SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended June 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 No. 0-3366
BRYAN STEAM CORPORATION
(Exact name of registrant as specified in its charter)
NEW MEXICO 35-0202050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
P.O. BOX 27, PERU, INDIANA 46970
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(317)473-6651
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
BRYAN STEAM CORPORATION
<PAGE>
CAPITAL STOCK, WITHOUT PAR VALUE
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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[ ]
Check if there is no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B contained in this Form, and no disclosure
will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [
X ].
The issuer's revenues for its most recent fiscal year.
$17,480,000.
The aggregate market value of the 162,589 shares of the
registrant's common stock held by non-affiliates on September 30, 1995
(based on average of bid and asked prices, not actual transactions)
was $7,438,446.75.
There were 191,257 shares of the registrant's Common Stock
outstanding on September 30, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into the
Part of this report indicated:
1. Annual Report to Shareholders for year ended June 30, 1995
(incorporated into Part II).
2. Proxy Statement for Annual Meeting to be held October 5,
1995 (incorporated into Part III).
<PAGE>
PART I
Item 1. Business
Registrant has only one industry segment. All of the revenue,
operating profit or loss, and identifiable assets of Registrant are
attributable to that industry segment. See the Financial Statements
filed under Item 8 in Part II of this Report.
Registrant manufactures and sells oil, gas and electrically fired
boilers, commercial water heaters and swimming pool heaters.
Registrant also manufactures and sells a limited number of storage
tanks and other equipment for use in connection with boilers. The
Registrant introduced a new line of medium-sized boilers in 1994.
Most boilers manufactured by Registrant are sold directly to
contractors for installation in new apartment, commercial, industrial
and institutional buildings; a limited number of boilers are sold for
replacement purposes.
Sales of Registrant's boilers are made through approximately 70
independent manufacturers' representatives located throughout the
United States and Canada. Registrant sold boilers to approximately
500 different purchasers during its fiscal year ended June 30, 1995.
No single customer accounts for any material part of Registrant's
sales.
The dollar amount of Registrant's backlog of orders believed to
be firm as of the close of its fiscal year ended June 30, 1995, was
approximately $4,600,000. The Registrant's backlog at the close of
its preceding fiscal year ended June 30, 1994, was approximately
$4,475,000.
Registrant's Canadian sales amounted to approximately $676,496
during its fiscal year ended June 30, 1995. Canadian sales were
approximately $674,179 and $1,104,865 for its fiscal years ended
June 30, 1994 and 1993, respectively. Its other foreign sales were
not material.
Registrant is in a competitive industry. It is one of the
smaller companies in that industry, but holds a relatively significant
share of its market.
Registrant's boilers are manufactured from steel and copper
tubing, steel plate, sheet metal, finished components (including
burners, controls, and gauges) and insulation and refractory
materials, substantially all of which are available from several
sources.
Registrant's expenditures for research and development of new
products and improvement of existing products during its fiscal years
ended June 30, 1995, and June 30, 1994, were approximately $119,233
and $113,956, respectively. Three employees are engaged full time in
such activities.
Registrant has no patents, trademarks, licenses, franchises or
concessions that are material to its business.
<PAGE>
Registrant employs approximately 180 persons full time. Its
production employees are represented by Local 357 of the International
Brotherhood of Boilermakers.
The Registrant, to obtain sales in its industry, ordinarily must
have a competitive price. The Company believes competition in the
industry has intensified in recent years. In addition, reputation for
quality, service capabilities and local sales representation are all
important factors in securing sales.
During the year ended June 30, 1995, the Registrant formed a
wholly-owned Indiana subsidiary, Wendland Manufacturing Co.
("Wendland"), for the purpose of acquiring assets from a tank
manufacturing business located in San Angelo, Texas. The asset
purchase transaction closed in July, 1995. Wendland had no activity
or transactions during the year ended June 30, 1995.
Item 2. Properties
Registrant operates a manufacturing plant located in Peru,
Indiana. The plant and the 27-acre site upon which it is located are
owned by Registrant. The plant consists of several adjacent
structures of brick, masonry and steel construction varying in age,
all of which are in satisfactory condition. The Registrant's Plant
contains an aggregate of approximately 153,000 square feet on one
level.
Registrant's executive and administrative offices are located in
a separate masonry building located on the same 27-acre site.
In connection with the asset purchase transaction described
above, Wendland acquired a 4.225 acre tract of land on which a tank
manufacturing plant is located. The Wendland plant contains
approximately 55,000 square feet on one level. Wendland also assumed
certain leases for real property located adjacent to the Wendland
plant.
Item 3. Legal Proceedings
Registrant is a party to ordinary routine litigation incidental
to its business. It is not a party to any material pending legal
proceedings.
Item 4. Submission of Matters to a Vote of Securities Holders.
There were no items submitted to a vote of security holders
during the fourth quarter of Registrant's fiscal year ended June 30,
1995.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
Information respecting the market for the Registrant's shares of
Common Stock and related matters appears on page 6 of the Registrant's
Annual Report to Shareholders for the year ended June 30, 1995, and is
incorporated herein by this reference.
Item 6. Management's Discussion and Analysis or Plan of Operation.
The Management's Discussion and Analysis of Financial Condition
and Results of Operations which appears on page 2 of the Registrant's
Annual Report to Shareholders for the year ended June 30, 1995 is
incorporated herein by this reference.
Item 7. Financial Statements.
The Financial Statements are submitted as a separate section of
this report and are described in response to Items 13(a)(1) and (2).
Item 8. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure.
Not applicable.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons, Compliance with Section 16(a) of the Exchange Act.
The information about the Registrant's Directors who are also
Executive Officers required by Items 401 and 405 of Regulation S-B,
which appears in the Registrant's Proxy Statement delivered in
connection with its Annual Meeting of Shareholders to be held October
5, 1995, is incorporated herein by this reference. Additional
information respecting certain of the Registrant's Executive Officers
who are not also Directors is set forth below.
<TABLE>
<CAPTION>
Name, Principal Occu- Shares Percentage of
pation, and Prior Beneficially Outstanding Shares
Business Experience Owned Beneficially Owned Age
<S> <C> <C> <C>
Kurt Krauskopf, 115(1) Less than 1 percent 41
Secretary of the Company
since January, 1991;
Treasurer of the Company
between October, 1988
and December, 1992.
Paul D. Donaldson, 0 0 32
Treasurer of the Company
since December, 1992;
prior thereto Credit
Manager of the Company
since March 1, 1989;
Loan Officer, Grissom
Federal Credit Union,
Grissom Air Force Base,
since prior to October,
1988.
-----------------------------
(1) Includes 25 shares held by Mr. Krauskopf's spouse.
</TABLE>
Item 10. Executive Compensation.
