-----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, H2Jixp46qQAY7Glohdp86ZwAgN7YiEcf5jHB4X/UOVdGHre5SqNepsagGTF22icy cDn2N5pDr7irZTLCvgp+ww== 0000791714-96-000006.txt : 19960812 0000791714-96-000006.hdr.sgml : 19960812 ACCESSION NUMBER: 0000791714-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALPINE LACE BRANDS INC CENTRAL INDEX KEY: 0000791714 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 222717823 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13658 FILM NUMBER: 96607235 BUSINESS ADDRESS: STREET 1: 111 DUNNELL RD CITY: MAPLEWOOD STATE: NJ ZIP: 07040 BUSINESS PHONE: 2013788600 MAIL ADDRESS: STREET 1: 111 DUNNELL ROAD CITY: MAPLEWOOD STATE: NJ ZIP: 07040 FORMER COMPANY: FORMER CONFORMED NAME: FIRST WORLD CHEESE INC DATE OF NAME CHANGE: 19910813 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarter Ended June 30, 1996 Commission File Number 0-15584 Alpine Lace Brands, Inc. (Exact name of registrant as specified in its charter) Delaware 22-2717823 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 111 Dunnell Road, Maplewood, New Jersey 07040 (Address of Principal Executive Offices) (Registrant's telephone number, including area code): 201-378-8600 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 issuers classes of common stock, as of the latest practicable date: As of August 1, 1996, there were 5,125,602 shares of Common Stock, $.01 par value, outstanding. 1 ALPINE LACE BRANDS, INC. INDEX Page Number Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 1996 (unaudited) and December 31, 1995 3 Consolidated Statements of Earnings for the Three Months and Six Months Ended June 30, 1996 and 1995 (unaudited) 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995 (unaudited) 6 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II. Other Information Item 1. Legal Proceedings 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature 12 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALPINE LACE BRANDS, INC. CONSOLIDATED BALANCE SHEETS June 30, 1996 Dec. 31, 1995 (unaudited) ASSETS (substantially pledged) Cash and cash equivalents $ 65,802 $ 459,610 Accounts receivable, net of allowance for bad debts 12,105,468 13,068,356 Inventories 7,111,887 6,213,256 Prepaid expenses and deposits 401,382 381,445 Advances to suppliers 300,000 300,000 Total current assets 19,984,539 20,422,667 Property, plant and equipment Land, buildings and improvements 310,006 289,314 Equipment under capital leases 973,795 973,795 Leasehold improvements 121,115 106,176 Furniture, fixtures and equipment 2,615,642 2,389,337 4,020,558 3,758,622 Less accumulated depreciation and amortization 1,649,814 1,422,968 2,370,744 2,335,654 OTHER ASSETS Note Receivable - Mountain Farms, Inc. 1,675,948 1,675,948 Trademarks, tradenames and technology, less accumulated amortization of $942,400 in 1996 and $865,061 in 1995 1,478,901 1,556,240 Note receivable 8,235 16,035 Other 249,322 270,157 3,412,406 3,518,380 $25,767,689 $26,276,701 The accompanying notes are an integral part of these statements. 3 ALPINE LACE BRANDS, INC. CONSOLIDATED BALANCE SHEETS June 30, 1996 Dec. 31, 1995 (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 9,327,399 $12,844,895 Accrued expenses 1,223,845 1,995,784 Income taxes 440,962 379,824 Current maturities of obligations under capital leases 164,707 143,083 Total current liabilities 11,156,913 15,363,586 Long term obligations, less current maturities Long term debt 7,983,591 5,325,945 Obligation under capital leases 338,228 409,561 Other long-term liability - 82,362 8,321,819 5,817,868 Stockholders' equity Preferred stock, par value $.01 per share; authorized 1,000,000 shares; issued and outstanding 45,000 at June 30, 1996 liquidation amount $50.00 per share 2,250,000 2,250,000 Common stock, par value $.01 per share, authorized 10,000,000 shares; issued 5,176,302 shares; outstanding 5,141,202 at June 30, 1996 and 5,050,136 shares issued and outstanding at December 31, 1995 51,763 50,501 Additional paid-in capital 3,196,074 2,611,966 Retained earnings 992,498 182,780 Less: 35,100 shares of common stock in treasury, at cost (201,378) - 6,288,957 5,095,247 $25,767,689 $26,276,701 The accompanying notes are an integral part of these statements. 