<PAGE>P-i SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
Form 10-Q
/X/QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 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 0-8615
BRC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1533071
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1111 West Mockingbird Lane, Suite 1400, Dallas, Texas 75247
(Address of principal executive including zip code)
Registrant's telephone number, including area code (214) 688-1800
None
Former name, former address and former fiscal year, if changed since last report
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
Common Stock 6,933,891
$.10 Par Value
<PAGE>P-ii BRC HOLDINGS, INC.
INDEX
PAGE
Part I. Financial Information
Consolidated Condensed Balance
Sheets - September 30, 1996 and
December 31, 1995 1
Consolidated Condensed Statements of
Income - Three Months Ended September 30,
1996 and 1995 2
Consolidated Condensed Statements of
Income - Nine Months Ended September 30,
1996 and 1995 3
Consolidated Condensed Statements of
Cash Flows - Nine Months Ended September 30,
1996 and 1995 4
Notes to Consolidated Condensed Financial
Statements 5
Management's Discussion and Analysis 8
Part II. Other Information 12
<PAGE>P-1 PART I. FINANCIAL INFORMATION
BRC HOLDINGS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents. . . . . . $ 7,275,000 $ 11,292,000
Short-term marketable securities . . 31,384,000 28,541,000
Accounts receivable, net . . . . . . 27,677,000 25,214,000
Current portion of installments
and notes receivable. . . . . . . . 8,587,000 5,884,000
Inventories (Note 3) . . . . . . . . 8,661,000 11,750,000
Deferred tax asset . . . . . . . . . 4,475,000 4,515,000
Other current assets . . . . . . . . 3,474,000 3,286,000
Total current assets. . . . . . . . 91,533,000 90,482,000
Property, plant and equipment. . . . 59,410,000 59,286,000
Less accumulated depreciation . . . (43,337,000) (42,345,000)
16,073,000 16,941,000
Long-term marketable securities. . . 17,763,000 8,314,000
Long-term installments and notes
receivable, net . . . . . . . . . . 13,212,000 10,194,000
Purchased software and databases, net 4,113,000 4,049,000
Goodwill and intangibles, net. . . . 18,155,000 33,414,000
Other assets . . . . . . . . . . . . 2,164,000 1,686,000
Total assets . . . . . . . . . . . . $163,013,000 $165,080,000
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . $ 2,569,000 $ 3,385,000
Accrued liabilities. . . . . . . . . 22,876,000 20,115,000
Current portion of
notes and capital leases. . . . . . 618,000 793,000
Total current liabilities . . . . 26,063,000 24,293,000
Long-term notes and capital leases . 37,000 579,000
Deferred tax payable . . . . . . . . 2,655,000 3,920,000
Shareholders' equity:
Common stock . . . . . . . . . . . . 693,000 688,000
Additional paid-in capital . . . . . 59,224,000 57,702,000
Retained earnings. . . . . . . . . . 74,341,000 77,898,000
Total shareholders' equity (Note 7) 134,258,000 136,288,000
Total liabilities and
shareholders' equity. . . . . . . . $163,013,000 $165,080,000
See accompanying Notes to the Consolidated Condensed Financial Statements.
The financial statements have been restated to include the results of a merger
in 1996 which has been accounted for as a pooling of interests (see Note 6).
<PAGE>P-2 BRC HOLDINGS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended September 30,
1996 1995
Revenues . . . . . . . . . . . . . . . $36,598,000 $36,630,000
Cost of products and services. . . . . 26,070,000 26,249,000
Selling, general and administrative. . 7,368,000 6,184,000
Unusual charges (Note 4) . . . . . . . 15,266,000 ---
48,704,000 32,433,000
Operating profit (loss) . . . . . . . (12,106,000) 4,197,000
Interest income, net . . . . . . . . . 1,068,000 794,000
Income (loss) before income tax. . . . (11,038,000) 4,991,000
Income tax provision (Note 5). . . . . 7,000 1,961,000
Net income (loss). . . . . . . . . . . $(11,045,000) $ 3,030,000
Earnings per common and
common equivalent share:
Net income (loss) . . . . . . . . . $ (1.59) $ .43
Average shares. . . . . . . . . . . 6,930,000 7,064,000
Earnings per share
assuming full dilution:
Net income (loss) . . . . . . . . . $ (1.59) $ .43
Average shares. . . . . . . . . . . 6,930,000 7,085,000
See accompanying Notes to the Consolidated Condensed Financial Statements. The
financial statements have been restated to include the results of a merger in
1996 which has been accounted for as a pooling of interests (see Note 6).
