-----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, SkddZT8jrw5ffXtNCy3v4OGQxW60ESHyLIEjPDq4aerOggTrwrrv585qBQzUXowW 9tHsm18Ctol30FVGWK/59Q== 0000910650-95-000051.txt : 19951219 0000910650-95-000051.hdr.sgml : 19951219 ACCESSION NUMBER: 0000910650-95-000051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951103 FILED AS OF DATE: 19951218 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: 000-07277 FILM NUMBER: 95602480 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 THIRD 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 NOVEMBER 3, 1995 ------------------------------------------------- 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 December 12, 1995 was 2,760,338. =============================================================================== WSMP, INC. AND SUBSIDIARIES INDEX Part I. Financial Information: ------------------------------------------------- Page No. Item 1. Financial Statements Consolidated Condensed Balance Sheets - November 3, 1995 and February 24, 1995........................... 1-2 Consolidated Condensed Statements of Operations and Retained Earnings - Three Months Ended November 3, 1995 and November 4, 1994 and Nine Months Ended November 3, 1995 and November 4, 1994............................ 3-4 Consolidated Condensed Statements of Cash Flows - Nine Months Ended November 3, 1995 and November 4, 1994................................................. 5 Notes to Consolidated Condensed Financial Statements....................................................... 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................................... 8-10 Part II. Other Information: Item 6. Exhibits and Reports on Form 8-K........................... 11 Signatures.......................................................... 11 Index to Exhibits................................................... 12 Exhibit 11 - Computation of Earnings (Loss) per Common and Common Equivalent Share............................... 13 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Consolidated Condensed Balance Sheets (Unaudited) November 3, February 24, ASSETS 1995 1995 - ------ ------- ------ Current assets: Cash and cash equivalents $ 369,175 $ 940,120 Marketable equity securities 137,905 120,564 Accounts receivable and current portion of notes receivable, net: Trade and other 4,772,178 4,809,950 Related party 1,208,843 1,178,213 Inventories 5,764,403 5,126,335 Income taxes refundable, prepaid expenses and other 469,901 498,478 ----------- ----------- Total current assets 12,722,405 12,673,660 ----------- ----------- Property, plant and equipment, net 24,962,282 27,157,884 Other assets: Properties held for sale 2,139,226 3,322,372 Excess of cost over fair value of net assets of businesses acquired, net 672,824 696,456 Noncurrent notes receivable 1,000,223 368,181 Noncurrent related party notes receivable 621,947 833,110 Investment in affiliates 1,109,106 742,633 Other 1,056,822 927,105 ----------- ----------- Total other assets 6,600,148 6,889,857 ----------- ----------- Total assets $ 44,284,835 $ 46,721,401 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 4,000,000 $ 3,000,000 Current installments of long-term debt 2,689,504 2,939,844 Trade accounts payable 2,806,925 3,016,776 Income taxes payable 74,631 46,737 Other accrued liabilities 2,796,975 2,766,415 ----------- ----------- Total current liabilities 12,368,035 11,769,772 Deferred income 228,307 30,000 Deferred income taxes 1,104,995 1,749,957 Long-term debt, excluding current installments 12,990,032 15,533,554 ------------ ------------ Total liabilities 26,691,369 29,083,283 ------------ ------------ 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 November 3, 1995 and 2,660,338 shares at February 24, 1995 2,760,338 2,660,338 Capital in excess of par value 6,579,347 6,389,347 Unrealized gain/(loss) on securities available for sale, net of deferred income taxes of $(2,140) at November 3, 1995 and $3,351 at February 24, 1995 3,346 (5,214) Retained earnings 8,250,435 8,593,647 ------------- ------------- Total shareholders' equity 17,593,466 17,638,118 ------------- ------------- Total liabilities and shareholders' equity $ 44,284,835 $ 46,721,401 ============= ============= WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Consolidated Condensed Statements of Operations and Retained Earnings Three Months Ended November 3, 1995 and November 4, 1994 (Unaudited)