4 ALPINE LACE BRANDS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Net sales $37,567,174 $33,998,678 $70,118,168 $66,444,997 Cost of goods sold 28,778,201 24,641,816 53,681,630 48,320,711 Gross profit 8,788,973 9,356,862 16,436,538 18,124,286 Operating expenses Selling 6,530,390 6,495,263 12,311,785 12,844,217 Administrative 1,260,732 1,257,316 2,300,912 2,346,956 7,791,122 7,752,579 14,612,697 15,191,173 Operating profit 997,851 1,604,283 1,823,841 2,933,113 Other income - 38,098 - 28,735 Interest expense - net 194,389 259,298 381,755 588,029 Earnings before income taxes and extraordinary item 803,462 1,383,083 1,442,086 2,373,819 Income taxes 305,316 179,801 547,993 246,180 Earnings before extraordinary item 498,146 1,203,282 894,093 2,127,639 Extraordinary Item: Gain from extinguishment of debt, net of income taxes of $7,451 - - - 103,760 Net earnings 498,146 1,203,282 894,093 2,231,399 Preferred Stock Dividends 42,188 39,844 84,375 39,844 Net earnings applicable to common shareholders $ 455,958 $ 1,163,438 $ 809,718 $2,191,555 Earnings per share of common stock Earnings before extraordinary item $ .09 $ .22 $ .15 $ .40 Extraordinary item .00 .00 .00 .02 Net earnings per share of common stock $ .09 $ .22 $ .15 $ .42 Weighted average number of common and common equivalent shares outstanding 5,248,845 5,299,278 5,271,888 5,247,605 The accompanying notes are an integral part of these statements. 5 ALPINE LACE BRANDS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, 1996 1995 Cash flows from operating activities Net earnings $ 894,093 $2,231,399 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation and amortization 304,185 278,461 Extraordinary gain from extinguishment of debt, net of income taxes - (103,760) Provisions for losses on accounts receivable 13,296 25,989 (Gain) on sale of fixed assets - (20,738) Change in assets and liabilities: Decrease in accounts receivable 949,592 5,985,511 Increase in inventory (898,631) (1,167,106) (Increase) Decrease in prepaid expenses (19,937) 122,712 (Increase) Decrease in other assets 20,835 (286,016) Decrease in note receivable 7,800 6,998 Decrease in accounts payable (3,517,496) (4,731,291) Decrease in accrued expenses (771,939) (601,427) Increase in income taxes 61,138 216,472 Decrease in other long-term liabilities (82,362) (247,085) (3,933,519) (521,280) Net cash (used in) provided by operating activities $(3,039,426) $1,710,119 The accompanying notes are an integral part of these statements. 6 ALPINE LACE BRANDS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, 1996 1995 Cash flows from investing activities: Additions to property, plant and equipment $ (261,936) $ (193,014) Payments for trademarks and trade names - (5,087) Proceeds from sale of fixed assets - 342,604 Net cash (used in) provided by investing activities (261,936) 144,503 Cash flows from financing activities: Net payments from obligation under capital lease (49,709) (144,433) Net proceeds (payments) under long-term obligations 2,657,646 (4,197,017) Net proceeds from preferred stock issued - 2,052,648 Net proceeds from stock option exercises 585,370 47,282 Payment of dividends to preferred shareholders (84,375) (39,844) Treasury stock purchases (201,378) - Net cash provided by (used in) financing activities 2,907,554 (2,281,364) Net (decrease) in cash and cash equivalents (393,808) (426,742) Cash and cash equivalents at beginning of year 459,610 438,414 Cash and cash equivalents at end of six months $ 65,802 $ 11,672 Supplemental disclosures of cash flow information: Cash paid during the year for Interest $ 390,776 $ 617,978 Income taxes $ 486,856 $ 31,455 The accompanying notes are an integral part of these statements. 