<PAGE>P-3 BRC HOLDINGS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended September 30,
1996 1995
Revenues.. . . . . . . . . . . . . . . $116,830,000 $104,984,000
Cost of products and services. . . . . 81,300,000 76,464,000
Selling, general and administrative. . 21,171,000 17,686,000
Unusual charges (Note 4).. . . . . . . 15,266,000 ---
117,737,000 94,150,000
Operating profit (loss). . . . . . . . (907,000) 10,834,000
Other income. . . . .. . . . . . . . . --- 823,000
Interest income, net.. . . . . . . . . 2,634,000 2,314,000
Income before income tax.. . . . . . . 1,727,000 13,971,000
Income tax provision (Note 5). . . . . 5,066,000 5,518,000
Net income (loss). . . . . . . . . . . $ (3,339,000) $ 8,453,000
Earnings per common and
common equivalent share:
Net income (loss).. . . . . . . . . $ (.48) $ 1.22
Average shares. . . . . . . . . . . 6,910,000 6,938,000
Earnings per share
assuming full dilution:
Net income (loss).. . . . . . . . . $ (.48) $ 1.20
Average shares (Note 8) . . . . . . 6,910,000 7,057,000
See accompanying Notes to the Consolidated Condensed Financial Statements. The
financial statements have been restated to include the results of a merger in
1996 which has been accounted for as a pooling of interests (see Note 6).
<PAGE>P-4
<TABLE> BRC HOLDINGS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<S> <C> <C>
Nine Months Ended September 30,
1996 1995
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . . . $ (3,339,000) $ 8,453,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . 8,336,000 8,217,000
Gain on sale of assets . . . . . . . . . . . . (41,000) (282,000)
Deferred income taxes . . . . . . . . . . . . . (1,226,000) ---
Unusual charges . . . . . . . . . . . . . . . . 15,266,000 ---
Changes in assets and liabilities:
(Increase) decrease in accounts receivable. . (2,463,000) (4,946,000)
(Increase) decrease in inventories. . . . . . 3,089,000 (5,754,000)
(Increase) decrease in other assets.. . . . . (1,241,000) (4,000)
Increase (decrease) in accounts payable . . . (816,000) 1,463,000
Increase (decrease) in other liabilities. . . 114,000 (287,000)
Increase (decrease) in accrued liabilities. . 1,629,000 (2,630,000)
Total adjustments . . . . . . . . . . . . . . . 22,647,000 (4,223,000)
Net cash provided by operating activities . . . . . 19,308,000 4,230,000
Cash flows from investing activities:
Capital expenditures. . . . . . . . . . . . . . . (5,371,000) (5,358,000)
Marketable securities purchased . . . . . . . . . (39,979,000) (34,819,000)
Marketable securities matured . . . . . . . . . . 27,022,000 12,238,000
Proceeds from sale of assets. . . . . . . . . . . 98,000 5,000
Additions to installment receivables. . . . . . . (8,117,000) (4,099,000)
Proceeds from installment receivables . . . . . . 2,691,000 2,518,000
Net cash used in investing activities . . . . . . . (23,656,000) (29,515,000)
Cash flows from financing activities:
Principal payments on notes and capital leases. . (717,000) (1,206,000)
Issuance of common stock. . . . . . . . . . . . . 1,266,000 5,634,000
Repurchases of stock and other. . . . . . . . . . --- (984,000)
Dividends paid. . . . . . . . . . . . . . . . . . (218,000) (183,000)
Net cash provided by financing activities . . . . . 331,000 3,261,000
Decrease in cash and cash equivalents . . . . . . . (4,017,000) (22,024,000)
Cash and cash equivalents at beginning of period. . 11,292,000 22,699,000
Cash and cash equivalents at end of period. . . . . $ 7,275,000 $ 675,000
Supplemental disclosures -- Cash payments during the first nine months of 1996
for income taxes and interest were $6,522,000 and $70,000, respectively. Cash
payments during the first nine months of 1995 for income taxes and interest were
$6,013,000 and $338,000, respectively.
