U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly Period Ended March 31, 1998.
OR
- ----- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______ to ____________.
Commission File No. 0-3366
BRYAN STEAM CORPORATION
(Exact name of small business issuer as specified in its charter)
NEW MEXICO 35-0202050
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
POST OFFICE BOX 27
PERU, IN 46970
(Address of principal executive offices, including zip code)
(765) 473-6651
(Issuer's telephone number, including area code)
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 _______
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
COMMON STOCK 191,284
(Title of class) (Number of shares outstanding
May 5, 1998)
Transitional Small Business Disclosure Format (check one): Yes No X
----- -----
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
Item Financial Statements
1.
BRYAN STEAM CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
Unaudited Unaudited Unaudited Unaudited
For the For the
Nine months Ended: Fiscal Quarter Ended
31-Mar-98 31-Mar-97 31-Mar-98 31-Mar-97
(Current (Preceding (Current (Preceding
Year) Year) Year) Year)
--------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Gross sales less
discounts, returns
and allowances $ 20,145,396 $ 19,403,679 $ 5,570,737 $ 5,492,926
------------ ------------ ------------ ------------
Cost and expenses --
Cost of goods sold $ 13,499,953 $ 12,745,873 $ 3,855,147 $ 3,713,942
Selling, general and
administrative expenses 4,796,937 4,949,672 1,643,090 1,727,148
------------ ------------ ------------ ------------
Total cost and expenses $ 18,296,890 $ 17,695,545 $ 5,498,237 $ 5,441,090
------------ ------------ ------------ ------------
Operating income $ 1,848,506 $ 1,708,134 $ 72,500 $ 51,836
------------ ------------ ------------ ------------
Other income and (expense)
Interest income $ 72,925 $ 68,498 $ 38,694 $ 29,890
Freight income 69,202 64,143 20,390 16,620
Interest expense (16,698) (71,463) (5,057) (20,274)
------------ ------------ ------------ ------------
Total other income and (expenses) $ 125,429 $ 61,178 $ 54,027 $ 26,236
------------ ------------ ------------ ------------
Income (or loss) before
taxes on income and
extraordinary items $ 1,973,935 $ 1,769,312 $ 126,527 $ 78,072
Provisions for taxes
on income 823,131 672,210 52,731 11,352
------------ ------------ ------------ ------------
Net income (or loss) $ 1,150,804 $ 1,097,102 $ 73,796 $ 66,720
============ ============ ============ ============
Earnings per share* $ 6.02 $ 5.74 $ 0.39 $ 0.35
============ ============ ============ ============
Dividends per share $ 2.00 $ 1.50 $ 2.00 $ 1.50
============ ============ ============ ============
</TABLE>
*Based on 191,284 shares of Common Stock issued and outstanding throughout the
period.
<PAGE>
BRYAN STEAM CORPORATION
PERU, INDIANA
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited
ASSETS March 31, June 30,
1998 1997
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $ 810,974 $ 368,879
Investment securities 1,330,331 1,466,686
Accounts receivable (net) 4,138,696 4,814,745
Prepaid expenses 437,901 282,644
Inventory 4,730,526 4,479,203
Prepaid income taxes -- 27,528
------------ ------------
TOTAL CURRENT ASSETS $ 11,448,428 $ 11,439,685
------------ ------------
FIXED
ASSETS
Land, buildings, equipment $ 9,290,195 $ 8,976,634
Less: Depreciation 3,761,335 3,400,512
------------ ------------
accumulated
TOTAL FIXED ASSETS $ 5,528,860 $ 5,576,122
------------ ------------
OTHER
ASSETS
Noncompete agreement
(Net of amortization) $ 124,814 $ 180,000
Other amortizable assets (Net of 27,543 21,791
amortization)
Deposits 5,171 5,171
------------ ------------
TOTAL OTHER ASSETS $ 157,528 $ 206,962
------------ ------------
TOTAL $ 17,134,816 $ 17,222,769
============ ============
ASSETS
LIABILITIES AND NET WORTH
CURRENT
LIABILITIES
Accounts payable - trade $ 284,162 $ 851,512
Capital lease obligations 40,185 8,632
Line of credit - Norwest Bank 54,900 45,400
Accrued commissions 694,566 807,617
Accrued property taxes 278,011 254,251
Accrued income taxes 48,779 4,837
Accrued taxes & other expenses 137,185 365,624
Current portion of long-term debt 2,837 24,300
Deferred federal income tax 70,071 70,071
Deferred state income tax 16,085 16,085
------------ ------------
TOTAL CURRENT LIABILITIES $ 1,626,781 $ 2,448,329
------------ ------------
LONG-TERM LIABILITIES
