-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ff0VtvXy9Sbhu1SUlaxOEj3HsPQPpQ3SCokX2QGUDeI3weqRwRN4ixulkh5w5C2r mGqgiQa+IKqWomfY8kYtSA== 0000067494-96-000009.txt : 19960627 0000067494-96-000009.hdr.sgml : 19960627 ACCESSION NUMBER: 0000067494-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960517 FILED AS OF DATE: 19960626 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WSMP INC CENTRAL INDEX KEY: 0000067494 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 560945643 STATE OF INCORPORATION: NC FISCAL YEAR END: 0222 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-66147 FILM NUMBER: 96585844 BUSINESS ADDRESS: STREET 1: PO BOX 399 STREET 2: WSMP DR CITY: CLAREMONT STATE: NC ZIP: 28610 BUSINESS PHONE: 7044597626 MAIL ADDRESS: STREET 1: PO BOX 399 CITY: CLAREMONT STATE: NC ZIP: 28610 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN STEER MOM N POPS INC DATE OF NAME CHANGE: 19880719 FORMER COMPANY: FORMER CONFORMED NAME: MOM N POPS HAM HOUSE INC DATE OF NAME CHANGE: 19810827 10-Q 1 FIRST QUARTER 10-Q File No. 0-7277 ============================================================================= UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------------------------------------------- FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL QUARTER ENDED MAY 17, 1996 -------------------------------------------------- WSMP, INC. Incorporated in North Carolina CLAREMONT, NORTH CAROLINA 28610 56-0945643 (704) 459 - 7626 (I.R.S. Employer Identification No.) -------------------------------------------------- WSMP, Inc. 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 and has been subject to such filing requirements for the past 90 days. The number of shares of WSMP, Inc. Common Stock outstanding as of June 20, 1996 was 2,760,338. WSMP, INC. AND SUBSIDIARIES INDEX Part I. Financial Information: ------------------------------------------------- Page No. -------- Item 1. Financial Statements Consolidated Condensed Balance Sheets - May 17, 1996 and February 23, 1996............................... 1-2 Consolidated Condensed Statements of Operations and Retained Earnings - Quarters Ended May 17, 1996 and May 19, 1995..................................................... 3 Consolidated Condensed Statements of Cash Flows - Quarters Ended May 17, 1996 and May 19, 1995..................................................... 4 Notes to Consolidated Condensed Financial Statements....................................................... 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................................... 7-8 Part II. Other Information: --------------------------------------------------- Item 6. Exhibits and Reports on Form 8-K........................ 9 Signatures....................................................... 9 Index to Exhibits................................................ 10 Exhibit 11 - Computation of Earnings per Common and Common Equivalent Share.............................. 11 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Consolidated Condensed Balance Sheets (Unaudited) May 17, February 23, 1996 1996 ---------- ------------ ASSETS Current assets: Cash and cash equivalents $ 959,503 $ 430,311 Marketable equity securities 151,816 148,997 Accounts receivable and current portion of notes receivable, net: Trade and other 3,791,321 3,981,563 Related party 1,193,224 1,257,280 Inventories 5,653,261 5,553,641 Income taxes refundable 204,464 369,728 Prepaid expenses and other 107,166 116,400 Deferred income taxes 511,264 518,490 ------------ ------------- Total current assets 12,572,019 12,376,410 ------------ ------------- Property, plant and equipment, net 25,000,335 25,288,033 ------------ ------------- Other assets: Properties held for sale 1,569,752 1,569,752 Excess of cost over fair value of net assets of businesses acquired, net 654,444 662,321 Noncurrent notes receivable 183,860 204,941 Noncurrent related party notes receivable 328,837 515,944 Investment in affiliates 347,533 381,533 Investment in restricted equity securities 242,050 242,050 Other 415,783 393,390 ------------ ------------- Total other assets 3,742,259 3,969,931 ------------ ------------- Total assets $ 41,314,613 $ 41,634,374 ============ ============= See accompanying notes to unaudited consolidated condensed financial statements. WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- (Unaudited) May 17, February 23, LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1996 - ------------------------------------ ----------- ----------- Current Liabilities: Notes payable $ 4,000,000 $ 4,000,000 Current installments of long-term debt 2,644,802 2,030,953 Trade accounts payable 2,672,471 2,810,229 Income taxes payable 3,366 10,651 Other accrued liabilities 2,585,514 2,540,221 ------------ ------------ Total current liabilities 11,906,153 11,392,054 Deferred income 5,000 5,000 Deferred income taxes 909,449 903,639 Long-term debt, excluding current installments 11,801,531 12,890,060 ------------ ------------ Total liabilities 24,622,133 25,190,753 ------------ ------------ Commitments and Contingencies Shareholders' Equity: Preferred stock - par value $.10, authorized 2,500,000 share; no shares issued Common stock - par value $1, authorized 10,000,000 shares; issued 2,760,338 shares at May 17, 1996 and at February 23, 1996 2,760,338 2,760,338 Capital in excess of par value 6,579,347 6,579,347 Unrealized gain on securities available for sale, net of deferred income taxes of $(3,740) at May 17, 1996 and $(3,164) at February 23, 1996 6,238 5,278 Retained earnings 7,346,557 7,098,658 ------------ ------------ Total shareholders' equity 16,692,480 16,443,621 ------------ ------------ Total liabilities and shareholders' equity $ 41,314,613 $ 41,634,374 ============ ============ See accompanying notes to unaudited consolidated condensed financial statements. WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Consolidated Condensed Statements of Operations and Retained Earnings Quarters Ended May 17, 1996 and May 19, 1995 (Unaudited) 1996 1995 Operating revenues: ------------- ------------- Food sales $ 19,729,205 $ 17,600,790 Franchise, royalty and other fees (includes related party transactions totaling $227,205 in 1996 and $270,982 in 1995) 650,150 711,769 ------------- ------------- Total operating revenues 20,379,355 18,312,559 ------------- ------------- Costs and expenses: Cost of goods sold (includes related party transactions totaling $128,247 in 1996 and $103,290 in 1995) 14,591,298 12,452,960 Operating expenses (includes related party transactions totaling $168,363 in 1996 and $223,804 in 1995) 2,766,165 3,070,682 Selling, general and administrative expenses (includes related party transactions totaling $480,038 in 1996 and $505,041 in 1995) 1,660,766 1,777,241 Depreciation and amortization 589,473 624,228 ------------- ------------- Total costs and expenses 19,607,702 17,925,111 ------------- ------------- Operating income 771,653 387,448 ------------- ------------- Other income (expense): Other income (including interest) (includes related party transactions totaling $16,187 in 1996 and $49,810 in 1995) 230,171 239,910 Net gain (loss) on dispositions and write-downs of assets 4,639 (460) Equity in earnings (loss) of affiliates (34,000) 17,000 Interest expense (417,323) (485,289) Other expense (includes related party transactions totaling $15,933 in 1996 and $24,182 in 1995) (148,082) (147,508) -------------- -------------- Net other expense (364,595) (376,347) -------------- -------------- Earnings before income taxes and cumulative effect of a change in accounting principle 407,058 11,101 Provision for income taxes 159,159 3,442 ------------- ------------- Net earnings $ 247,899 $ 7,659 ============= ============= Retained earnings: Balance at beginning of period $ 7,098,658 $ 8,593,647 Net earnings 247,899 7,659 ------------- ------------- Balance at end of period $ 7,346,557 $ 8,601,306 ============= ============= Net earnings per common and common equivalent share $ .08 $ .00 ============= ============= See accompanying notes to unaudited consolidated condensed financial statements. WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Consolidated Condensed Statements of Cash Flows Quarters Ended May 17, 1996 and May 19, 1995 (Unaudited) 1996 1995 ------------ ----------- Cash flows from operating activities: Net earnings $ 247,899 $ 7,659 ------------ ------------ Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 589,542 624,228 Depreciation of properties leased to others 64,577 56,735 Provision for losses on receivables 69,000 40,107 Net (gain)loss on disposition of assets (4,639) 460 Other non-cash adjustments to earnings 24,142 (24,778) Changes in operating assets and liabilities (net of effects from purchase of restaurant companies providing (using) cash: Receivables (119,090) 738,160 Inventories (99,620) 162,361 Income taxes refundable, prepaid expenses and other 174,499 (29,069) Trade accounts payable and other