See accompanying Notes to the Consolidated Condensed Financial Statements. The
financial statements have been restated to include the results of a merger in
1996 which has been accounted for as a pooling of interests (see Note 6).
</TABLE>
<PAGE>P-5 BRC HOLDINGS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The interim consolidated condensed financial statements included herein
have been prepared by BRC Holdings, Inc. (the "Company" or "BRC"), without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements have been condensed or omitted
pursuant to such rules and regulations. These consolidated condensed
financial statements should be read in conjunction with the consolidated
financial statements and related notes contained in the Company's 1995
annual report on Form 10-K. In the opinion of management, the
consolidated condensed financial statements contain all adjustments
necessary to present fairly the financial position of the Company as of
September 30, 1996, the results of operations for the three and nine
months ended September 30, 1996 and 1995, and cash flows for the nine
months ended September 30, 1996 and 1995. These adjustments include
recurring accruals and a pro rata portion of certain estimated expenses.
Management believes the procedures followed in preparing these
consolidated condensed financial statements are reasonable under the
circumstances, but the accuracy of the amounts in the financial statements
are in some respects dependent upon facts that will exist and procedures
that will be performed by the Company later in the fiscal year.
2. The results of operations for the three months and nine months ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
3. Inventories consisted of the following:
September 30, December 31,
1996 1995
Finished goods. . . . . . . . $ 3,827,000 $ 4,187,000
Work in progress. . . . . . . 1,866,000 3,023,000
Raw materials and supplies. . 2,968,000 4,540,000
Inventories . . . . . . . . . $ 8,661,000 $11,750,000
4. Results of operations for the quarter ended September 30, 1996 include a
$15,266,000 pre-tax charge to earnings, primarily associated with the
write-off of goodwill and other intangible assets of the Company's
"HealthSource" technology outsourcing business unit within its Health
Care division. The charge was determined in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for Long-lived
Assets" ("SFAS No. 121"). The charge was a result of the cancellation of
certain customer contracts with the Sisters of Providence Health System.
Total revenues derived from these contracts were approximately $2.9 and
$12.4 million for the three and twelve month periods ended September 30,
1996, respectively. In determining the amount of the impairment charge,
the Company compared expected undiscounted future cash flows of the
"HealthSource" business unit with the carrying value of the related
goodwill and other identifiable intangible assets. Expected undiscounted
future cash flows are not sufficient to recover the carrying value of
such assets, and as such, the Company recognized an impairment loss equal
to the difference between the carrying amount and their estimated fair
value. The Company relied upon a discounted cash flow analysis to
determine the fair value of such assets. The charge also includes
certain other contract re-negotiation and termination costs.
<PAGE>P-6
5. During the third quarter of 1996, the Company incurred a significant
unusual charge to earnings associated with the write-off of goodwill and
certain identifiable intangible assets (See Note 4). The Company will
realize a limited tax benefit associated with this unusual charge, and as
such, has reflected the full effect of the Company's underlying tax
liability as of September 30, 1996, inclusive of the charge.
Due to the reliance on an estimated annual effective rate pursuant to the
requirements of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", certain reclassifications between current
income tax and deferred income tax may be necessary at December 31, 1996
to reflect the annual computation of differences between book and tax
income.
6. On September 5, 1996, the Company consummated the merger of The Pace
Group, Inc. ("The Pace Group"), a wholly-owned subsidiary of the Company.
Under the terms of the agreement, the Company issued 432,835 shares of
its common stock in a tax-free exchange for all of the record and
beneficial interests held by The Pace Group security holders. The Pace
Group, headquartered in Dallas, Texas, provides consulting, development
and management services to purchasers and providers of health care
services. The Company has accounted for this transaction as a pooling of
interests. Accordingly, the Company's financial statements have been
restated to include the results of The Pace Group for all periods
presented.
Combined and separate results of BRC and The Pace Group during the periods
ended September 30, 1996 were as follows:
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, 1996 September 30, 1996
Revenue:
BRC. . . . . . . . . . $ 34,360,000 $ 109,781,000
The Pace Group.. . . . 2,238,000 7,049,000
Total. . . . . . . . $ 36,598,000 $ 116,830,000
Net Income (loss):
BRC. . . . . . . . . . $(11,182,000) $ (4,082,000)
The Pace Group.. . . . 137,000 743,000
Total. . . . . . . . $(11,045,000) $ (3,339,000)
In the ordinary course of business, The Pace Group paid dividends of
$218,000 and $183,000 in January, 1996 and 1995, respectively, to the
shareholders of The Pace Group.