Long-term debt $ 45,272 $ 45,272
Capital lease obligations 8,187 44,968
Deferred federal income tax 229,926 229,926
Deferred state income tax 50,609 50,609
Dividends payable 13,922 11,834
------------ ------------
TOTAL LONG-TERM LIABILITIES $ 347,916 $ 382,609
------------ ------------
TOTAL LIABILITIES $ 1,974,697 $ 2,830,938
------------ ------------
NET WORTH
Capital stock $ 810,272 $ 810,272
Treasury stock, at cost (28,727) (28,727)
Retained earnings 14,378,574 13,610,286
------------ ------------
TOTAL NET WORTH $ 15,160,119 $ 14,391,831
------------ ------------
TOTAL LIABILITIES AND NET WORTH $ 17,134,816 $ 17,222,769
============ ============
<PAGE>
BRYAN STEAM CORPORATION
PERU, INDIANA
COMPARATIVE CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Unaudited Unaudited
July 1, 1996 July 1, 1996
to to
Mar. 31, 1997 Mar. 31, 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 1,150,804 $ 1,097,102
Non-cash items included in net income
Amortization 49,434 44,658
Depreciation 360,823 346,129
Changes in:
Inventory (251,323) 437,909
Accounts receivable 676,049 798,227
Prepaid expenses (155,257) (184,975)
Prepaid income taxes 27,528 66,835
Accounts payable (567,350) (229,805)
Commissions payable (113,051) 31,424
Accrued county property tax 23,760 90,165
Accrued taxes & expenses (228,439) (94,662)
Accrued income taxes 43,942 --
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,016,920 $ 2,403,007
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Redemptions (purchases) of investment $ 136,355 $ 193,450
securities
Purchases of plant and equipment (313,561) (1,275,336)
----------- -----------
NET CASH (USED) BY INVESTING ACTIVITIES $ (177,206) $(1,081,886)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt $ (17,191) $ (773,045)
Dividends paid $ (380,428) $ (284,257)
----------- -----------
NET CASH (USED) BY FINANCING ACTIVITIES $ (397,619) $(1,057,302)
----------- -----------
NET INCREASE (DECREASE) IN CASH $ 442,095 $ 263,819
=========== ===========
CASH & CASH EQUIVALENTS
July 1 $ 368,879 $ 304,739
March 31 $ 810,974 $ 568,558
----------- -----------
NET INCREASE (DECREASE) IN CASH $ 442,095 $ 263,819
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (Net of amount capitalized) $ 16,698 $ 71,463
Income taxes $ 751,661 $ 498,451
</TABLE>
<PAGE>
Item 1. CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The unaudited interim consolidated financial statements to which
this management's discussion and analysis is attached reflect all
adjustments which are, in the opinion of management, necessary to
a fair statement of the results for the interim periods
presented. All such adjustments are of a normal, recurring
nature.
The accompanying consolidated financial statements include the
accounts of the Company and of its wholly-owned subsidiaries.
Intercompany transactions and balances have been eliminated in
consolidation.
Pension benefits are based on taxable earnings and years of
service. The Company's policy is to fund at least the minimum
amounts required by Federal law and regulation.
The Company's policy regarding investment securities is to
classify them as current assets. None of the investment
securities are considered to be available-for-sale or trading
securities by the Company. Gross unrealized holding gains and
losses on investment securities classified as held to maturity at
March 31, 1998 are not material to the accompanying consolidated
financial statements and are not reported therein.
- 5 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND CONSOLIDATED RESULTS OF OPERATIONS
Consolidated net income for the third quarter of $73,796 is up
(10.61%) from the net income of $66,720 for the corresponding
quarter last year. The increase in consolidated net income
results primarily from the $197,193 increase in net income of
Bryan Steam Corporation (the Parent) for the quarter, as compared
to the corresponding quarter of the prior fiscal year. This
increase more than offsets the $173,739 decrease in net income of
Monticello Exchanger and Manufacturing Company (M.E.M.C.O.), an
indirect subsidiary of the Parent, for the quarter as to the
corresponding quarter of the prior year. The Parent's increase in
net income results from increased sales and improved margins,
while M.E.M.C.O.'s decrease in net income was caused by decreased
sales, lower margins and increased administrative costs.