The information about the Registrant's executive compensation and
transactions which appears in the Registrant's Proxy Statement
delivered in connection with its Annual Meeting of Shareholders to be
held October 5, 1995 is incorporated herein by this reference.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
<PAGE>
Information concerning the number and percentage of shares of
Common Stock owned beneficially on August 31, 1995 by 5% beneficial
shareholders, owned individually by each director, and owned
collectively by all directors and officers of the Registrant, which
information appears in the Registrant's Proxy Statement delivered in
connection with its Annual Meeting of Shareholders to be held on
October 5, 1995, is incorporated herein by this reference. The
Registrant knows of no arrangements which may result in a change in
control of the Registrant.
Item 12. Certain Relationships and Related Transactions.
The Registrant paid approximately $571,000 in fiscal year 1995 to
cover premiums for various property and casualty insurance policies on
which an insurance agency owned by G. N. Summers, a Director of the
Registrant, received commission. There are no other reportable
relationships or related transactions between the Registrant and its
Directors, Executive Officers, 5% beneficial shareholders, or
immediate family members of the foregoing persons.
PART IV
Item 13. Exhibits and Reports on Form 8-K.
(a) (1) and (2): The following financial statements are filed as
a part of this report:
Comparative Balance Sheets (June 30, 1995, 1994, and 1993)
Comparative Statement of Income (Years Ended June 30, 1995, 1994
and 1993)
Comparative Statement of Retained Earnings (Years Ended
June 30, 1995, 1994 and 1993)
Comparative Statement of Cash Flows
(Years Ended June 30, 1995, 1994 and 1993)
Notes to Financial Statements (June 30, 1995)
Selected Financial Data
(a) (3): The following exhibits are filed as a part of this
report:
3(a). The Registrant's Articles of Incorporation were
filed as Exhibit 3 to the Registrant's Annual Report
on Form 10-K for the year ended June 30, 1981, which
is incorporated herein by this reference.
3(b). The Registrant's Code of By-Laws was filed as
Exhibit 19(i) to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1986,
which was sent to the Commission on February 4,
1987, and which is incorporated herein by this
reference.
13. The Registrant's Annual Report to Shareholders for
the year ended June 30, 1995.
<PAGE>
21. The Registrant has one wholly owned subsidiary
incorporated under the laws of the State of Indiana,
Wendland Manufacturing Co. ("Wendland"). In July
1995, Wendland completed its acquisition of tank
manufacturing assets from a Texas concern. Wendland
currently manufactures tanks at its plant in San
Angelo, Texas.
(b) No reports on Form 8-K were filed during the fourth quarter of
fiscal 1995.
<PAGE>
<TABLE>
<CAPTION> SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the registrant,
in the capacities and on the dates indicated.
Signature Title Date
<S> <C> <C>
(1) Principal Executive Officer ) September 25, 1995
)
/s/ Albert J. Bishop )
--------------------------------- President )
Albert J. Bishop )
)
)
(2) Principal Financial Officer )
)
/s/ Kurt J. Krauskopf )
--------------------------------- Controller )
Kurt J. Krauskopf )
)
)
(3) A majority of the Board of Directors ) September 25, 1995
)
/s/ Harold V. Koch )
---------------------------------- Director )
Harold V. Koch )
)
/s/ Albert J. Bishop )
---------------------------------- Director )
Albert J. Bishop )
)
)
---------------------------------- Director )
Bryan D. Herd )
)
/S/ H. Jesse McVay )
---------------------------------- Director )
H. Jesse McVay )
)
/S/ G.N. Summers )
---------------------------------- Director )
G.N. Summers )
)
)
---------------------------------- Director )
Jack B. Jackson )
)
)
----------------------------------- Director )
James R. Lockhart, Jr. )
</TABLE>
BRYAN STEAM CORPORATION
ANNUAL REPORT
1995
<PAGE>
To Our Shareholders:
The following annual report shows the financial condition of our
Company as of June 30, 1995 and the results of operations for the
three most recent years. The fiscal year just completed was a
success. Profits were up from the preceding year, and the overall
rate of sales were the highest in our Company's history. Sales
increased approximately 2.6%.
We feel that this increase in sales is the direct result of our
continued emphasis on advertising and marketing. We are continuing to
emphasize advertising and marketing, but on a more selective basis.
The first six months of each year continues to provide the greatest
share of sales, with the third quarter showing a decline, followed by
a rebound in the fourth quarter. Last year, 54% of our sales were
generated in the first six months, compared to 22% in the third
quarter and 24% in the fourth quarter. Sales in the first quarter of
the current year are slightly above last year. We have a good backlog
of business at the present time.
Our directors have declared a dividend of $1.40 per share, which is
$0.10 per share higher than that paid in 1994. This dividend is
payable on September 15, 1995 to shareholders of record August 31,
1995. Your check is enclosed. Attached is a notice of the Annual
Meeting of Shareholders to be held on October 5, 1995 together with a
proxy and a proxy statement.
If you cannot be present at the shareholders' meeting, we would
appreciate your signing and returning the proxy immediately.
Albert J. Bishop
President
Enc. Notice of Annual Meeting of Shareholders
Proxy Form
Proxy Statement
Dividend Check
<PAGE>
MANAGEMENT'S ANALYSIS AND DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net income for the year ended June 30, 1995, was $927,141,
compared to $519,442 and $1,065,336 for the years ended June 30, 1994
and 1993, respectively. The increase in net income for 1995 when
compared with 1994 resulted primarily from a $246,000 increase in
gross operating profit on sales, a $104,000 increase in total other
income, and from a prior year accounting change.
Sales income of $17,480,290 for the year ended June 30, 1995,
increased approximately 2.6% when compared to the 1994 figure of
$17,036,069, which represented a 4.5% increase from sales of
$16,294,691 in 1993. The increase in sales for 1995 when compared to
1994 can be traced to increased advertising, aggressively pursuing
customer inquiries generated as a result of this advertising, and a
general improvement in the construction climate. Competition in the
Company's small water tube boiler market has increased dramatically
over the last few years. There are now two large manufacturers
providing stiff competition. As a result, it was necessary to give
more and greater discounts to customers purchasing small water tube
boilers to remain competitive in the market. In spite of the
increased competition, the Company was able to increase prices by 5%
in September of 1994.
The Cost of Goods Sold for the year ended June 30, 1995, was
$13,913,906, compared to $13,707,958 and $12,503,743 for the years
ended June 30, 1994 and 1993, respectively. Cost of Goods Sold, as a
percentage of sales, was 79.6% in 1995, 80.5% in 1994, and 76.7% in
1993. Inflation was not a major factor in 1995. A new collective
bargaining agreement was negotiated in May, 1995 and runs through May,
1998. This contract allows for an increase in wages for the
bargaining unit of approximately 3.5% in each of the three years.