The combined financial results presented above include adjustments and
reclassifications made to conform the accounting policies of the two
companies. There were no material income adjustments or intercompany
transactions between the two companies for the periods presented.
<PAGE>P-7
7. As a result of the merger with The Pace Group, the following supplemental
reconciliation of shareholders' equity has been provided. The December
31, 1995 balances have been restated to include the results of the merger.
Common Additional
Stock $.10 Paid-In Retained
Par Value Capital Earnings
Balance at December 31, 1995 . $688,000 $57,702,000 $77,898,000
Net loss . . . . . . . . . --- --- (3,339,000)
Exercise of stock options. 5,000 1,261,000 ---
Stock option tax benefits. --- 261,000 ---
Dividends (Note 6) . . . . --- --- (218,000)
Balance at September 30, 1996. $693,000 $59,224,000 $74,341,000
8. Earnings per share, assuming full dilution, for the three and nine month
periods ended September 30, 1996 and the three months ended September 30,
1995, were computed based on the weighted average number of common and
common equivalent shares outstanding for a total of 6,930,000, 6,910,000
and 7,085,000 shares, respectively. Earnings per share, assuming full
dilution, for the nine months ended September 30, 1995, was computed based
on shares issued upon the conversion of a note to an officer/director and
the weighted average number of common and common equivalent shares
outstanding for a total of 7,057,000 shares. In addition, for purposes of
computing earnings per share for the nine months ended September 30, 1995,
interest expense on the convertible note was added back to income, net of
tax, in the amount of $20,000.
9. On October 23, 1996, the Company executed a consulting agreement and stock
purchase agreement with MatriDigm Corporation ("MatriDigm"), a privately-
held corporation headquartered in Fremont, California. MatriDigm is
researching, developing and testing an automated technology solution to
the Year 2000 computer date problem affecting computer systems. Under the
consulting agreement with MatriDigm, the Company will provide the
assistance of its Chairman and Chief Executive Officer, and certain other
management services, to assist MatriDigm in the development and growth of
its business operations. In consideration for these efforts, the Company
will receive a percentage of the pre-tax operating income of MatriDigm.
Additionally, the Company purchased $1,500,000 of MatriDigm common stock,
constituting approximately seven percent (7%) of the current outstanding
equity of MatriDigm. The consulting agreement terminates in December
1999, and may be terminated earlier based on a number of events, including
the lack of achievement of performance goals subsequent to September 30,
1997. In the event of a termination of the consulting contract, MatriDigm
has certain share repurchase rights with respect to a portion of the
shares purchased by the Company. The Company has previously entered into
a sales and marketing agreement with MatriDigm which provides for
commissions to be paid to the Company based on the sale of MatriDigm
products and services.
<PAGE>P-8 MANAGEMENT'S DISCUSSION AND ANALYSIS
Certain information contained herein may include forward-looking statements
that involve risks and uncertainties. The Company's actual results may differ
materially from those discussed in the forward-looking statements. Potential
risks and uncertainties include market responses to pricing pressures,
changes in product and service mix, results from litigation, the timely
development and acceptance of new products and services, changes in customer
preferences and inventory risks due to shifts in market demand. Consequently,
the actual results realized by the Company could differ materially from the
statements made herein. Readers of this report are cautioned not to place
undue reliance on the forward-looking statements made herein.
Three Months Ended September 30, 1996 and 1995
Revenues of $36.6 million for the third quarter of 1996 were consistent with
those reported during the same period last year. While the Company's election
products and services and technology outsourcing service revenues increased
over the third quarter of last year, revenues from governmental records
management and other products and services decreased. A significant portion
of the Company's revenues from election products and services are subject to
a two year business cycle. Due to a higher number of public elections being
held, revenues from these products and services are typically higher in
even-numbered "election" years as opposed to odd-numbered "non-election" years.
Due primarily to the aforementioned election cycle, revenues from election
products and services increased by $0.9 million, or 11%, when compared to the
previous year. This increase is primarily related to revenues generated from
the sale of election supplies and ballots of $4.0 million in the third
quarter of 1996 compared to $1.9 million in the third quarter of 1995. Off-
setting this increase, full service election and computerized election system
revenues decreased $4.2 million when compared to the third quarter of 1995.