1995 1994 ------ ------ Operating revenues: Food sales $ 17,911,735 $ 22,012,475 Franchise, royalty and other fees (includes related party transactions totaling $246,530 in 1995 and $234,814 in 1994) 638,108 672,970 ------------- ----------- Total operating revenues 18,549,843 22,685,445 ------------- ----------- Costs and expenses: Cost of goods sold (includes related party transactions totaling $96,393 in 1995 and $119,478 in 1994) 12,771,676 16,191,941 Operating expenses (includes related party transactions totaling $249,597 in 1995 and $356,672 in 1994) 2,984,366 3,291,994 Selling, general and administrative expenses (includes related party transactions totaling $466,694 in 1995 and $377,788 in 1994) 1,754,132 1,940,086 Depreciation and amortization 639,608 655,867 ------------- ----------- Total costs and expenses 18,149,782 22,079,888 ------------- ----------- Operating income 400,061 605,557 ------------- ----------- Other income (expense): Net gain on dispositions and write-downs of assets (includes gain on sale of assets to related parties totaling $128,320 in 1994) 57,198 260,686 Other income (including interest)(includes related party transactions totaling $2,979 in 1995 and $120,333 in 1994) 139,108 204,873 Interest expense (437,657) (460,431) Other expense (includes related party transactions totaling $21,982 in 1995 and $36,758 in 1994) (114,905) (147,351) ------------- ----------- Net other income (expense) (356,256) (142,223) ------------- ----------- Earnings before income taxe 43,805 463,334 Provision for income taxes 30,788 180,334 ------------- ----------- Net earnings $ 13,017 $ 283,000 ============= =========== Retained earnings: Balance at beginning of period $ 8,237,418 $ 8,597,604 Net earnings 13,017 283,000 ------------ ----------- Balance at end of period $ 8,250,435 $ 8,880,604 ============ =========== Net earnings per common and common equivalent share $ .00 $ .10 ============ =========== See accompanying notes to unaudited consolidated condensed financial statements.
WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Consolidated Condensed Statements of Operations and Retained Earnings Nine Months Ended November 3, 1995 and November 4, 1994 (Unaudited)
1995 1994 ----- ------ Food sales $ 53,953,395 $ 63,519,936 Franchise, royalty and other fees (includes related party transactions totaling $777,610 in 1995 and $721,176 in 1994) 2,066,787 2,086,419 ----------- ----------- Total operating revenues 56,020,182 65,606,355 ----------- ----------- Costs and expenses: Cost of goods sold (includes related party transactions totaling $300,509 in 1995 and $367,155 in 1994) 38,650,583 45,951,031 Operating expenses (includes related party transactions totaling $552,379 in 1995 and $752,362 in 1994) 9,141,018 10,129,272 Selling, general and administrative expenses (includes related party transactions totaling $1,617,337 in 1995 and $1,596,830 in 1994) 5,592,079 5,852,662 Depreciation and amortization 1,872,522 2,009,274 ----------- ----------- Total costs and expenses 55,256,202 63,942,239 ----------- ----------- Operating income 763,980 1,664,116 ----------- ----------- Other income (expense): Net gain on dispositions and write-downs of assets (includes gain on sale of assets to related parties totaling $128,320 in 1994) 5,692 796,750 Other income (including interest) (includes related party transactions totaling $97,934 in 1995 and $224,885 in 1994) 545,794 813,804 Interest expense (1,378,718) (1,365,557) Other expense (includes related party transactions totaling $65,409 in 1995 and $105,495 in 1994) (523,436) (516,270) ------------ ------------ Net other income (expense) (1,350,668) (271,273) ------------ ------------ Earnings (loss) before income taxes (586,688) 1,392,843 Provision for income taxes (benefit) (243,476) 542,843 ------------ ------------ Net earnings (loss) $ (343,212) $ 850,000 ============ ============ Retained earnings: Balance at beginning of period $ 8,593,647 $ 8,030,604 Net earnings (loss) (343,212) 850,000 ------------ ------------ Balance at end of period $ 8,250,435 $ 8,880,604 ============ ============ Net earnings (loss) per common and common equivalent share $ (.13) $ .30 ============ ============ See accompanying notes to unaudited consolidated condensed financial statements.
WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Consolidated Condensed Statements of Cash Flows Nine Months Ended November 3, 1995 and November 4, 1994 (Unaudited)
1995 1994 ------ ------ Cash flows from operating activities: Net earnings (loss) $ (343,212) $ 850,000 Adjustments to reconcile net earnings ---------- ---------- (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,872,522 2,009,274 Depreciation on properties leased to others 195,331 267,875 Provision for losses on receivables 63,107 95,000 Net gain on disposition and writedowns of assets (5,692) (796,750) Decrease (increase) in deferred income taxes (644,962) 105,928 Other non-cash items 123,029 (374,847) Changes in operating assets and liabilities (net of effects from purchase of restaurant companies) providing (using) cash: Receivables (455,560) (94,240) Inventories (638,068) (508,336) Income taxes refundable, prepaid expenses and other 23,086 (343,010) Trade accounts payable and other accrued liabilities (151,397) (1,168,924) ---------- ----------- Total adjustments 381,396 (808,030) ---------- ----------- Net cash provided by operating activities 38,184 41,970 ---------- ----------- Cash flows from investing activities: Decrease (increase) in marketable equity securities (3,290) 2,931 Proceeds from sales of assets to related parties 623,734 Proceeds from sales of assets to others 2,028,180 1,924,423 Decrease (increase) in related party notes receivables 176,025 (319,795) Decrease in other notes receivables 390,545 506,532 Deposits, net of refunds (246,365) (46,354) Capital expenditures to related parties (260,567) (143,106) Capital expenditures - others (785,322) (551,667) Other investing activities (404,473) (353,589) ---------- ----------- Net cash provided by investing activities 894,733 1,643,109 ---------- ----------- Cash flows from financing activities: Proceeds from borrowings 85,000 342,165 Principal payments on long-term debt (2,878,862) (2,936,143) Proceeds from exercising of stock options 290,000 Acquisition of treasury stock (35,625) Net proceeds under short-term borrowing agreements 1,000,000 525,000 ---------- ----------- Net cash used in financing activities (1,503,862) (2,104,603) ---------- ----------- Net decrease in cash and cash equivalents (570,945) (419,524) Cash and cash equivalents at beginning of period 940,120 1,235,089 ---------- ----------- Cash and cash equivalents at end of period $ 369,175 $ 815,565 ========== =========== 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 November 3, 1995 and February 24, 1995, the results of operations for the fiscal quarters and nine months ended November 3, 1995 and November 4, 1994 and the cash flows for the nine months ended November 3, 1995 and November 4, 1994. 2.The results of operations for the fiscal quarters and nine months ended November 3, 1995 and November 4, 1994 are not necessarily indicative of the results to be expected for the full year. 3.Financial statements for fiscal 1995 have been reclassified, where applicable, to conform to financial statement presentation used in fiscal 1996. 4.Earnings (loss) 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 calculation are 2,715,819 and 2,848,014 for the nine months ended in 1995 and 1994, respectively. The weighted average number of shares used in the calculation for the third fiscal quarters ended in 1995 and 1994, are 2,898,478 and 2,872,057 respectively. Per share amounts for fiscal 1995 periods retroactively reflect a five-for-four stock split, effected in the form of a stock dividend declared on February 22, 1995. 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:
November 3, February 24, November 4, February 25, 1995 1995 1994 1994 ---------- ----------- ----------- ------------ Hams in curing process $ 1,848,838 $ 1,748,375 $ 1,390,014 $ 1,729,997 Other food (includes cured hams) 2,521,393 2,104,940 2,292,102 1,357,837 Supplies 1,394,172 1,273,020 1,315,673 1,401,619 ---------- ---------- ---------- ---------- Totals $ 5,764,403 $ 5,126,335 $ 4,997,789 $ 4,489,453 ========== ========== ========== ==========
