-----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, Ds2VCNm6imf3rvcMjaaZ44CTcWpwHe4oMced4hUTtEn1sif4xoZzuamf5byH8mhO UAYmqt58Ad0sO/7kVdzA4g== 0000791714-95-000003.txt : 19951119 0000791714-95-000003.hdr.sgml : 19951119 ACCESSION NUMBER: 0000791714-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590746 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 September 30, 1995 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 October 31, 1995, there were 5,041,187 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 September 30, 1995 (unaudited) and December 31, 1994 3 Consolidated Statements of Earnings for the Three Months and Nine Months Ended September 30, 1995 and 1994 (unaudited) 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1995 and 1994 (unaudited) 6 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 12 Signature 13 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALPINE LACE BRANDS, INC. CONSOLIDATED BALANCE SHEETS September 30, 1995 Dec. 31, 1994 (unaudited) ASSETS (substantially pledged) Cash and cash equivalents $ 166,059 $ 438,414 Accounts receivable, net of allowance for bad debt 12,417,875 16,228,784 Inventories 5,309,239 5,447,502 Prepaid expenses and deposits 368,561 502,004 Advances to suppliers 300,000 300,000 Total current assets 18,561,734 22,916,704 Property, plant and equipment Land, buildings and improvements 220,549 346,000 Equipment under capital leases 973,795 1,052,544 Leasehold improvements 104,837 45,914 Furniture, fixtures and equipment 1,782,762 1,541,200 3,081,943 2,985,658 Less accumulated depreciation and amortization 1,303,225 1,057,075 1,778,718 1,928,583 ASSETS HELD FOR SALE --- 265,800 OTHER ASSETS Investment in and advances to Mountain Farms, Inc. 1,675,948 1,675,948 Trademarks, tradenames and technology, less accumulated amortization of $826,392 in 1995 and $709,802 in 1994 1,594,909 1,709,451 Notes receivable 19,779 30,420 Other 826,774 409,609 4,117,410 3,825,428 $24,457,862 $28,936,515 The accompanying notes are an integral part of these statements. 3 ALPINE LACE BRANDS, INC. CONSOLIDATED BALANCE SHEETS September 30, 1995 Dec. 31, 1994 (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of note payable $ --- $ 1,385,846 Accounts payable 9,366,494 14,610,852 Accrued expenses 2,328,818 2,565,802 Income taxes 444,174 10,450 Current maturities of obligation under capital leases 134,338 178,815 Total current liabilities 12,273,824 18,751,765 Long term obligations, less current maturities Notes payable 6,966,899 9,547,581 Obligation under capital leases 456,982 592,121 Other long-term liability 205,904 576,531 7,629,785 10,716,233 Stockholders' equity Preferred stock, par value $.01 per share; authorized 1,000,000 shares; issued and outstanding 45,000 at September 30, 1995 liquidation amount $50.00 per share 2,250,000 --- Common stock, par value $.01 per share, authorized 10,000,000 shares; issued and outstanding 5,040,287 at September 30, 1995 and 5,012,419 at December 31, 1994 50,403 50,124 Additional paid-in capital 2,811,295 3,129,888 Retained earnings (deficit) (557,445) (3,711,495) 4,554,253 (531,483) $24,457,862 $28,936,515 The accompanying notes are an integral part of these statements. 4 ALPINE LACE BRANDS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Net sales $37,240,549 $32,202,223 $103,685,546 $94,347,851 Cost of goods sold 27,897,283 23,886,340 76,217,994 70,479,953 Gross profit 9,343,266 8,315,883 27,467,552 23,867,898 Operating expenses Selling 6,730,938 6,330,348 19,575,155 18,791,765 Administrative 1,165,588 1,180,859 3,512,543 3,332,115 7,896,526 7,511,207 23,087,698 22,123,880 Operating profit 1,446,740 804,676 4,379,854 1,744,018 Other income (expense) 3,811 13,016 32,545 85,046 Interest expense - net (228,628) (422,747) (816,657) (1,211,996) Earnings before income taxes and extraordinary item 1,221,923 394,945 3,595,742 617,068 Income taxes 219,946 38,000 466,126 38,000 Earnings before extraordinary item 1,001,977 356,945 3,129,616 579,068 Extraordinary Item: Gain from extinguishment of debt, net of income taxes of $7,451 --- --- 103,760 --- Net earnings 1,001,977 356,945 3,233,376 579,068 Preferred Stock Dividends 42,188 --- 82,031 --- Net earnings applicable to common shareholders $ 959,789 $ 356,945 $ 3,151,345 $ 579,068 Earnings per share of common stock Earnings before extraordinary item $ .18 $ .07 $ .58 $ .11 Extraordinary item .00 .00 .02 .00 Net earnings per share of common stock $ .18 $ .07 $ .60 $ .11 Weighted average number of common and common equivalent shares outstanding 5,363,140 5,029,078 5,286,117 5,046,958 The accompanying notes are an integral part of these statements. 5 ALPINE LACE BRANDS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 30, 1995 1994 Cash flows from operating activities Net earnings $3,233,376 $ 579,068 Adjustments to reconcile net earnings to net cash used in operating activities Depreciation and amortization 430,830 645,842 Extraordinary gain from extinguishment of debt, net of income taxes (103,760) --- Provisions for losses on accounts receivable 119,706 97,500 (Gain) on sale of fixed assets (23,624) --- Change in assets and liabilities (Increase) in marketable securities --- (33,192) Decrease in accounts receivable 3,691,203 3,176,978 Decrease in inventory 138,263 1,502,483 Decrease in prepaid expenses 133,443 149,924 Decrease in refundable income taxes --- 959,097 (Increase) in trade receivables, net-due from Mountain Farms, Inc. --- (1,129,805) Decrease in notes receivable 10,641 9,548 (Increase) Decrease in other assets (452,067) 221,456 Decrease in accounts payable (5,244,358) (5,190,724) Decrease in accrued expenses (236,984) (84,179) Increase (Decrease) in income taxes 426,273 (40,880) Decrease in other long-term liabilities (370,627) --- (1,481,061) 284,048 Net cash provided by operating activities $1,752,315 $ 863,116 The accompanying notes are an integral part of these statements. 