Revenues from technology outsourcing services increased by $1.3 million, or 7%,
over the same period last year. The majority of this increase can be
attributed to the sale of specialized software to hospital emergency rooms.
During the third quarter of 1996, certain technology outsourcing contracts with
the Sisters of Providence Health System were canceled. Total revenues derived
from these contracts were approximately $2.9 million and $12.4 million for the
three and twelve months ended September 30, 1996, respectively. Additionally,
the Company anticipates the potential loss of other health care outsourcing
contracts. As a result of the cancellation of the contracts, and in accordance
with SFAS No. 121, the Company reflected a $15,266,000 pre-tax charge against
earnings in its results for the quarter ended September 30, 1996. The charge
relates primarily to a write-off of goodwill and other intangible assets of the
Company's Health Care Division (See Note 4 to the unaudited financial
statements).
On September 5, 1996, a wholly-owned subsidiary of the Company merged with The
Pace Group, a Dallas-based consulting firm specializing in the managed health
care industry. The merger has been treated as a pooling of interests for
accounting purposes (See Note 6 to the unaudited financial statements).
The Company's revenues associated with governmental records management were down
$0.9 million, or 15%, as compared to the same period last year. This decrease
relates primarily to the discontinuance of government records management
services to the Office of Recorder, Cook County, Illinois ("Cook County") during
the fourth quarter of 1995. Cook County accounted for $0.6 million in revenues
during the third quarter of 1995. Other decreases in revenues from governmental
records management relate to the sale of certain of the Company's customer
accounts in the Texas region during the third quarter of 1995.
<PAGE>P-9
Revenues from other products and services decreased $1.3 million as compared to
the same period last year. This decrease was due to the discontinuance of a
tape media sale and repair business, as well as the sale of a business unit
involved in the reselling of a variety of public records data to nationwide
credit bureaus and other providers of information retrieval services in December
1995.
The Company's gross margins reported for the quarters ended September 30, 1996
and 1995, were 29% and 28%, respectively. The slight increase in the Company's
gross profit margin relates to higher utilization of overhead and fixed expenses
associated with increased business volumes and corresponding revenues from the
Company's election business. Selling, general and administrative expenses for
the quarter ended September 30, 1996 increased by $1.2 million, or 19%, when
compared to the same period last year. Selling, general and administrative
expenses rose from 17% of revenues during the third quarter of 1995 to 20% of
revenues during the third quarter of 1996. The primary causes of this increase
in expense can be attributed to increased commission expense incurred as a
result of additional election-related sales, increases in expenses associated
with the Company's employee benefit plans, increased contract labor expenses,
and growth of the consulting business related to the merger with The Pace
Group.
Nine Months Ended September 30, 1996 and 1995
Year-to-date revenues for the first nine months of 1996 were $11.8 million, or
11%, higher than those reported during the same period last year. This increase
relates primarily to additional sales of election products and services. As
stated in the foregoing section, a significant portion of the Company's revenues
from election products and services are subject to a two year business cycle.
Revenues from these products and services are typically higher in even-numbered
"election" years as opposed to odd-numbered "non-election" years.
Revenues from election products and services increased by $13.8 million, or 64%,
when compared to the same period of the previous year. Due to increased public
election activity, the Company experienced significant increases in ballots,
booths and supplies sales, which grew to $11.7 million during the period, an
increase of $6.7 million, or 132%, over the nine months ended September 30,
1995. Sales of election systems were $9.2 million during the first nine
months of 1996, an increase of $1.6 million, or 21%, when compared to the
previous year. Sales of election systems in 1996 included a $4.2 million sale
to Maricopa County, Arizona. As of September 30, 1996, the Company's
inventories decreased by $3.1 million, as compared to December 31, 1995
balances, due primarily to the sale of election systems and supplies during
the first nine months of 1996.
Technology outsourcing services reflected revenue growth of $4.2 million, or 8%,
when compared to the first nine months of 1995. In addition to increased
service revenues from existing accounts, the Company also experienced increased
sales of automated emergency department systems, vision care-related software,
and health care consulting services as compared to the first nine months of
1995.