Consolidated sales for the quarter increased 1.42% from the
corresponding quarter last year, and increased 3.82% over the
same year to date period last year. Cost of goods sold increased
a corresponding 3.80% from the same quarter a year ago, and
increased 5.92% over last year for the year to date. Consolidated
sales increased $77,811 from the corresponding quarter last year
despite the fact that M.E.M.C.O. had a $174,087 decrease in sales
for the quarter over the same quarter a year ago. The increase in
consolidated sales was the result of a modest increase of
$136,935 (3.12%) in Parent's sales and a $114,973 (18.86%)
increase in the sales of Wendland Manufacturing Corp., (WMC), a
subsidiary of the Parent, over the same quarter a year ago. While
M.E.M.C.O.'s total sales for the quarter do reflect an increase
in sales over both of the previous current fiscal quarters, it
also highlights M.E.M.C.O.'s need to develop additional product
lines to supplement fluctuations in orders for their main product
(exchangers).
The consolidated working capital ratio at March 31, 1998 of 7.04
to 1, is up from 4.68 to 1 at year-end, and up from the 6.08 to 1
ratio of a year ago. Consolidated cash and equivalents are up
$442,095 (119.85%) from year-end, and up $242,416 (42.64%) from
the same quarter a year ago. Consolidated investment securities
decreased $136,335 (9.30%) from year-end, and decreased $92,773
(6.05%) from the same quarter a year ago. Accounts receivable are
down (14.04%) from year-end, and up (3.59%) from the same quarter
a year ago.
- 6 -
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND CONSOLIDATED RESULTS OF OPERATIONS (CONTINUED)
Inventory increased $251,323 (5.61%) from year-end as more
work-in-progress was brought to finished, saleable condition, and
increased (25.68%) from a year ago.
Consolidated trade accounts payable decreased $567,350 (66.63%)
to a historically customary level from year-end. Consolidated
accrued commissions decreased (14.00%) from year-end as a result
of expected collections of accounts receivable.
Production continues at near capacity. The consolidated backlog
of orders at March 31, 1998, was $6,276,417, up (14.45%) from
year-end. As of the date of this Quarterly Report, the plants are
operating first shifts totaling 160 production employees on a 40
hour work week. As of the date of this Quarterly Report,
twenty-nine (29) workers are on layoff.
As of the date of this Quarterly Report, the Company has
$1,000,000 available on its $1,000,000 revolving line of credit
and $500,000 available on its $500,000 operating line of credit.
Planned capital expenditures this year of up to $450,000 (of
which approximately $320,000 has been utilized) will continue to
be funded internally.
The Company has recently entered into a new labor contract (the
"Labor Contract"), which will take effect May 17, 1998. The Labor
Contract has a three-year term and provides for hourly wage
increases over the next three years of 5%, 3% and 3%,
respectively. In addition, the Labor Contract provides that 5% of
annual net after-tax profits will be paid to covered employees in
fiscal year 1999, 2000 and 2001. The Labor Contract also provides
for life and health insurance benefits.
- 7 -
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibit is filed as a part of this
report:
(27) Financial Data Schedule (nine
months ended March 31, 1998)
(b) No reports on Form 8-K were filed during the
quarter ended March 31, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BRYAN STEAM CORPORATION
By: /s/ H. Jesse McVay
---------------------------
H. Jesse McVay, President
Date: May 15, 1998
By: /s/ Kurt Krauskopf
---------------------------
Kurt Krauskopf, Secretary
Date: May 15, 1998
(8)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF BRYAN STEAM CORPORATION AS OF MARCH 31, 1998, AND
THE RELATED CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE NINE-MONTH PERIOD
THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000014971
<NAME> Bryan Steam Corporation
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1.000
<CASH> 810,974
<SECURITIES> 1,330,331
<RECEIVABLES> 4,156,068
<ALLOWANCES> 17,372
<INVENTORY> 4,730,526
<CURRENT-ASSETS> 11,448,428
<PP&E> 9,290,195
<DEPRECIATION> 3,761,335
<TOTAL-ASSETS> 17,134,816
<CURRENT-LIABILITIES> 1,626,781
<BONDS> 151,351
<COMMON> 810,272
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,164,816
<SALES> 20,145,396
<TOTAL-REVENUES> 20,287,523
<CGS> 13,499,953
<TOTAL-COSTS> 4,796,937
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,698
<INCOME-PRETAX> 1,973,935
<INCOME-TAX> 823,131
<INCOME-CONTINUING> 1,150,804
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,150,804
<EPS-PRIMARY> 6.02
<EPS-DILUTED> 6.02
</TABLE>