Management has taken and will continue to take all steps available to
control material costs and to rectify labor efficiency concerns.
Total expenses of $2,404,024 for the year ended June 30, 1995,
remained fairly constant when compared to total expenses for the year
ended June 30, 1994. The $53,915 increase in salaries and wages was
primarily attributable to the early distribution of profit-sharing
bonuses in the amount of $27,000. These departmental bonuses are
normally paid in December and are based on the prior fiscal year's
profitability. Due to rising long-term rates of return, pension plan
expenses for the year ended June 30, 1994 declined to $119,204,
compared to $178,778 and $121,066 for 1993 and 1992, respectively.
General and administrative expenses of $1,250,282 for the year
ended June 30, 1995 remained stable when compared to $1,272,406 for
the year ended June 30, 1994. Management will continue to take all
reasonable steps to reduce these costs.
Total other income for the year ended June 30, 1995, increased to
$143,245 from $121,322 and $127,932 for the years ended June 30, 1994
and 1993, respectively. The increase in total other income in 1995
<PAGE>
when compared to 1994 resulted primarily from an increase in dividend
income due to higher interest rates and partly from an internal
accounting reclassification.
Liquidity and Capital Resources
The Company continued to have strong liquidity during the year
ended June 30, 1995. The Company maintained a high level of cash
reserves and marketable securities which totalled $4,121,350 at June
30, 1995. The large increase in cash was partly due to a $1,000,000
loan taken out in late June of 1995 to finance an acquisition of
assets from a tank manufacturer in San Angelo, Texas, which was
completed in July of 1995.
Accounts payable were down at year-end, relative to 1994, merely
due to receipts of material, and do not reflect any particular trend.
Accounts receivable were approximately 10% more at the end of 1995
compared to 1994 as a result of increased sales.
The Company's working capital ratio of current assets to current
liabilities as of June 30, 1995 is 6.59:1, down from 7.05:1 on June
30, 1994, and 6.62:1 on June 30, 1993. The current ratio was affected
primarily by the $1,000,000 loan from First of America Bank. The
Company is planning capital expenditures in the coming year in the
amount of approximately $500,000 for equipment purchases for both the
office and plant. Management anticipates that internal sources of
funds will be adequate to cover the planned capital improvements.
General
Management considers the Company's performance for the last
fiscal year to be very satisfactory considering the economic
conditions and the competitive nature of our industry. The Company is
now operating two shifts daily. The backlog of orders on June 30,
1995 was approximately $4,600,000, up from $4,480,000 on June 30, 1994
and down from $5,040,000 on June 30, 1993. The Company anticipates
announcing an increase in prices on November 1, 1995, primarily to
cover the cost of an increase in labor and material prices.
As mentioned above, the collective bargaining agreement increased
wages by approximately 3.5% on the 15th day of May, 1995. Continued
strong competition, primarily from domestic but also some foreign
manufacturers, still faces the Company. Therefore, it may be
necessary to continue the pricing concessions of the last three years.
A new, larger series of boilers made available during 1990 continued
to generate an increase in business during 1995. Increased sales of
these units, coupled with the new medium-sized boiler that the Company
introduced in January of 1994, should allow it to remain a leader in
the small water tube boiler field. The Hoppes line of boiler room
accessory equipment continues to add to total sales and to profits.
The acquisition of the assets of Wendland Manufacturing Company in
Texas, completed in July, 1995, should add to our overall sales and
profits.
The Company intends, from time to time, to consider possible
additional acquisitions of related businesses.
<PAGE>
It is Management's intention to continue growth and profitability
in the coming year by maintaining the marketing program and internal
cost containment measures that were instituted during the last four
years. It is difficult, if not impossible, to project whether sales
will continue at the level of the last three years. The uncertainty
of the economic and political climate, in addition to the competition
in our industry, could adversely affect sales in the coming year.
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(All except per share amounts are in thousands)
June 30,
1995 1994 1993
<S> <C> <C> <C>
TOTAL ASSETS $ 15,091 $ 13,247 $ 12,906
======= ======== =======
LONG-TERM OBLIGATIONS
Note Payable -- First of America Bank $ 800 $ -- $ --
Deferred income taxes 323 296 138
Dividends payable 9 12 22
------- ------- -------
TOTAL LONG-TERM OBLIGATIONS $ 1,132 $ 308 $ 160
======= ======= =======
SALES -- NET $ 17,480 $ 17,036 $ 16,295
COST OF GOODS SOLD 13,914 13,708 12,504
------- ------- -------
GROSS PROFIT ON SALES $ 3,566 $ 3,328 $ 3,791
TOTAL EXPENSES 2,338 2,346 2,334
------- ------- -------
OPERATING PROFIT $ 1,228 $ 982 $ 1,457
OTHER INCOME 247 143 121
------- ------- -------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING PRINCIPLE $ 1,475 $ 1,125 $ 1,578
PROVISION FOR INCOME TAXES 548 410 513
------- ------- -------
INCOME BEFORE CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING PRINCIPLE $ 927 $ 715 $ 1,065
CUMULATIVE EFFECT ON PRIOR YEARS (TO JUNE 30, 1993)
OF A CHANGE IN ACCOUNTING PRINCIPLE
(NOTE 1g) - (196) -
------- ------- -------
NET INCOME $ 927 $ 519 $ 1,065
======= ======= =======
EARNINGS PER SHARE BEFORE CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING PRINCIPLE $ 4.85 $ 3.74 $ 5.56
CUMULATIVE EFFECT ON PRIOR YEARS (TO JUNE 30, 1993)
OF A CHANGE IN ACCOUNTING PRINCIPLE - (1.02) -
------- -------- -------
EARNINGS PER SHARE - COMMON STOCK
(191,284 shares in 1995; 191,284 shares in 1994;
<PAGE>
191,284 shares in 1993) $ 4.85 $ 2.72 $ 5.56
======= ======== =======
PROFORMA AMOUNTS ASSUMING RETROACTIVE
APPLICATION OF ACCOUNTING CHANGE:
NET INCOME $ 927 $ 715 $ 1,058
======= ======== =======
EARNINGS PER SHARE - COMMON STOCK
(191,284 shares in 1995; 191,284 shares in 1994;
191,284 shares in 1993) $ 4.85 $ 3.74 $ 5.52
======= ======== =======
OPERATING PROFIT PER SHARE - COMMON STOCK
(191,284 shares in 1995; 191,284 shares in 1994;
191,284 shares in 1993) $ 6.42 $ 5.13 $ 7.62
======= ======== ======
DIVIDENDS PER SHARE - COMMON STOCK
(191,284 shares in 1995; 191,284 shares in 1994;
191,284 in 1993) $ 1.30 $ 1.30 $ 0.95
======= ======== ======
<FN>
The accompanying notes to financial statements are an integral part of this Selected Consolidated Financial Data.