Governmental records management revenues decreased $2.3 million, or 14%, as
compared to the same period last year. As mentioned in the previous section,
the discontinuance of services to Cook County, Illinois in late 1995 primarily
contributed to this decrease. Cook County accounted for $1.6 million in
revenues during the first nine months of 1995. The Company also sold other
government records management accounts during the third quarter of 1995.
<PAGE>P-10
Revenues from other products and services decreased $3.9 million, or 30%, as
compared to the first nine months of 1995. As noted in the previous
discussion, this decrease relates primarily to the sale of a business unit and
the discontinuance of a tape media sale and repair business in 1995.
The Company's gross margin increased to 31% during the first nine months of 1996
as compared to 27% for the same period in 1995. This increase primarily relates
to higher utilization of the Company's fixed and overhead expenses associated
with election products and services revenue, which increased during 1996.
Sales, general and administrative expenses increased $3.5 million in 1996 when
compared to the same period in 1995. As discussed in the previous section, the
primary causes of this increase in expense relate to increased commission
expenses associated with additional sales of election products and services,
increased employee benefits expense, additional use of contract labor, and
overall growth of the consulting business of the Company.
Subsequent Events
Subsequent to September 30, 1996, the Company executed a consulting agreement
and stock purchase agreement with MatriDigm, a privately-held corporation
headquartered in Fremont, California. MatriDigm is researching, developing
and testing an automated technology solution to the Year 2000 computer date
problem. In addition, the Company has purchased $1.5 million of MatriDigm
common stock, constituting approximately 7% of the current outstanding equity
of MatriDigm (See Note 9 to the unaudited financial statements).
Liquidity and Capital Resources
At September 30, 1996, the Company had net working capital (total current
assets minus total current liabilities) of $65.5 million. This represents a
decrease of $0.7 million as compared to the Company's working capital as of
December 31, 1995. Cash and cash equivalents and short-term investments
decreased a total of $1.2 million since December 31, 1995 due to a shift in
the Company's portfolio to long-term investments. Of the $2.5 million
increase in accounts receivable in the first nine months of 1996, $1.5 million
is primarily a result of increased election supply sales. An additional $1.0
million increase in accounts receivable relates to growth in consulting
services of The Pace Group (See Note 6 to the unaudited financial statements).
The $2.7 million increase in current installments and notes receivable since
December 31, 1995 can also be attributed to additional election-related sales.
Accordingly, election-related inventories decreased by $3.1 million during the
same period. The Company's total current assets were 3.5 times total current
liabilities at September 30, 1996.
Net cash provided by operating activities increased by $15.1 million as compared
to the same period last year. This change primarily relates to the use of $5.8
million for the production of election equipment in the first nine months of
1995, as compared to a $3.1 million reduction in inventories related to election
products sold during the first nine months of 1996. In addition, $2.7 million
was used to satisfy accrued liabilities in the first nine months of 1995 as
compared to a $1.6 million increase in accrued liabilities for the first nine
months of 1996. Net income decreased $11.8 million compared to the same period
last year as a result of the third quarter 1996 non-cash, unusual charge of
$15.3 million (See Note 4 to the unaudited financial statements). Excluding
this unusual charge, year to date 1996 net income increased $3.5 million over
the first nine months of 1995.
<PAGE>P-11
Cash flows used in investing activities decreased $5.9 million as compared to
the same period last year. This change is a result of a $9.6 million net
increase in the amount of marketable securities redeemed over the amount
purchased in 1996 as compared to 1995. A net increase in installment
receivables of $3.8 million as compared to the same period last year primarily
relates to the Company's financing of election equipment sold in 1996.
Cash flows from financing activities reflect a net decrease of $2.9 million as
compared to the previous year. This change primarily relates to fewer
transactions in 1996 relating to the exercise of employee stock options.
The Company currently anticipates continuing positive cash flows from operations
and additions to capital associated with employee stock option exercises during
the short-term. Long-term cash flow trends may be affected by acquisitions,
changes in industry trends or other factors which cannot be estimated at this
time. Currently, the Company believes its cash and investment balances are
sufficient to meet currently foreseeable working capital commitments. The
Company does not maintain an active line of credit.
<PAGE>P-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
11. Computation of Earnings per Share
a. For the Three Months Ended September 30, 1996 and 1995.
b. For the Nine Months Ended September 30, 1996 and 1995.