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 November 3, 1995, or had received waivers for noncompliance. There were no consolidated retained earnings available for payment of dividends as of November 3, 1995. The Company has $9,831,480 in Senior Note obligations with two major life insurance companies. The Company and the two insurance companies have agreed to amend the terms of the Senior Notes to provide for an extension to the maturity date under the notes from October 1, 1996 to October 1, 1997; a granting of additional security interest in certain of the Company's real properties; an increase in the interest rate under the notes on October 1, 1996 from 10% to the greater of 15% or 950 basis points above the one year treasury rate with an additional increase of .25% or 25 basis points, respectively, every three months thereafter until maturity; and a reduction in the current ratio requirement from 1.25 to 1.0. The Company will continue to make semi-annual principal payments of $769,230 on October 1 and April 1 until maturity. In addition, the Company has agreed to remit any proceeds received from the sale of certain assets to the note holders as principal payment to be applied in inverse order of maturity, except that up to $769,230 may be applied to the April 1, 1996 payment of principal. 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 franchise. 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 November 3, 1995, remaining payments under this agreement are $500,000. 9.Stock options for 100,000 shares were exercised during the nine month period ended November 3, 1995 and resulted in cash proceeds totaling $290,000. During the nine months ended November 4, 1994, the Company purchased and retired 5,000 shares of the Company's common stock at a cost of $35,625. 10. Supplemental cash flow disclosures - cash paid during the period for: Nine Months Ended -------------------------- November 3, November 4, 1995 1994 ----------- ----------- Interest $ 1,382,111 $ 1,402,009 =========== =========== Income taxes $ 170,000 $ 193,500 =========== =========== During fiscal 1996, the Company received notes receivable totaling $798,392 from the sale of property, plant and equipment. Accounts receivable from certain franchisees totaling $34,094 and $97,512 were converted to notes receivable in fiscal 1996 and fiscal 1995, respectively. 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 Total Operating Revenue ------------------------------------------ Three Months Ended Nine Months Ended ----------------------- ---------------------- November 3, November 4, November 3, November 4, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Food processing sales 65.2 68.7 62.6 65.6 Restaurant food sales 31.4 28.4 33.7 31.2 Franchise, royalty and other fees 3.4 2.9 3.7 3.2 ------ ------ ------ ------ Total operating revenue 100.0 100.0 100.0 100.0 Cost of goods sold 68.9 71.4 69.0 70.0 Operating expenses 16.1 14.5 16.3 15.4 Selling, general and administrative expenses 9.5 8.6 10.0 8.9 Depreciation and amortization 3.4 2.9 3.3 3.1 ------ ------ ------ ------ Total operating income 2.1 2.6 1.4 2.6 Other income (expense) (1.9) (.6) (2.4) (.5) ------ ------ ------ ------ Earnings (loss) before income taxes .2 2.0 (1.0) 2.1 Provision for income taxes (.2) (.8) .4 (.8) ------ ------ ------ ------ Net earnings (loss) 0.0% 1.2% (.6)% 1.3% ====== ======= ====== ======
The Company operates in three principal lines of business. Segment information is presented as follows:
Three Months Ended Nine Months Ended ---------------------------------- ----------------------------------- November 3, 1995 November 4, 1994 November 3, 1995 November 4, 1994 ---------------- ---------------- ---------------- ---------------- Operating Revenues: - ------------------ Food processing $ 12,086,906 $ 15,574,958 $ 35,088,262 $ 43,057,946 Restaurant operations 5,824,829 6,437,517 18,865,133 20,461,990 Restaurant franchising 638,108 672,970 2,066,787 2,086,419 ------------- ------------ ------------- ------------- Total operating revenues $ 18,549,843 $ 22,685,445 $ 56,020,182 $ 65,606,355 ============= ============ ============= ============= Operating Profits: Food processing $ 740,333 $ 1,057,436 $ 1,338,941 $ 2,697,824 Restaurant operations 202,638 350,157 999,634 1,186,046 Restaurant franchising 370,215 304,894 1,347,424 1,064,435 ------------- ------------ ------------- ------------- 1,313,186 1,712,487 3,685,999 4,948,305 Corporate expenses (913,125) (1,106,930) (2,922,019) (3,284,189) Other income (expense) 81,401 318,208 28,050 1,094,284 Interest expense (437,657) (460,431) (1,378,718) (1,365,557) Earnings (loss) before income taxes ------------- ------------ ------------- ------------- $ 43,805 $ 463,334 $ (586,688) $ 1,392,843 ============= ============= ============== =============