</TABLE>
<PAGE>
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
Present Positions
and Offices with the Principal Occupation
Name Company or Employments
<S> <C> <C>
Harold V. Koch Chairman of the Board, Chairman of the
Director and member of the Board
Executive Committee
Albert J. Bishop President, General Manager, President and General
Director and member of the Manager of the Company
Executive Committee
H. Jesse McVay Vice President of Vice President of the
Operations, Company
Director
Kurt J. Krauskopf Corporate Secretary Secretary of the Company
Paul D. Donaldson Treasurer Treasurer of the Company
G. N. Summers Director Owner of Saine-Summers
Insurance Agency
Jack B. Jackson Director Retired community bank
Chairman,
Peru office, First of
America Bank - Indiana
James R. Lockhart, Jr. Director Vice President of Sales,
Firestone Building
Products Co.
Bryan D. Herd Director Owner and President of
Bryan Interiors, a
furniture and decorating
business
</TABLE>
<PAGE>
ADDITIONAL INFORMATION
There are approximately 996 record holders of the Company's
shares of common stock. There is no established trading market for
the Company's shares and the Company is not normally informed of the
terms of transactions in its shares. In the limited number of sales
of shares with respect to which the Company has information regarding
the transfer price, the Company believes the trading price in such
transactions was $15.00 per share during the fiscal year ended June
30, 1995. Such transfer price is not necessarily characteristic of
all transactions in Company shares effected during such fiscal year,
as indicated by the public bid prices shown below.
The Company's shares are traded sporadically over-the-counter.
Set forth below are the range of high and low bid quotations of which
management is aware for each quarter during the last two fiscal years.
These quotations may reflect inter-dealer transactions, without retail
mark-up, mark-down, or commission. They do not necessarily represent
actual transactions and management does not have knowledge of the
volume of trading, if any, at any of such bid prices.
QUARTER ENDED HIGH BID LOW BID
September 30, 1993 60 31
December 31, 1993 42 34
March 31, 1994 60 38 1/2
June 30, 1994 60 44
September 30, 1994 60 44 1/4
December 31, 1994 60 44 1/2
March 31, 1995 49 1/2 44 1/2
June 30, 1995 49 1/2 42 1/2
Excluding gratuitous transfers among the Naomi G. Bryan family,
to the Company's knowledge, approximately 15,169 shares were
transferred in approximately 89 transactions during fiscal 1995.
Management believes, however, that most of such transactions did not
involve arm's length sales.
The Company has paid dividends for the last several years on an
annual basis. The annual dividends per share paid during its 1995 and
1994 fiscal years and the dates of payment are:
$1.30 September 15, 1994
$1.30 September 15, 1993
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH SHAREHOLDER, ON
THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 13a-1 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, FOR THE COMPANY'S MOST RECENT FISCAL
YEAR. THE WRITTEN REQUEST SHOULD BE DIRECTED TO: ALBERT J. BISHOP,
<PAGE>
PRESIDENT, BRYAN STEAM CORPORATION, P. O. BOX 27, PERU, INDIANA
46970.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors and Shareholders
Bryan Steam Corporation
State Route 19, North
Peru, Indiana 46970
Gentlemen:
We have audited the accompanying consolidated balance sheets of Bryan
Steam Corporation as of June 30, 1995, 1994, and 1993, and the related
consolidated statements of income, retained earnings and cash flows
for the years then ended. These financial statements are the
responsibility of the Corporation's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of Bryan Steam Corporation as of June 30, 1995, 1994, and 1993, and
the results of its consolidated operations and its consolidated cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed in Note 1g to the financial statements, the Corporation
changed its method of accounting for income taxes during the fiscal
year ended June 30, 1994.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The Selected
Consolidated Financial Data is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Cassen Company, LLC
Indianapolis, Indiana August 4, 1995
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
June 30,
-----------------------------------------------
1995 1994 1993
------------- -------------- -------------
<S> <C> <C> <C>
SALES $ 17,480,290 $ 17,036,069 $ 16,294,691
---------- ---------- ----------
COST OF GOODS SOLD
Inventory -- Beginning $ 3,881,151 $ 3,997,814 $ 3,960,905
Purchases & Freight 8,173,090 7,923,792 7,165,904
Labor 3,535,022 3,207,008 3,015,721
Other Costs 2,506,156 2,460,495 2,359,027
----------- ----------- -----------
TOTAL $ 18,095,419 $ 17,589,109 $ 16,501,557
Less: Inventory -- Ending 4,181,513 3,881,151 3,997,814
----------- ----------- -----------
COST OF GOODS SOLD $ 13,913,906 $ 13,707,958 $ 12,503,743
----------- ----------- -----------
GROSS PROFIT ON SALES $ 3,566,384 $ 3,328,111 $ 3,790,948
----------- ----------- -----------
EXPENSES
Salaries & Wages -- Officers 174,280 $ 97,088 $ 80,780
Salaries & Wages -- Other 554,145 577,422 561,060
Depreciation Expense 105,375 98,302 95,249
Pension Plan 119,204 178,778 121,066
Taxes -- Payroll & Local 72,713 78,928 75,377
Provision for Bad Debts 20,564 (370) (3,735)
Repairs & Maintenance 41,461 43,726 49,254
General & Administrative 1,250,282 1,272,406 1,354,799
----------- ----------- -----------
TOTAL EXPENSES $ 2,338,024 $ 2,346,280 $ 2,333,850
----------- ----------- -----------
OPERATING PROFIT $ 1,228,360 $ 981,831 $ 1,457,098
----------- ----------- -----------
OTHER INCOME (LOSS)
Dividend Income $ 106,690 $ 24,752 $ 13,754
Interest Income 51,181 107,443 105,098
Net gain (loss) on investment securities 11,928 (1,551) (3,013)
Other Income 77,472 12,601 5,483
----------- ----------- -----------
TOTAL OTHER INCOME $ 247,271 $ 143,245 $ 121,322
----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE $ 1,475,631 $ 1,125,076 $ 1,578,420
PROVISION FOR INCOME TAXES 548,490 409,651 513,084
----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING PRINCIPLE $ 927,141 $ 715,425 $ 1,065,336
CUMULATIVE EFFECT ON PRIOR YEARS
<PAGE>
(TO JUNE 30, 1993) OF A CHANGE IN
ACCOUNTING PRINICIPLE (Note 1g) -- (195,983) --
----------- ----------- -----------
NET INCOME $ 927,141 $ 519,442 $ 1,065,336
=========== =========== ===========
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME (CONT.)
