FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-23568
Bettis Corporation
(Exact name of registrant as specified in its charter)
Delaware 76-0428239
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18703 GH Circle
Waller, Texas 77484
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 463-5100
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 10, 1996, 8,480,235 shares of common stock ($.01 par value) were
outstanding.
1
<PAGE>
BETTIS CORPORATION
Part I.Financial Statements
Item 1. Financial Statements
I. Consolidated Balance Sheets (unaudited) as of March 31, 1996 and
December 31, 1995.
II. Consolidated Statements of Operations (unaudited) for the three months
ended March 31, 1996 and 1995.
III. Consolidated Statements of Cash Flows (unaudited) for the three months
ended March 31, 1996 and 1995.
IV. Notes to Consolidated Financial Statements (unaudited).
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
2
<PAGE>
Item 1. Financial Statements
<TABLE>
BETTIS CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, 1996 and December 31, 1995
<CAPTION>
March 31, December 31,
1996 1995
(in thousands)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................................... $ 800 $ 801
Accounts receivable, net...................................................... 12,799 12,321
Inventories................................................................... 10,537 9,097
Prepaid expenses.............................................................. 822 931
Other current assets.......................................................... 552 418
Total current assets........................................................ 25,510 23,568
Property, plant and equipment, net................................................. 14,986 15,368
Excess cost over net assets acquired, less accumulated amortization
of $868 and $835, respectively................................................ 5,820 5,853
Other assets....................................................................... 1,064 1,087
$ 47,380 $ 45,876
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank debt.......................................................... $ 2,850 $ 3,364
Accounts payable, trade....................................................... 5,088 4,791
Accrued liabilities........................................................... 3,820 3,741
Current maturities of long-term debt.......................................... 2,587 2,583
Total current liabilities................................................... 14,345 14,479
Long-term debt..................................................................... 11,077 9,898
Deferred income taxes.............................................................. 571 624
Other non-current liabilities...................................................... 66 66
Commitments and contingencies (Note 4)
Stockholders' equity:
Common stock, par value $.01 per share, 30,000,000 shares
authorized and 8,480,235 shares issued and outstanding...................... 85 85
Paid-in capital............................................................... 5,767 5,767
Retained earnings............................................................. 16,713 16,121
Cumulative translation adjustment............................................. (1,244) (1,164)
Total stockholders' equity.................................................. 21,321 20,809
$ 47,380 $ 45,876
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
BETTIS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended March 31, 1996 and 1995
(in thousands, except share and per share amounts)
<CAPTION>
1996 1995
<S> <C> <C>
Net revenues....................................................................... $ 14,821 $ 12,962
Operating costs and expenses:
Manufacturing and direct...................................................... 9,863 8,472
Selling, general and administrative........................................... 3,616 3,525
13,479 11,997
Operating income................................................................... 1,342 965
Other income (expense):
Interest...................................................................... (249) (294)
Other, net.................................................................... (37) 40
(286) (254)
Earnings before income tax provision............................................... 1,056 711
Income tax provision............................................................... 464 300
Net earnings....................................................................... $ 592 $ 411
Earnings per common share.......................................................... $ .07 $ .05
Weighted average common and common equivalent shares outstanding................... 8,605,617 8,496,075
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
BETTIS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the three months ended March 31, 1996 and 1995
<CAPTION>
1996 1995
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net earnings....................................................................... $ 592 $ 411
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization...................................................... 626 551
(Gain) loss on sale of assets...................................................... (2) 10
Deferred income taxes.............................................................. (52) (9)
Changes in assets and liabilities:
Increase in accounts receivable, net.......................................... (577) (1,278)
(Increase) decrease in inventories............................................ (1,572) 471
(Increase) decrease in prepaid expenses and other current assets.............. (38) 4
Increase (decrease) in accounts payable, trade................................ 327 (111)
Increase in accrued liabilities............................................... 137 342
Net cash provided by (used in) operating activities...................... (559) 391
Cash flows from investing activities:
Additions to property, plant and equipment......................................... (285) (337)
Proceeds from sale of assets....................................................... 15 1
Net cash used in investing activities......................................... (270) (336)
Cash flows from financing activities:
Decrease in short-term bank debt................................................... (465) (1,322)
Reduction of long-term debt........................................................ (666) (312)
Long-term debt borrowings.......................................................... 1,900 131
Net cash provided by (used in) financing activities........................... 769 (1,503)
Effect of exchange rate changes on cash............................................ 59 (185)
Net decrease in cash and cash equivalents.......................................... (1) (1,633)
Cash and cash equivalents at beginning of period................................... 801 2,489
Cash and cash equivalents at end of period......................................... $ 800 $ 856
- --------------
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</FN>
</TABLE>
5
<PAGE>
BETTIS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
The financial statements of Bettis Corporation ("Bettis") and its
wholly-owned subsidiaries are presented on a consolidated basis and include all
adjustments, consisting of normal recurring adjustments and any other financial
adjustments considered necessary by management for the fair presentation of the
consolidated financial position of Bettis and its subsidiaries at March 31, 1996
and the consolidated results of their operations and their cash flows for the
three months ended March 31, 1996 and 1995.