accrued liabilities (99,751) (1,183,048) ------------ ------------ Total adjustments 598,660 385,156 ------------ ------------ Net cash provided by operating activities 846,559 392,815 ------------ ------------ Cash flows from investing activities: Increase in marketable equity securities (1,283) (1,220) Proceeds from sales of assets to others 132,103 347,214 Decrease in related party notes receivables 193,885 214,307 Decrease in other notes receivable 195,388 256,282 Deposits, net of refunds (1,414) (25,117) Capital expenditures to related parties (33,399) (95,199) Capital expenditures - others (327,967) (130,606) Other investing activities (282,522) ------------ ------------ Net cash provided by investing activities 157,313 283,139 ------------ ------------ Cash flows from financing activities: Principal payments on long-term debt (474,680) (1,411,077) Net proceeds under short-term borrowing agreements 1,000,000 Proceeds from exercise of stock options 145,000 ------------ ------------ Net cash used in financing activities (474,680) (266,077) ------------ ------------ Net increase in cash and cash equivalents 529,192 409,877 Cash and cash equivalents at beginning of period 430,311 940,120 ------------ ------------ Cash and cash equivalents at end of period $ 959,503 $ 1,349,997 ============ ============ See accompanying notes to unaudited consolidated condensed financial statements. WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Notes to Consolidated Condensed Financial Statements (Unaudited) 1.In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of May 17, 1996 and February 23, 1996 and the results of operations and the cash flows for the fiscal quarters ended May 17, 1996 and May 19, 1995. 2.The results of operations for the fiscal quarters ended May 17, 1996 and May 19, 1995 are not necessarily indicative of the results to be expected for the full year. 3.Financial statements for fiscal 1996 have been reclassified, where applicable, to conform to financial statement presentation used in fiscal 1997. 4.Earnings per share are based on the weighted average number of common shares and dilutive common equivalent shares outstanding during each fiscal quarter. Common equivalent shares relate to outstanding stock options. The weighted average number of shares used in the calculations are 2,936,769 and 2,903,484 for the three months ended in 1996 and 1995, respectively. 5.The Company reports the results of its operations using a 52-53 week basis. In line with this, reports for interim fiscal periods are prepared on the basis of 12-12-12-16 week periods. The Company follows this policy consistently. 6.A summary of inventories entering into cost of goods sold is:
May 17, February 23, May 19, February 24, 1996 1996 1995 1995 ------------ ------------- ------------ ------------- Hams in curing process $ 1,933,953 $ 1,326,420 $ 1,894,799 $ 1,748,375 Other food (includes cured hams) 2,248,629 2,818,418 2,080,525 2,104,940 Supplies 1,470,679 1,408,803 988,650 1,273,020 ------------ ------------- ------------ ------------ Totals $ 5,653,261 $ 5,553,641 $ 4,963,974 $ 5,126,335 ============ ============= ============ ============
7.The Company has certain debt obligations that contain restrictive covenants including a restriction on payment of cash dividends. The Company was either in compliance with these covenants at May 17, 1996, or had received waivers for noncompliance. There were no consolidated retained earnings available for payment of dividends as of May 17, 1996. 8.The Company has guaranteed a loan obligation of one of its franchisees in an amount not to exceed $322,000. The loan is secured by certain restaurant equipment purchased by the franchisee. Effective December 1, 1993, the Company entered into a three year endorsement with Richard Childress Racing Enterprises, Inc. and Dale Earnhardt, Inc. The agreement calls for total payments of $1,200,000 over the three year period. As of May 17, 1996, remaining payments under this agreement are $400,000. 9.Supplemental cash flow disclosures - cash paid during the period for: Quarters Ended ---------------------------------- May 17, 1996 May 19, 1995 ------------ ------------ Interest $ 411,295 $ 465,757 ============ ============ Income taxes $ 11,000 $ 45,000 ============ ============ Accounts receivable from certain franchisees totaling $53,595 and $22,488 in fiscal 1997 and 1996, respectively, were converted to notes receivable. The Company received notes receivable totaling $6,392 from the sale of property, plant and equipment. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth for the periods indicated (i) percentages which certain items reflected in the financial data bear to operating revenue of the Company and (ii) the percentage change of such items as compared to the indicated prior period:
Relationship to Period-to-Period Total Revenue Increase (Decrease) Quarters Ended Quarters Ended ---------------------------- ------------------- May 17, 1996 May 19, 1995 1996-95 ------------ ------------ ------- Restaurant food sales 30.0 35.9 (7.0) Manufacturing sales 66.8 60.3 23.5 Franchise, royalty and other fees 3.2 3.8 (8.7) ------ ------ Total operating revenue 100.0 100.0 11.3 Cost of goods sold 71.6 68.0 17.2 Operating expenses 13.6 16.8 (9.9) Selling, general and administrative expenses 8.1 9.7 (6.6) Depreciation and amortization 2.9 3.4 (5.6) ------- ------- Total operating income 3.8 2.1 99.2 Net other income (expense) (1.8) (2.0) ------- ------- Earnings before income taxes 2.0 .1 3566.9 Provision for income taxes .8 .0 4524.0 ------- ------- Net earnings 1.2 .1 3136.7 ======= ======= =======
The Company operates in three principal lines of business. Segment information is presented as follows: Quarters Ended ----------------------------------- May 17, 1996 May 19, 1995 -------------- -------------- Operating Revenues: --------------------------- Food processing $ 13,623,561 $ 11,034,235 Restaurant operations 6,105,644 6,566,555 Restaurant franchising 650,150 711,769 -------------- -------------- Total operating revenues $ 20,379,355 $ 18,312,559 ============== ============== Operating Profits --------------------------- Food processing $ 613,024 $ 388,417 Restaurant operations 701,500 518,891 Restaurant franchising 389,088 455,621 -------------- -------------- 1,703,612 1,362,929 Corporate expenses (931,959) (975,481) Other Income 52,728 108,942 Interest expense (417,323) (485,289) -------------- -------------- Earnings before income taxes $ 407,058 $ 11,101 ============== ============== RESULTS OF OPERATIONS: - ---------------------- Consolidated food sales revenue increased $2.1 million from $18,312,559 in the first quarter of fiscal 1996 to $20,379,355 in the first quarter of fiscal 1997. This positive change is the result of an increase in revenues from the food processing segment totaling $2.6 million, offset by a decrease in revenues from restaurant operations. The increase in revenue in the food processing segment reflects improvements in sales in the bakery division. As previously discussed, the bakery division's sales during fiscal 1996 were negatively impacted due to its largest customer discontinuing a line of product previously purchased from the Company. Although actions to replace this business were put in place early in fiscal 1996, benefits from these actions were realized at a slower pace than originally expected, and significant improvements in bakery sales did not occur until late in the fourth quarter of fiscal 1996. Sales in the bakery division have continued to improve during fiscal 1997, with first quarter sales showing a $3.0 million increase over the corresponding period of fiscal 1996. This increase in sales from the food processing segment during the first quarter of fiscal 1997 is offset by a decrease in sales from restaurant operations totaling $461,000. A decrease in revenues totaling $552,000 occurred due to the closing of three stores since the beginning of fiscal 1996 and was offset by increases in same store sales totaling approximately $92,000. Franchise, royalty and other fees in the first three months of fiscal 1997 experienced an 8.7% decrease over the comparable period in fiscal 1995. This is a partially the result of a net decline in the number of franchise units from seventy five at the beginning of fiscal 1996 to seventy at the end of the first quarter of fiscal 1997. A second factor contributing to this decline was an overall decline of approximately 6.1% in franchise unit same store sales during the first quarter of fiscal 1997 compared with the first quarter of fiscal 1996. Total operating income increased from $387,000 in the first quarter of fiscal 1996 to $772,000 in the first quarter of fiscal 1997. This increase is the result of increases in operating profits in the food processing and restaurant operations segments, as well as reductions in corporate expenses, offset by decreased profitability in the restaurant franchising segment. Total