EARNINGS PER SHARE BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE $ 4.85 $ 3.74 $ 5.56
CUMULATIVE EFFECT OF PRIOR YEARS
(TO JUNE 30, 1993) OF A CHANGE IN
ACCOUNTING PRINCIPLE -- (1.02) --
----------- ----------- -----------
NET EARNINGS PER SHARE $ 4.85 $ 2.72 $ 5.56
=========== =========== ===========
PROFORMA AMOUNTS ASSUMING RETROACTIVE
APPLICATION OF ACCOUNTING CHANGE:
NET INCOME $ 927,141 $ 715,425 $ 1,058,464
=========== =========== ===========
EARNINGS PER SHARE $ 4.85 $ 3.74 $ 5.52
=========== =========== ===========
DIVIDENDS PER SHARE -- COMMON STOCK $ 1.30 $ 1.30 $ 0.95
=========== =========== ===========
<FN>
The accompanying notes to financial statements are an integral part of these Consolidated Statements of Income.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
June 30,
-----------------------------------------------
1995 1994 1993
------------- -------------- -------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR $ 10,749,269 $ 10,472,915 $ 9,778,610
Net Income 927,141 519,442 1,065,336
Dividends Paid (249,988) (242,793) (371,031)
Payment of additional FYE 6/30/93
Federal Income Tax -- (295) --
----------- ----------- -----------
BALANCE AT END OF YEAR $ 11,426,422 $ 10,749,269 $ 10,472,915
=========== =========== ===========
<FN>
The accompanying notes to financial statements are an integral part of these Consolidated Statements of Retained
Earnings.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
June 30,
-----------------------------------------------
1995 1994 1993
------------- -------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 17,310,182 $ 17,107,398 $ 17,049,413
Cash paid to suppliers and employees (16,254,730) (15,348,842) (14,595,983)
Interest and dividends received 155,422 137,717 110,848
Interest paid (3,819) (325) (842)
Income taxes paid (199,000) (805,706) (410,804)
----------- ----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 1,008,055 $ 1,090,242 $ 2,152,632
----------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment (net) (615,347) (667,987) (415,213)
Proceeds from sale of plant & equipment -- -- 200
Purchases of investment securities (894,308) (1,297,738) (1,728,806)
Proceeds from sale of investment securities 1,587,087 737,499 952,565
----------- ----------- -----------
NET CASH (USED) BY
INVESTING ACTIVITIES $ 77,432 $ (1,228,226) $ (1,191,254)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note -- First of America Bank $ 1,000,000 $ -- $ --
Purchase of treasury stock -- -- (16,815)
<PAGE>
Dividends paid (252,754) (253,431) (512,296)
----------- ----------- -----------
NET CASH (USED) BY
FINANCING ACTIVITIES $ 747,246 $ (253,431) $ (529,111)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH
AND EQUIVALENTS $ 1,832,733 $ (391,415) $ 432,267
CASH AND EQUIVALENTS AT BEGINNING OF YEAR $ 360,213 $ 751,628 $ 319,361
----------- ----------- -----------
CASH AND EQUIVALENTS AT END OF YEAR $ 2,192,946 $ 360,213 $ 751,628
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
Non-cash investing transactions included trading used equipment having a fair market value for new equipment, in
addition to boot given.
Fair value of used equipment given $ 20,579 $ 4,573 $ 2,690
=========== =========== ===========
<FN>
The accompanying notes to financial statements are an integral part of these Consolidated Statements of Cash Flows.
</TABLE>
<PAGE>
<TABLE>
<CAPTION> CONSOLIDATED BALANCE SHEETS
June 30,
-----------------------------------------------
1995 1994 1993
------------- -------------- -------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash & Cash Equivalents $ 2,192,946 $ 360,213 $ 751,628
Investment Securities 1,928,404 2,633,111 2,079,608
Accounts Receivable, Less Allowance For
Doubtful Accounts of (1995 - $9,511;
1994 - $6,382; 1993 - $7,982) 3,002,774 2,731,890 2,773,081
Other Receivables 49,080 48,131 56,793
Inventory 4,181,513 3,881,151 3,997,814
Prepaid Income Taxes -- 170,014 --
Prepaid Expenses 190,839 103,683 214,794
Deferred Income Tax -- -- 1,439
----------- ----------- -----------
TOTAL CURRENT ASSETS $ 11,545,556 $ 9,928,193 $ 9,875,157
----------- ----------- -----------
PROPERTY, PLANT & EQUIPMENT
(Cost, less accumulated depreciation) $ 3,524,417 $ 3,293,443 $ 2,984,879
----------- ----------- -----------
OTHER ASSETS
Organizational expense $ 5,000 $ -- $ --
Noncompete Agreement -- Net of Amortization
(1995 - $100,000; 1994 - $91,667;
1993 - $71,667) -- 8,333 28,333
Patents -- Net of Amortization
(1995 - $2,349; 1994 - $1,807;
1993 - $1,265) 6,865 7,407 7,949
Goodwill -- Hoppes -- Net of Amortization
(1995 - $1,167; 1994 - $0;
1993 - $0) 8,833 10,000 10,000
----------- ----------- -----------
TOTAL OTHER ASSETS $ 20,698 $ 25,740 $ 46,282
----------- ----------- -----------
TOTAL ASSETS $ 15,090,671 $ 13,247,376 $ 12,906,318
=========== =========== ===========
LIABILITIES & NET WORTH
CURRENT LIABILITIES
Accounts Payable -- Trade $ 320,072 $ 406,867 $ 250,602
Notes Payable -- First of America Bank 200,000 -- --
Accrued Commissions 694,809 629,359 679,431
Accrued County Property Taxes 226,651 218,117 206,421
Accrued Expenses 41,637 33,899 24,847
Sales Tax Payable 24,326 58,303 33,320
Accrued Payroll 39,402 10,920 61,934
Accrued State Income Taxes 36,453 29,055 69,530
Federal Income Taxes Payable 118,730 -- 165,250
Deferred Federal Income Tax 39,915 17,896 --
Deferred State Income Tax 9,157 4,105 --
----------- ----------- -----------
<PAGE>
TOTAL CURRENT LIABILITIES $ 1,751,152 $ 1,408,521 $ 1,491,335
----------- ----------- -----------
LONG-TERM LIABILITIES
Note Payable -- First of America Bank $ 800,000 $ -- $ --
Deferred Federal Income Tax 262,474 241,101 138,256
Deferred State Income Tax 60,215 55,311 --
Dividends Payable 8,863 11,629 22,267
----------- ----------- -----------
TOTAL LONG-TERM LIABILITIES $ 1,131,552 $ 308,041 $ 160,523
----------- ----------- -----------
NET WORTH
Common Capital Stock, Without Par Value,
200,000 Shares -- Authorized & Issued $ 810,272 $ 810,272 $ 810,272
----------- ----------- -----------
Retained Earnings 11,426,422 10,749,269 10,472,915
Treasury Stock, at cost (8,716 shares in 1995;
8,716 shares in 1994; 8,716 shares in 1993) (28,727) (28,727) (28,727)
----------- ----------- -----------
TOTAL NET WORTH $ 12,207,967 $ 11,530,814 $ 11,254,460
----------- ----------- -----------
TOTAL LIABILITIES AND NET WORTH $ 15,090,671 $ 13,247,376 $ 12,906,318
=========== =========== ============
<FN>
The accompanying notes to financial statements are an integral part of these Consolidated Balance Sheets.