All significant intercompany transactions and balances are eliminated. This
presentation is consistent with the accounting policies reflected in the
financial statements included in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31, 1995
and should be read in conjunction herewith.
2. Inventories
<TABLE>
At March 31, 1996 and December 31, 1995, inventories were comprised of the
following:
<CAPTION>
March 31, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Raw materials and supplies................................................... $ 9,651 $ 8,470
Finished parts and sub-assemblies............................................ 886 627
$ 10,537 $ 9,097
</TABLE>
6
<PAGE>
BETTIS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
3. Long-Term Debt and Obligations
Long-term debt at March 31, 1996 and December 31, 1995 consisted of the
following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(in thousands)
<S> <C> <C>
Note payable to bank, interest at 5.95% payable through 1999....................... $ 6,500 $ 7,000
Revolving credit facility, interest at prime rate (8.25% at
March 31, 1996) payable through April 30, 1997............................... 2,900 1,000
Term loan to bank, interest at the Canadian prime rate (6.75% at
March 31, 1996) payable through August 31, 2001.............................. 2,023 2,107
Capital lease obligations.......................................................... 2,241 2,374
13,664 12,481
Less current maturities...................................................... (2,587) (2,583)
$ 11,077 $ 9,898
</TABLE>
4. Commitments and Contingencies
The Company is a defendant from time to time in various civil lawsuits
involving normal and usual claims arising in the ordinary course of its
business. In the opinion of management, all such matters are either covered by
insurance or involve amounts such that an unfavorable disposition of the
proceedings would not have a material effect on the accompanying consolidated
financial statements of the Company.
7
<PAGE>
5. Income Taxes
The components of pre-tax earnings and the income tax provision were as
follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
--------- ---------
(in thousands)
<S> <C> <C>
Pre-tax Earnings:
Domestic........................................................... $ 1,053 $ 576
Foreign ........................................................... 3 135
------- -------
$ 1,056 $ 711
Income tax provision (benefit):
Current:
U.S. Federal....................................................... $ 370 $ 212
State.............................................................. 36 21
Foreign............................................................ 124 81
------- -------
530 314
Deferred:
U.S. Federal....................................................... (23) (14)
Foreign............................................................ 43) -
------- -------
(66) (14)
------- -------
Total income tax provision.............................................. $ 464 $ 300
</TABLE>
6. Earnings Per Share
At March 31, 1996, common stock outstanding aggregated 8,480,235 shares.
Primary earnings per share were calculated on the basis of 8,605,617 and
8,496,075 weighted shares for the three months ended March 31, 1996 and 1995,
respectively. Fully diluted earnings per share are not presented as the results
would not be materially different from primary earnings per share.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Three Month Period Ended March 31, 1996 as Compared to the Three Months
Ended March 31, 1995
Net revenues for the three month period ended March 31, 1996 totalled
$14,821,000 as compared to $12,962,000 for the same period in 1995, reflecting
an increase of $1,859,000, or 14.3%. The increase was due principally to
revenues from significant project sales at the U.S. operations of the Company.
Gross margin as a percentage of revenues was 33.5% and 34.6% for the three
month periods ended March 31, 1996 and 1995, respectively. The margin decrease
was due to increased costs of raw materials and sales of products that carried a
lower margin.