7 ALPINE LACE BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary to present fairly the financial position of Alpine Lace Brands, Inc. as of June 30, 1996 and December 31, 1995 and the results of its operations for the three months and six months ended June 30, 1996 and 1995 and cash flows for the six months ended June 30, 1996 and 1995. All material intercompany accounts and transactions have been eliminated. Certain information and footnote disclosures required under generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the year-end financial statements and notes thereto included in the Company's Annual Report on Form 10-K filed with the Securities Exchange Commission. The accounting policies followed by the Company are set forth in the notes to the Company's consolidated financial statements as set forth in its Annual Report on Form 10-K. 2. The results of operations for the six months ended June 30, 1996 are not necessarily indicative of the results to be expected for the entire fiscal year. 3. Inventories are summarized as follows: June 30, 1996 December 31, 1995 Cheese inventory $6,725,657 $5,880,513 Packaging supplies 386,230 332,743 $7,111,887 $6,213,256 4. Earnings per share of common stock was computed by dividing net earnings, after deducting preferred dividend requirements, by the weighted average number of common equivalent shares outstanding during the period, including the incremental shares from the dilutive effect of warrants and stock options, if applicable. 5. The Company's operations consist of two segments: (1) the branded cheese business which develops, markets, converts, packages and distributes branded cheeses and deli meats; and (2) the Company's cheese and dairy products trading business. 6. On August 2, 1996, the Company was served in a class action litigation pending in the United States District Court for the Eastern District of Wisconsin. The amended complaint contains allegations of violations under the federal antitrust acts as well as claims of misrepresentation and breach of contract and names Kraft Foods, Inc., Borden, Inc., The National Cheese Exchange, Inc. and the Company as defendants. Unspecified damages and injunctive relief is sought. The action is based on an alleged conspiracy to manipulate the price of bulk cheese on The National Cheese Exchange. Although it is too early to predict the outcome of this lawsuit, in the Company's opinion, the allegations lack merit and it is our intention to put forth a vigorous defense. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. a. Results of Operations. Comparison of the Company's second quarter (April 1, 1996 - June 30, 1996) of the current fiscal year ("1996") with the second quarter (April 1, 1995 - June 30, 1995) of the last fiscal year ("1995"). Net sales for the second quarter ending June 30, 1996 were $37,567,174 as compared to $33,998,678 in the same period of 1995. The Company's Branded Division had increased sales of $1,880,045 for the second quarter ending June 30, 1996 going from $27,814,348 in 1995 to $29,694,393 in the same period of 1996 primarily due to increased sales of commodity cheddar cheese. Sales for the Company's cheese and dairy products trading business increased by 27.3% or $1,686,434 to $7,872,150 from $6,185,716 for the comparative period of 1995 primarily due to increased sales unit volume. As a percentage of sales, gross profit decreased to 23.4% in the second quarter of 1996 from 27.5% in the comparable period of 1995. Gross profit decreased by $567,889 in the quarter ending June 30, 1996 going from $9,356,862 in 1995 to $8,788,973 in 1996. This decrease was the result of the higher cost to purchase cheese resulting from higher commodity prices, partially offset by continuing manufacturing efficiencies. Selling and administrative expenses increased from $7,752,579 in the second quarter of 1995 to $7,791,122 in the same period of 1996. As a percentage of sales, selling and administrative expenses decreased from 22.8% in the second quarter of 1995 to 20.7% in the comparable period of 1996. The Company's operating profit decreased by $606,432 from $1,604,283 in the second quarter of 1995 to $997,851 in the comparable period of 1996. Operating profit as a percent of net sales decreased to 2.7% in the second quarter of 1996 compared to 4.7% in the second quarter of 1995 due to the lower gross profit previously discussed. Net interest expense in the second quarter of 1996 was $194,389, a decrease of $64,909 from the comparable period of 1995, as a result of the Company's decreased use of its working capital credit line and lower interest rates. The Company's income tax provision for the second quarter of 1996 was 38.0% or $305,316. The Company's effective tax rate of 13.0% or $179,801 in the second quarter of 1995 included the utilization of net operating loss carry-forwards generated in prior years. The Company's net earnings for the quarter ending June 30, 1996 was $498,146 compared to $1,203,282 for the same period of 1995 for the reasons discussed above. 9 b. Results of Operations. Comparison of the Company's first six months (January 1, 1996 - June 30, 1996) of the current fiscal year ("1996") with the first six months (January 1, 1995 - June 30, 1995) of the last fiscal year ("1995"). Net sales for the six months ending June 30, 1996 were $70,118,168 as compared to $66,444,997 in the same period of 1995. The Company's Branded Division had increased sales of $2,600,082 for the first six months ending June 30, 1996 going from $53,150,647 in 1995 to $55,750,729 in the same period of 1996 primarily due to increased sales of commodity cheddar cheese. Sales for the Company's cheese and dairy products trading business increased by 8.1% or $1,078,120 to $14,366,572 from $13,288,452 for the comparative period of 1995 due to higher average selling price and increased sales unit volume. As a percentage of sales, gross profit decreased to 23.4% in the first six months of 1996 from 27.3% in the comparable period of 1995. Gross profit decreased by $1,687,748 in the six months ending June 30, 1996 going from $18,124,286 in 1995 to $16,436,538 in 1996. This decrease was the result of the higher cost to purchase cheese resulting from higher commodity prices, partially offset by continuing manufacturing efficiencies. As a percentage of sales, selling and administrative expenses decreased from 22.9% in the first six months of 1995 to 20.8% in the comparable period of 1996. Selling and administrative expenses decreased from $15,191,173 in the first six months of 1995 to $14,612,697 in the same period of 1996. The major contributors to this decrease were from advertising, slotting and reduced freight and warehousing expenses. The Company's operating profit decreased by $1,109,272 from $2,933,113 in the first six months of 1995 to $1,823,841 in the comparable period of 1996. Operating profit as a percent of net sales decreased to 2.6% in the first six months of 1996 compared to 4.4% in the first six months of 1995 due to the lower gross profit, partially offset by lower selling and administrative expenses previously discussed. Net interest expense in the first six months of 1996 was $381,755 a decrease of $206,274 from the comparable period of 1995, as a result of the Company's decreased use of its working capital credit line and lower interest rates. The Company's income tax provision for the first six months of 1996 was 38.0% or $547,993. The Company's effective tax rate of 10.4% or $246,180 in the first six months of 1995 included the utilization of net operating loss carry-forwards generated in prior years. The Company's net earnings for the six months ending June 30, 1996 was $894,093 compared to $2,231,399 for the same period of 1995 for the reasons discussed above. c. Financial Condition The major sources of cash for the six months ending June 30, 1996 came from the decrease in accounts receivable, net earnings and proceeds from stock option exercises. The major uses of cash for the six months ending June 30, 1996 were to fund decreases in accounts payable and increases in inventory. As of August 1, 1996, the Company had approximately $4,500,000 available on its revolving credit facility and $3,500,000 available on its equipment credit facility. The bank has agreed that the Company may use up to $1,000,000 under the revolving credit facility to fund the Company's previously announced plans to repurchase shares of its common stock. As of August 1, 1996, the Company had repurchased 50,700 shares of common stock for a total cost of $281,047. The Company anticipates purchasing shares with the balance of the $1,000,000, but the actual number of shares purchased, the time of purchase and the prices at which they will be purchased will be dependent on future conditions. 