RESULTS OF OPERATIONS Third Quarter Ended November 3, 1995 Compared With Third Quarter Ended November 4, 1994 Consolidated food sales revenue was $17,911,735 in the third quarter of fiscal 1996 compared to $22,012,475 during the corresponding quarter of the prior year. Approximately $3.5 million of the decrease occurred in the food processing segment and reflects the combined effect of a $2.8 million decrease in sales of the bakery division and a $700,000 decrease in sales of the ham curing division. As discussed in the first and second quarters, the bakery division continues to feel the impact of the decline in sales to its largest customer while this customer is repositioning itself in certain of its own markets. This customer is currently working toward replacing this volume through a well defined marketing program. In addition, the Company has been successful in identifying new opportunities which will help to replace this volume during the coming periods. The decrease in the sales of the ham curing division is due primarily to the earlier sales in the prior year for the Thanksgiving and Christmas season. Most of this decrease is expected to be offset by higher sales early in the fourth quarter of fiscal 1996. Additionally, the restaurant segment accounted for approximately $613,000 of the decrease in consolidated food sales. Approximately $237,000 of this decrease is the result of closing two stores since the third quarter of fiscal 1995. The remaining decrease of $376,000 reflects a decrease in same store sales between the quarters ended November 4, 1994 and November 3, 1995. Franchise, royalty and other fees in the third quarter of fiscal 1996 were slightly less than the comparable quarter in fiscal 1995. Although seven franchised Western Steer restaurants closed between November 4, 1994 and November 3, 1995, the impact has been offset by the opening of one Bennett's Smokehouse and Saloon franchise, one Prime Sirloin franchise, and one Western Steer franchise during the same period. Operating income decreased from $605,557 in the third quarter of fiscal 1995 to $400,061 in the third quarter of fiscal 1996. This decrease is the result of declines in operating profits in the food processing and the restaurant operations segments, offset by increased profitability in restaurant franchising and reductions in corporate expenses. Total operating profit in the food processing segment decreased $317,000 during the third quarter of fiscal 1996 compared to the same period in fiscal 1995. This decline is directly attributed to the decrease in food sales revenues described above which this segment has experienced. The restaurant segment experienced a decrease in operating profits from $350,157 for the quarter ended November 4, 1994 to $202,638 for the quarter ended November 3, 1995. This decrease is due primarily to the decline in same store sales between the corresponding periods. Operating profits in the restaurant franchising segment increased $65,321 over the third quarter of 1995 due to improvements in management of operating costs and collections of royalties. Nine Months Ended November 3, 1995 Compared with Nine Months Ended November 4, 1994 Consolidated food sales decreased $9.6 million, or 15.1%, to $54.0 million during the first nine months of fiscal 1996, compared to the first nine months of fiscal 1995. The food processing segment accounted for approximately $8.0 million of this decrease. The majority of the decrease in the food processing segment, approximately $7.8 million, occurred in the bakery division due to the same factors discussed in the quarter comparison above. In addition, the restaurant segment experienced a decline in revenues totaling $1.6 million. Approximately $910,000 of the decrease resulted from the closing of five stores since the beginning of the prior fiscal year. The remaining decrease in revenues of the restaurant segment is attributable to net decreases in same store sales. Franchise, royalty and other fees for the first nine months of fiscal 1996 showed little change from the corresponding period of fiscal 1995. As discussed in the quarter comparison above, decreases in royalty and other fees brought about by closing of franchised restaurants have been offset by new franchise restaurants opened during the same period. Operating income decreased from $1,664,116 for the first nine months of fiscal 1995 to $763,980 for the corresponding period in the current year. This decrease is the net result of a decline in operating income in the food processing segment, offset by increased profitability in the franchising segment and by reductions in corporate costs. Operating income in the food processing segment during