27. Financial Data Schedule for the Nine Months Ended September 30, 1996.
(Pursuant to Item 601 (c)(iv) of Regulation S-X, the Financial Data
Schedule is not deemed to be "filed" for purpose of Section 11 of the
Securities Act of 1933, as amended, or Section 18 of the Securities
Exchange Act of 1934, as amended.)
B. Reports on Form 8-K
During the period July 1, 1996 through September 30, 1996, the Company did
not file a current report on Form 8-K.
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.
BRC HOLDINGS, INC.
(Registrant)
By
Date: November 14, 1996 /s/ P. E. Esping
P. E. Esping
Chairman, Chief Executive Officer
and Director (Principal Executive
Officer)
Date: November 14, 1996 /s/ J. L. Morrison
J. L. Morrison
President and Chief Operating Officer
Date: November 14, 1996 /s/ Thomas E. Kiraly
Thomas E. Kiraly
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from Form 10-Q
financial statements filed for the period ended September 30, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 7275
<SECURITIES> 31384
<RECEIVABLES> 36264
<ALLOWANCES> 0
<INVENTORY> 8661
<CURRENT-ASSETS> 91533
<PP&E> 59410
<DEPRECIATION> 43337
<TOTAL-ASSETS> 163013
<CURRENT-LIABILITIES> 26063
<BONDS> 37
<COMMON> 693
0
0
<OTHER-SE> 133565
<TOTAL-LIABILITY-AND-EQUITY> 160313
<SALES> 0
<TOTAL-REVENUES> 116830
<CGS> 0
<TOTAL-COSTS> 81300
<OTHER-EXPENSES> 36437
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1727
<INCOME-TAX> 5066
<INCOME-CONTINUING> (3339)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3339)
<EPS-PRIMARY> (.48)
<EPS-DILUTED> (.48)
</TABLE>
<PAGE>
EXHIBIT 11a
BRC HOLDINGS, INC.
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended September 30,
1996 1995
Primary:
Net income (loss) . . . . . . . . . . . . (11,045,000) 3,030,000
Weighted average number of shares
outstanding. . . . . . . . . . . . . . . 6,930,000 6,860,000
Additional weighted average shares
from assumed exercise of dilutive
stock options, net of shares assumed
to be repurchased with proceeds at
average market price . . . . . . . . . . --- 204,000
6,930,000 7,064,000
Primary earnings (loss) per share . . . . (1.59) .43
Assuming full dilution:
Net income (loss) . . . . . . . . . . . . (11,045,000) 3,030,000
Weighted average number of
shares outstanding . . . . . . . . . . . 6,930,000 6,860,000
Additional weighted average shares
from assumed exercise of dilutive
stock options, net of shares assumed
to be repurchased with proceeds at
average market price . . . . . . . . . . --- 225,000
6,930,000 7,085,000
Fully diluted earnings (loss) per share . (1.59) .43
<PAGE>
EXHIBIT 11b
BRC HOLDINGS, INC.
COMPUTATION OF EARNINGS PER SHARE
Nine Months Ended September 30,
1996 1995
Primary:
Net income (loss). . . . . . . . . . . . (3,339,000) 8,453,000
Weighted average number of shares
outstanding . . . . . . . . . . . . . . 6,910,000 6,755,000
Additional weighted average shares
from assumed exercise of dilutive
stock options, net of shares assumed
to be repurchased with proceeds at
average market price. . . . . . . . . . --- 183,000
6,910,000 6,938,000
Primary earnings (loss) per share. . . . (.48) 1.22
Assuming full dilution:
Net income (loss). . . . . . . . . . . . (3,339,000) 8,453,000
Add interest expense on
convertible notes and
debentures, net of tax. . . . . . . . . --- 20,000
Adjusted net income (loss). . . . . (3,339,000) 8,473,000
Weighted average number of
shares outstanding. . . . . . . . . . . 6,910,000 6,754,000
Additional weighted average
shares from assumed exercise of
dilutive stock options, net of
shares assumed to be repurchased
with proceeds at average
market price. . . . . . . . . . . . . . --- 208,000
Additional weighted average shares
from assumed conversion of notes
and conversion of debentures. . . . . . --- 95,000
6,910,000 7,057,000
Fully diluted earnings (loss) per share. (.48) 1.20