</TABLE>
<PAGE>
BRYAN STEAM CORPORATION AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1a. CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash equivalents
include cash on hand, deposits in banks, certificates of deposit,
money funds and all highly liquid debt instruments with original
maturities of three months or less. The fair value of cash and
cash equivalents, based on current market prices, is $2,192,946.
1b. INVESTMENT SECURITIES
Investment securities are valued at cost which approximates the
market value. Based on current market prices, the fair value of
investment securities is $1,887,294. Current gross unrealized
gains and (losses) totalled $62,572 and $(21,462), respectively.
1c. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation
of buildings, equipment, fixtures and vehicles is computed using
the straight-line method over estimated useful lives.
Estimated useful lives are:
Years
Buildings & improvements 10 - 40
Machinery & equipment 10
Furniture & fixtures 5 - 10
Vehicles 4 - 10
Expenditures for equipment repair and maintenance and for
replacements and renewals of portions of structures which are not
considered as lengthening the life of the structures are expensed
as incurred. Additions, replacements and renewals of equipment
are capitalized.
When property or equipment is retired, sold or otherwise disposed
of, the cost and related accumulated depreciation are removed
from the accounts and gains and losses resulting from such
transactions are reflected in income.
1d. RESEARCH & DEVELOPMENT
Research and development costs are charged to operations when
incurred and are included in operating expenses. The amounts
charged for the years ended June 30, 1995, 1994, and 1993 were
$119,233, $113,956, $105,230, respectively.
1e. INVENTORY
<PAGE>
The Corporation's inventory of raw materials is valued at lower
of cost or market. The Corporation's inventories of work-in-
process and finished goods are valued at cost per unit.
1f. SUPPLEMENTAL INCOME INFORMATION
The amounts of depreciation and maintenance are set forth in the
statement of income. There were no management or service
contract fees or royalties paid during the years ended June 30,
1995, 1994, and 1993. Advertising costs are expensed as
incurred.
1g. INCOME TAXES
The Corporation adopted Statement of Financial Accounting
Standards (SFAS) 109-"Accounting for Income Taxes", July 1, 1993.
This Statement supercedes SFAS 96-"Accounting for Income Taxes".
Deferred income taxes reflect the future federal and state tax
consequences of differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year-
end.
1h. PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Corporation and of its wholly owned subsidiary.
Intercompany transactions and balances have been eliminated in
consolidation.
1i. INDUSTRY SEGMENT
During the year ended June 30, 1995, the Corporation exclusively
operates in one industry segment, the manufacture of boilers and
pressure vessels.
2. INVENTORY
Inventories are stated at the lower of cost or market. Cost
approximates market. Such cost includes raw materials, direct
labor, other direct costs and production overhead. The
inventories are valued on the first-in, first-out (FIFO) method.
Inventories at June 30 are as follows:
1995 1994 1993
Finished goods and
work-in-process $ 843,503 $ 953,843 $1,113,527
Raw materials 3,338,010 2,927,308 2,884,287
--------- --------- ---------
TOTAL $4,181,513 $3,881,151 $3,997,814
========= ========= =========
3. INCOME TAXES
As discussed in Note 1g, on July 1, 1993, the Corporation adopted
Statement of Financial Accounting Standards No. 109-"Accounting
for Income Taxes" (SFAS 109). SFAS 109 is an asset and liability
approach that requires the recognition of deferred tax assets and
<PAGE>
liabilities for the expected future tax consequences of events
that have been recognized in the Corporation's financial
statements or tax returns. In estimating future tax
consequences, SFAS 109 generally considers all expected future
events other than enactments of changes in the tax law or rates.
Previously, the Corporation used the Statement of Financial
Accounting Standards No 96-"Accounting for Income Taxes" (SFAS
96) asset and liability approach for federal income tax that gave
no recognition to future events other than the recovery of assets
and settlement of liabilities at their carrying amounts. Under
SFAS 109, in the year of adoption, previously reported results of
operations for that year should be restated to reflect the
effects of applying SFAS 109, and the cumulative effect of
adoption on prior years' results of operations should be shown in
the income statement in the year of change. The cumulative
effect as of July 1, 1993 of the change was a deferred tax
expense of $195,983, or $1.02 per share.
This was a nonrecurring cumulative charge against current
operations for financial reporting only. The adoption of this
statement in the current year was mandatory under Generally
Accepted Accounting Principles.
The charge was a non-cash transaction which did not affect the
Corporation from an operational standpoint.
<PAGE>
<TABLE>
<CAPTION>
The provision for income taxes consists of the following:
June 30,
-------------------------------
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Current taxes
Federal $388,744 $329,986 $508,405
State 106,398 94,052 --
------- ------- -------
Total $495,142 $424,038 $508,405
------- ------- -------
Deferred taxes
Federal $ 43,388 $ (11,703) $ 4,679
State 9,960 (2,684) --
------- -------- -------
Total $ 53,348 $ (14,387) $ 4,679
------- -------- -------
Provision (benefit)
for income taxes $548,490 $409,651 $513,084
======= ======= =======
</TABLE>
Reconciliation of total provision for income tax with the
expected provision obtained by applying statutory rates to pretax
income:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Expected tax provision $616,814 $470,282 $536,667
Nondeductible expenses/
(nontaxable income) (68,324) (60,631) (16,726)
Tax benefit of graduated
rates used in the
calculation of the
deferred tax liability -- -- (6,857)
------- ------- -------
Total Provision for
Income Tax $548,490 $409,651 $ 513,084
======= ======= =======
</TABLE>
The sources of the temporary differences for deferred income taxes as
of June 30, are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<PAGE>
--------- --------- ---------
<S> <C> <C> <C>
Depreciation $771,984 $709,120 $670,220
Pension 126,909 66,293 133,697
Other (9,511) (13,659) (7,744)
------- ------- -------
Total $889,382 $761,754 $796,173
======= ======= =======
Deferred Income
Tax Liabilities $371,761 $318,413 $136,817
======= ======= =======
Deferred tax liabilities (assets) are comprised of the following:
June 30,
-------------------------------
1995 1994 1993
--------- -----------------
Depreciation $322,689 $296,412 $115,172
Pension 53,048 27,710 22,972
------- ------- -------
Gross deferred tax
liability $375,737 $324,122 $138,144
------- ------- -------
Allowance for bad debts $ (3,976) $ (2,667) $ --
Capital loss carryforward -- (3,042) (1,327)
------- ------- -------
Gross deferred tax assets $ (3,976) $ (5,709) $ (1,327)
------- ------- -------
Deferred tax assets
valuation allowance $ -- $ -- $ --
------- ------- -------
Deferred tax liabilities
(assets) $371,761 $318,413 $136,817
======= ======= =======
</TALBE>
4. PENSION PLANS
The Corporation has non-contributory pension plans for
substantially all employees. The initial pension plan was
established on or about July 1, 1966. Plan assets consist of
government and corporate bonds, mutual funds, guaranteed
investment contracts, and cash equivalent investments.