the nine months ended November 3, 1995 was $1.4 million below the amount generated in the corresponding period of the preceding year. Approximately $1.0 million of this decrease relates to the bakery division and corresponds with the decline in food sales during the first nine months of fiscal 1996 compared the first nine months of fiscal 1995. The remaining decrease of $400,000 occurred in the ham curing division, primarily during the first two quarters, as a result of lower margins. Offsetting these decreases is an increase of $283,000 in operating income from restaurant franchising, which is the result of the factors discussed above in the comparison of the quarters. LIQUIDITY AND CAPITAL RESOURCES The Company is currently seeking to refinance amounts outstanding under its Senior Notes and short-term secured note on an intermediate to long-term basis through a private placement of debt. The Company has $9.8 million in Senior Note obligations with two major life insurance companies. The senior lenders agreed to amend the terms of the notes to provide for an extension of the maturity date from October 1, 1996 to October 1, 1997 as discussed in Note 7 to the consolidated condensed financial statements. Although this extension provides additional time in which to complete the refinancing, management expects to accomplish this prior to the original October 1, 1996 maturity date. The Company's working capital decreased from $904,000 at February 24, 1995 to $354,000 at November 3, 1995. Three major factors contributing to this decrease were repayments on long-term debt totaling $2.9 million, capital expenditures totaling $1.0 million, and investments made in two 50% joint ventures involving the construction of two restaurant units totaling $442,000. However, these uses of working capital were partially offset by cash received from the sale of assets totaling $2.0 million and working capital provided by operations. These factors also had a direct impact on cash and cash equivalents which decreased $571,000 during the nine month period ended November 3, 1995. Management anticipates an increase in the amount of working capital generated by operations during the coming quarters as the bakery continues to rebuild sales. PART II. OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8 - K - ------------------------------------------- (a) Exhibits See Index to Exhibits (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended November 3, 1995. 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: 12/15/95 By: James C. Richardson, Jr. ----------- ------------------------------------ James C. Richardson, Jr. (President and Chief Executive Officer) Date: 12/15/95 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 November 3, 1995 Exhibit No. Page No. - ----------- -------- 11 Computation of Earnings (Loss) Per Common and Common Equivalent Share 13 EX-11 2 EARNINGS PER SHARE Exhibit 11 WSMP, INC. AND SUBSIDIARIES ---------------------------------------------------- Computation of Earnings (Loss) Per Common and Common Equivalent Share
Quarter Ended Nine Months Ended -------------------------- -------------------------- November 3, November 4, November 3, November 4, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- Earnings (loss) computations: Net earnings (loss) $ 13,017 $ 283,000 $ (343,212) $ 850,000 ============ ============ ============ ============= Weighted average shares computation: Actual outstanding shares at beginning of period 2,710,338 2,666,861 2,660,338 2,666,861 Add (deduct) weighted average shares applicable to: Common stock issued 38,690 55,481 Common stock equivalents (stock options) 149,450 206,535 181,599 Treasury stock purchases (1,339) (446) ---------- ----------- ----------- ------------- Weighted average shares as adjusted 2,898,478 2,872,057 2,715,819 2,848,014 ---------- ----------- ----------- ------------- Earnings (loss) per common and common equivalent share $ .00 $ .10 $ (.13) $ .30 =========== ============ ============ =============
EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the 1996 3rd quarter 10-Q for WSMP, Inc., and is qualified in its entirety by references to such 10-Q. 9-MOS FEB-23-1996 FEB-25-1995 NOV-03-1995 369,175 137,905 3,827,657 9,420 5,764,403 12,722,405 44,685,623 19,723,341 44,284,835 12,368,035 15,679,536 2,760,338 0 0 14,833,128 44,284,835 53,953,395 56,020,182 38,650,583 38,650,583 9,141,018 63,107 1,378,718 (586,688) (243,476) (343,212) 0 0 0 (343,212) (.13) 0
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