operating profits in the food processing segment increased approximately $225,000 during the first quarter of fiscal 1997 compared to the same period in fiscal 1996. This increase is directly attributed to the increase in food sales revenues described above which this segment has experienced. In addition, operating profits from restaurant operations increased $183,000 over the comparable prior year quarter despite an overall decline in operating revenue from this division. This increase in profitability is attributed to the closing of several poorly performing restaurants during fiscal 1996, as well as better management of costs and expenses in existing restaurants and an increase in same store sales during the first quarter of fiscal 1997. These increases in operating profits were partly offset by a $67,000 reduction in profitability in the restaurant franchising segment which was brought about by the decline in franchise, royalty and other fees discussed above. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company had total working capital of $666,000 at May 17, 1996, down from $984,000 at February 23, 1996. The main reason for this decrease is that as of February 23, 1996, the semi-annual senior note principal payment due April 1, 1996 had been prepaid from the proceeds received on the sale of certain assets as required by the amended terms of the notes. Therefore, current liabilities as of February 23, 1996 includes only one of the $769,230 semi-annual senior note payments. However, as of May 17, 1996 two of the semi-annual payments are reflected in current liabilities. The effect of this is partially offset by working capital generated during the first quarter through profitable operations. In addition, management anticipates additional improvement in the working capital position of the Company during the coming quarter as the Company continues its return to profitability. Total cash and cash equivalents increased $529,000 during the three month period ended May 17, 1996. This increase was driven by profitable operations during the first quarter which generated cash totaling $847,000. In addition, collections on notes receivable and proceeds from sales of assets generated $389,000 and $132,000, respectively. Offsetting these inflows of cash were repayments of long-term debt and capital expenditures which totaled $475,000 and $361,000, respectively during the first quarter. PART II. OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8 - K - ------------------------------------------- (a) Exhibits See Index to Exhibits Page 10 (b) Reports on Form 8-K: There were no reports filed on Form 8-K for the quarter ended May 17, 1996. 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. WSMP, INC. ---------- Date: 6-26-96 By: James C. Richardson, Jr. ------------- ---------------------------- James C. Richardson, Jr. (President and Chief Executive Officer) Date: 6-26-96 By: Matthew V. Hollifield ------------- ---------------------------- Matthew V. Hollifield (Vice President of Accounting and Chief Accounting Officer) INDEX TO EXHIBITS For inclusion in Quarterly Report on Form 10-Q Quarter Ended May 17, 1996 Exhibit No. Page No. - ----------- -------- 11 Computation of Per Common and Common Equivalent Share 11 EX-11 2 EARNINGS PER SHARE Exhibit 11 ---------- WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Computation of Earnings Per Common and Common Equivalent Share Quarter Ended ------------------- May 17, May 19, 1996 1995 ------- ------- Earnings computations: Net earnings $ 247,899 $ 7,659 ========== ========== Weighted average shares computation: Actual outstanding shares at beginning of period 2,760,338 2,660,338 Add weighted average shares applicable to: Common stock issued 27,753 Common stock options outstanding 176,431 215,393 ---------- ---------- Weighted average shares as adjusted 2,936,769 2,903,484 ========== ========== Earnings per common and common equivalent share $ .08 $ .00 ========== ========== EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the 1996 1st quarter 10-Q for WSMP, Inc. and is qualified in its entirety by reference to such 10-Q. 3-MOS FEB-28-1997 FEB-24-1996 MAY-17-1996 959,503 151,816 3,060,254 35,000 5,653,261 12,572,019 46,305,069 21,304,734 41,314,613 11,906,153 14,446,333 0 0 2,760,338 13,932,142 41,314,613 19,729,205 20,379,355 14,591,298 14,591,298 2,766,165 69,000 417,323 407,058 159,159 247,899 0 0 0 247,899 .08 0
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