.
FINANCIAL CONDITION:
The 1996 Capital Program is budgeted at $10,152,000, which includes
$474,000 of carryovers from prior years, and $9,678,000 in new projects
approved for 1996. Process improvements and new business opportunities
account for the majority of new projects.
Cash and cash equivalents increased $2,882,000 during the quarter,
while working capital increased by $3,737,000, to $44,818,000.
Management believes that its current cash and cash equivalents,
together with expected earnings, will be sufficient to cover the 1996
Capital Program, dividend, and debt repayment requirements for 1996.
OUTLOOK:
The decline in domestic OEM sales was anticipated, as was the strong
increase in export shipments. The second quarter should continue this mix.
Reconditioning and replacement bearing sales, record export shipments, and
increased switching services are together softening the impact of the lower
domestic OEM business.
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 - 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: May 10, 1996 BY: J. Craig Rice
-------------------------
J. Craig Rice
President
DATED: May 10, 1996 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 13366
<SECURITIES> 0
<RECEIVABLES> 22471
<ALLOWANCES> 0
<INVENTORY> 16803
<CURRENT-ASSETS> 56780
<PP&E> 93617
<DEPRECIATION> 58027
<TOTAL-ASSETS> 93041
<CURRENT-LIABILITIES> 11962
<BONDS> 0
<COMMON> 10204
0
0
<OTHER-SE> 55930
<TOTAL-LIABILITY-AND-EQUITY> 93041
<SALES> 32875
<TOTAL-REVENUES> 32875
<CGS> 25000
<TOTAL-COSTS> 28825
<OTHER-EXPENSES> ( 251)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 178
<INCOME-PRETAX> 4123
<INCOME-TAX> 1552
<INCOME-CONTINUING> 2571
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2571
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