Interest expense for the three months ended March 31, 1996 decreased by
$45,000 from the same period in 1995 principally due to the decreased borrowings
of the Company.
The effective tax rate for the three months ended March 31, 1996 and 1995,
respectively, were 43.9% and 42.2%, respectively. The principal reason for the
difference between the statutory rate of 34% and the effective tax rate was the
effect of state income taxes and losses from operations at the Company's French
subsidiary for which no tax benefit was applicable.
8
<PAGE>
Liquidity and Financial Condition
Cash used in operations was $559,000 for the three months ended March 31,
1996 as compared to cash provided from operations in the same 1995 period of
$391,000.
Working capital at March 31, 1996 was $11,165,000. This was an increase of
$2,076,000 from December 31, 1995 and was due principally to the earnings of the
Company and an increase in inventory due to projects to be shipped in the next
three months.
At March 31, 1996, Bettis had a credit agreement with a bank for a term
loan facility, a $7,000,000 revolving credit facility and a $2,000,000 foreign
exchange facility. The term loan had an outstanding balance of $6,500,000 at
March 31, 1996, bears interest at the rate of 5.95% per annum and matures on
April 30, 1999. Principal in the amount of $500,000 plus interest is payable
quarterly.
Each of Bettis' foreign subsidiaries has a credit facility with a bank in
the country in which its principal office is located. At March 31, 1996, the
aggregate amount of loans outstanding under these credit facilities was
approximately $4,873,000.
Capital expenditures for the three month period ended March 31, 1996 were
$285,000. Bettis anticipates that capital expenditures during the remainder of
1996 will be approximately $2,750,000. The Company expects to fund these
expenditures and all working capital requirements through funds from operations
and borrowings under its revolving lines of credit.
Part II. Other Information
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits: 11.1 Computation of Earnings Per Common and Common Equivalent
Shares for the three months ended March 31, 1996 and 1995.
(b) No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1996.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BETTIS CORPORATION
(Registrant)
Date: May 13, 1996
By: /S/ Wilfred M. Krenek
- -----------------------------------------------------
Wilfred M. Krenek, Vice President,
and Chief Financial Officer
(Principal Financial and Accounting Officer)
10
<PAGE>
<TABLE>
Exhibit 11.1
BETTIS CORPORATION
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARES
For the three months ended March 31, 1996 and 1995
(in thousands, except share and per share amounts)
(Unaudited)
<CAPTION>
1996 1995
<S> <C> <C>
Computation of primary earnings per common share:
Net earnings applicable to common stock............................................ $ 592 $ 411
Weighted average number of common shares outstanding............................... 8,480,235 8,480,235
Common shares issuable from stock option plans..................................... 788,000 486,000
Less: shares assumed repurchased with proceeds.................................... (662,618) (470,160)
Common and common equivalent shares outstanding.................................... 8,605,617 8,496,075
Primary earnings per common share.................................................. $ .07 $ .05
Computation of earnings per common share assuming full dilution:
Net earnings applicable to common stock assuming full dilution..................... $ 592 $ 411
Weighted average number of common shares outstanding............................... 8,480,235 8,480,235
Common shares issuable from stock option plans..................................... 788,000 486,000
Less: shares assumed repurchased with proceeds.................................... (658,818) (465,837)
Common and common equivalent shares outstanding
assuming full dilution....................................................... 8,609,417 8,500,398
Fully diluted earnings per common share............................................ $ .07 $ .05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1.000
<CASH> 800
<SECURITIES> 0
<RECEIVABLES> 13,172
<ALLOWANCES> 373
<INVENTORY> 10,537
<CURRENT-ASSETS> 25,510
<PP&E> 33,659
<DEPRECIATION> 18,673
<TOTAL-ASSETS> 47,380
<CURRENT-LIABILITIES> 14,345
<BONDS> 0
0
0
<COMMON> 85
<OTHER-SE> 21,236
<TOTAL-LIABILITY-AND-EQUITY> 47,380
<SALES> 14,821
<TOTAL-REVENUES> 14,821
<CGS> 9,863
<TOTAL-COSTS> 13,479
<OTHER-EXPENSES> 37
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 249
<INCOME-PRETAX> 1,056
<INCOME-TAX> 464
<INCOME-CONTINUING> 464
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 464
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