Pension expense includes the following components:
</TABLE>
<TABLE>
<CAPTION>
June 30,
-------------------------------
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Service cost - benefits
earned during year $214,930 $265,096 $184,527
<PAGE>
Interest cost on projected
benefit obligation 268,558 255,273 245,285
Actual return on assets (179,441) (154,902) (392,022)
Net of other components (164,893) (129,419) 122,041
------- ------- -------
Net periodic
pension cost $139,154 $236,048 $159,831
======= ======= =======
</TABLE>
The reconciliation of the funded status of the plans is as follows:
Year Ended 6/30/95 6/30/94 6/30/93
------- ------- -------
Measurement Date 3/31/95 3/31/94 3/31/93
------- ------- -------
<TABLE>
<CAPTION>
Actuarial present value of benefit obligation:
<S> <C> <C> <C>
Vested benefit
obligation $(2,605,779) $(2,747,764) $(2,978,927)
---------- ---------- ----------
Accumulated benefit
obligation $(2,858,294) $(3,050,184) $(3,354,348)
---------- ---------- ----------
Projected benefit
obligation $(3,427,845) $(3,919,906) $(4,504,440)
Plan assets at
fair value 4,178,854 3,902,388 3,684,555
---------- ---------- ----------
Plan assets greater
(less) than projected
benefit obligation $ 751,009 $ (17,518) $ (819,885)
Unrecognized net
(gain) loss (320,239) 418,003 1,318,105
Prior service cost not yet
recognized in net
periodic pension cost 33,697 35,861 38,025
Unrecognized transition
obligation (assets) (337,558) (370,053) (402,548)
---------- ---------- ----------
Prepaid (accrued)
pension expense $ 126,909 $ 66,293 $ 133,697
========== ========== ==========
</TABLE>
The assumptions used in determining pension expense and funded status
information shown above were as follows:
6/30/95 6/30/94 6/30/93
------- ------- -------
<PAGE>
Discount rate 8.25% 7.25% 5.75%
Rate of salary
progression 4.00% 4.00% 4.00%
Long-term rate of
return on assets 7.00% 7.00% 7.00%
The discount rate for June 30, 1995 is based upon the Moody's AA
Corporate Bond Index.
The Net Periodic Pension Cost for the fiscal year ending June 30,
1994 has been revised to reflect a correction to the Projected
Benefit Obligation. This correction, which decreased the
Projected Benefit Obligation by $150,565 (from $3,919,906 to
$3,769,341), reflects the plan's benefit formula being a "career-
average formula". SFAS 87 requires "career average" plans to use
unit credit as the last method.
Contributions to a union sponsored defined contribution pension
plan for years ended June 30, 1995, 1994, and 1993 were $131,323,
$98,447, and $62,105 respectively.
This plan covers all bargaining unit employees. This plan is not
administered by the Corporation and contributions are determined
in accordance with provisions of a negotiated labor contract.
5. PLANT, PROPERTY & EQUIPMENT
<TABLE>
<CAPTION>
June 30,
-------------------------------
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Land - Peru, Indiana $ 54,676 $ 54,676 $ 54,676
Buildings 2,486,135 2,459,303 2,321,355
Machinery & Equipment 2,432,653 1,965,170 1,621,131
Patterns -- Hoppes 30,000 30,000 30,000
Furniture & fixtures 774,841 798,622 734,056
Vehicles 288,843 274,789 248,017
--------- --------- ---------
$6,067,148 $5,582,560 $5,009,235
Less: Accumulated
Depreciation (2,542,731) (2,289,117) (2,024,356)
--------- --------- ---------
TOTAL $3,524,417 $3,293,443 $2,984,879
========= ========= =========
</TABLE>
6. CONTINGENT LIABILITIES
The Corporation is involved in litigation arising from the normal
course of business. In the opinion of management, based on
advice of legal counsel, this litigation will not have any
<PAGE>
material adverse effect on the financial position of the
Corporation.
7. RELATED PARTY TRANSACTIONS
The Corporation paid approximately $606,740 in the fiscal year
1995 to cover premiums for various property, casualty, and
workers compensation insurance policies on which an insurance
agency owned by G. N. Summers, a director of the Corporation,
received commissions. A $35,728 refund was received by the
Corporation as a result of a periodic payroll audit to determine
the correct workers compensation premium, based on actual wages
and salaries paid. There are no other reportable related party
transactions between the Corporation and its directors, executive
officers, 5% beneficial shareholders or immediate family members
of the foregoing persons.
8. INTANGIBLES
Amortization is recorded under the "straight line method."
Goodwill is being amortized over five years. Expenditures to
acquire a patent are capitalized and amortized over 17 years.
9. OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK
In 1990, the Corporation adopted Statement of Financial
Accounting Standard No. 105 which requires disclosure of
information about financial instruments with off-balance sheet
risk and about concentrations of credit risk for all financial
instruments.
OFF-BALANCE SHEET RISK
As of June 30, 1995, the Corporation had no significant off-
balance sheet risk.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Corporation
to significant concentrations of credit risk consist principally
of temporary cash investments and trade receivables.
The Corporation places its cash and temporary investments with
various high quality financial institutions. Cash accounts, on
deposit at a local bank, sometimes exceeded the $100,000 limit
established by the Federal Deposit Insurance Corporation. The
Corporation maintains accounts with several stock brokerage
firms. The accounts contain cash and various securities.
Cash balances, which are generally not significant, are insured
up to $100,000 by the Securities Investor Protection Corporation
(SIPC).
Investment securities balances, as reported in the balance sheet,
are insured by SIPC up to various limits, depending on the
brokerage firm.
<PAGE>
Concentrations of credit risk with respect to trade receivables
are limited due to the large number of customers comprising the
Corporation's customer base, and their dispersion across many
different industries and geographical areas. No individual
customer balance exceeded 8% of the Corporation's trade
receivables at the balance sheet date.