10 PART II. Other Information Item 1. Legal Proceedings On August 2, 1996, the Company was served in a class action litigation pending in the United States District Court for the Eastern District of Wisconsin. The amended complaint contains allegations of violations under the federal antitrust acts as well as claims of misrepresentation and breach of contract and names Kraft Foods, Inc., Borden, Inc., The National Cheese Exchange, Inc. and the Company as defendants. Unspecified damages and injunctive relief is sought. The action is based on an alleged conspiracy to manipulate the price of bulk cheese on The National Cheese Exchange. Although it is too early to predict the outcome of this lawsuit, in the Company's opinion, the allegations lack merit and it is our intention to put forth a vigorous defense. Item 4. Submission of Matters to a Vote of Security Holders On May 16, 1996, the Company held its Annual Meeting of Stockholders (the "Meeting"), whereby the stockholders elected Directors and approved a proposal to ratify the appointment of Grant Thornton LLP as the Company's independent auditors for the year ending December 31, 1996. The vote on such matters was as follows: 1. Election of Directors: For Withhold Carl T. Wolf 4,664,461 27,422 Marion F. Wolf 4,663,861 28,022 Richard Cheney 4,662,261 29,622 Richard S. Hickok 4,662,761 29,122 Howard M. Lorber 4,664,347 27,536 Joseph R. Rosetti 4,664,961 26,922 Stephen Sadove 4,665,461 26,422 Marvin Schiller 4,665,761 26,122 2. RATIFICATION OF APPOINTMENT OF AUDITORS: To ratify the appointment of Grant Thornton LLP as the independent auditors of the Company for the year ending December 31, 1996. For Against Abstain 4,656,011 28,933 6,939 Item 6. Exhibits and Reports on Form 8-K a. Exhibit. Exhibit 11 Computation of Earnings per Share of Common Stock b. Form 8-K Reports. There were no current reports on Form 8-K filed by the registrant during the quarter ended June 30, 1996. 11 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. ALPINE LACE BRANDS, INC. By: /s/ Carl T. Wolf Carl T. Wolf, President and Chairman of the Board (Principal Executive Officer) Dated: August 7, 1996 By: /s/ Arthur Karmel Arthur Karmel, Vice President-Finance (Chief Accounting Officer) Dated: August 7, 1996 12 Exhibit 11. ALPINE LACE BRANDS, INC. Computation of Earnings Per Share of Common Stock Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Net Earnings for the Period $498,146 $1,203,282 $ 894,093 $2,231,399 Preferred Stock Dividends 42,188 39,844 84,375 39,844 Net Earnings for Computation of Earnings Per Share 455,958(A) 1,163,438(A) 809,718(A)2,191,555(A) Weighted Average Number of Common Shares Outstanding: Weighted Average Number of Issued and Outstanding Common Shares (1) 5,164,962 5,022,687 5,150,691 5,022,687 Incremental Shares Attributable to Assumed Exercise of Stock Options and Warrants (2) 83,883 276,591 121,197 224,918 Weighted Average Number of Common Shares (1) + (2) 5,248,845(B) 5,299,278(B) 5,271,888(B)5,247,605(B) Earnings Per Common and Common Equivalent Share $ .09(A)/(B) $ .22(A)/(B) $ .15(A)/(B)$ .42(A)/(B) EX-27 2
5 6-MOS DEC-31-1996 JUN-30-1996 65,802 0 12,161,790 56,322 7,111,887 19,984,539 4,020,558 1,649,814 25,767,689 11,156,913 8,321,819 51,763 0 2,250,000 3,987,194 25,767,689 70,118,168 70,118,168 53,681,630 68,294,327 0 0 381,755 1,442,086 547,993 894,093 0 0 0 894,093 .15 .15
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