In management's opinion, as of June 30, 1995, the Corporation had
no other significant concentrations of credit risk.
10. COMPARATIVE STATEMENT OF CASH FLOWS
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
<TABLE>
<CAPTION>
June 30,
-------------------------------------
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 927,141 $ 519,442 $1,065,336
Non-Cash Items
Included in Net Income
Cumulative effect of
accounting change -- 195,983 --
Amortization 10,042 20,542 20,542
Depreciation 366,388 342,580 301,012
(Gain) loss on disposal
of equipment 17,985 16,843 5,838
(Gain) loss on sale
of securities 11,928 6,736 3,013
Deferred Income Taxes 53,348 (14,387) 4,679
Changes in:
Accounts Receivable (270,887) 41,191 719,510
Other Receivables (949) 5,657 14,845
Inventory (300,362) 116,663 (36,909)
Prepaid Income Taxes 170,014 (170,014) 23,155
Prepaid Expenses (87,156) 114,116 96,735
Other Assets (5,000) -- --
Accounts Payable -
Trade (86,795) 156,265 (384,436)
Accrued Expenses 202,358 (261,375) 319,312
--------- --------- ---------
NET CASH PROVIDED
(USED) BY OPERATING
ACTIVITIES $1,008,055 $1,090,242 $2,152,632
========= ========= =========
</TABLE>
<PAGE>
11. LONG-TERM DEBT
Long-term debt consists of the following:
Note payable to First of America Bank, in annual
installments of $200,000. Interest is paid
quarterly at the prime rate determined by the
highest base rate on corporate loans at large
banks as indicated in the Money Rate section of
the Wall Street Journal. Note is collateralized by
accounts receivable. $1,000,000
Maturities of long-term debt are as follows:
Year Ending
June 30 Amount
------------ ----------
1996 $ 200,000
1997 200,000
1998 200,000
1999 200,000
2000 200,000
Thereafter --
----------
TOTAL $1,000,000
=========
12. OTHER COMMITMENTS
The Corporation has an unused $500,000 line of credit available
from First of America Bank. The line of credit expires October
31, 1995.
13. INVESTMENT SECURITIES
On July 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 115 - "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115). The
Corporation's policy has been, historically, to classify its
investment securities as current assets, even though management
has set a precedent, evidencing its intent, by holding its
investment securities to maturity. The Corporation considers
none of its investment securities to be, or to have been,
available-for-sale or trading securities. Investment securities
held to maturity, which do not have either a single or defined
maturity date, have been allocated to the "maturing within one
year" maturity grouping.
The following is a summary of investment securities classified as
held to maturity at June 30, 1995:
<TABLE>
<CAPTION>
Fair Amortized
Value Cost
<PAGE>
------------ ------------
<S> <C> <C>
Equity Securities $ -- $ --
U.S. Government obligations -- --
Obligations of individual states
and political subdivisions 1,544,682 1,600,373
Obligations of foreign governments -- --
Corporate obligations -- --
Mortgage-backed securities -- --
Other 342,612 328,031
---------- ----------
$ 1,887,294 $ 1,928,404
========== ==========
</TABLE>
At June 30, 1995, investment in debt securities, classified as held to
maturity, mature as follows:
<TABLE>
<CAPTION>
Maturity
Within After
1 year 1-5 years 5-10 years 10 years
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government
obligations $ -- $ -- $ -- $ --
Obligations of
individual states
and political
subdivisions 1,260,690 213,547 2,860 123,276
Obligations of
foreign governments -- -- -- --
Corporate obligations -- -- -- --
Other 328,031 -- -- --
---------- ---------- ---------- ----------
$ 1,588,721 $ 213,547 $ 2,860 $ 123,276
========== ========== ========== ==========
</TABLE>
The following is a summary of gross unrealized holding gains and
losses for investment securities classified as held to maturity at
June 30, 1995:
Gross Gross
Unrealized Unrealized
Holding Holding
Gains Losses
--------- ----------
Equity Securities $ -- $ --
U.S. government obligations -- --
Obligations of individual states
and political subdivisions 61,278 5,588
Obligations of foreign governments -- --
<PAGE>
Corporate obligations -- --
Mortgage-backed securities -- --
Other 1,294 15,874
-------- --------
$ 62,572 $ 21,462
======== ========
Realized gains and losses are determined on the basis of specific
identification during the year ended June 30, 1995; gross proceeds and
gross realized gains and losses on securities classified as held to
maturity were:
Sale proceeds $1,224,458
=========
Redemption proceeds $ 130,000
=========
Amortized cost of sales & redemptions $1,342,530
=========
Gross realized gains $ 11,981
=========
Gross realized losses $ 53
=========
The Corporation sold investment securities during the current
fiscal year and purchased a U.S. Treasury Money Fund having a
higher current yield. Redemption proceeds from municipal bond
maturities were subsequently invested in similar municipal bonds.
14. BUSINESS COMBINATIONS
During the current fiscal year, the Corporation formed Wendland
Manufacturing Co. (Wendland), a wholly-owned subsidiary, for the
purpose of acquiring tank manufacturing businesses. The
Corporation received 100% of Wendland's shares in exchange for
its investment of $100,000. The Corporation has accounted for
the formation of this subsidiary by the purchase method.
Wendland had no activity or transactions affecting the income
statement, and there were no results of operations to include in
the consolidated income statement. A total of 1,000 of
Wendland's common shares, at $100 par value, were authorized and
issued.
Subsequent to the balance sheet date, Wendland acquired
substantially all of the tank manufacturing business assets of a
Texas corporation for $1,115,000.
<TABLE> <S> <C>
<ARTICLE> 5
<CAPTION>
This schedule contains summary financial information extracted from
the balance sheet of Bryan Steam Corporation as of June 30, 1995, and
the related condensed income statement for the year then ended, and is
qualified in its entirety by reference to such financial statements.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,192,946
<SECURITIES> 1,928,404
<RECEIVABLES> 3,012,285
<ALLOWANCES> 9,511
<INVENTORY> 4,181,513
<CURRENT-ASSETS> 11,545,556
<PP&E> 6,067,148
<DEPRECIATION> 2,542,731
<TOTAL-ASSETS> 15,090,671
<CURRENT-LIABILITIES> 1,751,152
<BONDS> 800,000
0
0
<COMMON> 810,272
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,090,671
<SALES> 17,480,290
<TOTAL-REVENUES> 17,727,561
<CGS> 13,913,906
<TOTAL-COSTS> 2,338,024
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,475,631
<INCOME-TAX> 548,490
<INCOME-CONTINUING> 927,141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 927,141
<EPS-PRIMARY> 4.85
<EPS-DILUTED> 4.85