6 ALPINE LACE BRANDS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 30, 1995 1994 Cash flows from investing activities Additions to property, plant and equipment $ (327,941) $ (271,085) Payments for trademarks and trade names (2,047) (37,789) Changes in investments in and advances to MFI-principally sales proceeds --- 3,617,130 Proceeds from sale of fixed assets 452,812 --- Net cash provided by investing activities 122,824 3,308,256 Cash flows from financing activities Net (payments) from obligation under capital lease (179,616) (86,805) Net (payments) under long-term agreements (4,033,808) (4,228,113) Payment of dividends to preferred shareholders (82,031) --- Net proceeds from preferred stock issued 2,016,741 --- Proceeds from employee stock option exercise 131,220 --- Net cash (used) in financing activities (2,147,494) (4,314,918) Net (decrease) in cash and cash equivalents (272,355) (143,546) Cash and cash equivalents at beginning of year 438,414 238,937 Cash and cash equivalents at end of nine months $ 166,059 $ 95,391 Supplemental disclosures of cash flow information: Cash paid during the year for Interest $ 881,253 $ 1,220,857 Income taxes $ 44,588 $ 43,464 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 September 30, 1995 and December 31, 1994, the results of its operations for the three months and nine months ended September 30, 1995 and 1994 and the changes in its cash position for the nine months ended September 30, 1995 and 1994. 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 registrant 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 registrant's Annual Report on Form 10-K as filed. 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 filed with the Securities Exchange Commission. 2. The results of operations for the nine months ended September 30, 1995 are not necessarily indicative of the results to be expected for the entire fiscal year. 3. Inventories are summarized as follows: September 30, 1995 December 31, 1994 Finished goods $4,880,936 $4,986,691 Raw materials & Packaging supplies 428,303 460,811 $5,309,239 $5,447,502 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 (2) the Company's cheese and dairy products trading business. 6. As of December 31, 1994, the Company had available net operating loss carry-forwards of approximately $1,015,000 which expire in 2009. The Company also had at December 31, 1994, approximately $2,000,000 of tax deductible temporary differences available for future use. The Company's effective income tax rate of 13.0% for the nine months ended September 30, 1995 includes the utilization of the Company's net operating loss carry- forwards and the utilization of temporary differences. 7. On March 22, 1995 the Company completed a private placement of $2,250,000 of 7.5% cumulative preferred stock, resulting in net proceeds to the Company of approximately $2,000,000. The securities are convertible into common stock at a conversion price of $7 3/8 for five years at which time the Company must either force a conversion at market price of the common stock or redeem the preferred stock. In the event of a change of control, 8 the Company is required to make an offer to purchase the convertible preferred stock. 8. On March 27, 1995, the Company redeemed its $3,000,000 subordinated note payable and common stock purchase warrants for $3,000,150 plus accrued interest of $42,750. The redemption resulted in an extraordinary gain of $103,760 to the Company. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. a. Results of Operations. Comparison of the Registrant's third quarter (July 1, 1995 - September 30, 1995) of the current fiscal year ("1995") with the third quarter (July 1, 1994 - September 30, 1994) of the last fiscal year ("1994"). Net sales for the third quarter ending September 30, 1995 were $37,240,549 as compared to $32,202,223 in the same period of 1994. The Alpine Lace Branded Division had increased sales of $1,930,753 for the third quarter ending September 30, 1995 going from $26,305,177 in 1994 to $28,235,930 in the same period of 1995 due to increased unit volume. Sales for the Company's cheese and dairy products trading business increased by 52.8% or $3,110,873 to $9,004,177 from $5,893,304 for the comparative period of 1994, primarily due to increased sales on the Green Bay, Wisconsin cheese exchange. As a percentage of sales, gross profit decreased to 25.1% in the third quarter of 1995 from 25.8% in the comparable period of 1994. Gross profit increased by $1,027,383 in the quarter ending September 30, 1995 going from $8,315,883 in 1994 to $9,343,266 in 1995. This increase was the result of the 7.3% sales increase in the Alpine Lace Branded Division, partially offset by the higher cost to purchase cheese resulting from higher commodity prices. Selling and administrative expenses increased from $7,511,207 in the third quarter of 1994 to $7,896,526 in the same period of 1995. As a percentage of sales, selling and administrative expenses decreased from 23.3% in the third quarter of 1994 to 21.2% in the comparable period of 1995. The Company's operating profit increased by $642,064 from $804,676 in the third quarter of 1994 to $1,446,740 in the comparable period of 1995. Operating profit as a percent of net sales increased to 3.9% in the third quarter of 1995 compared to 2.5% in the third quarter of 1994 due to the higher gross profit, offset slightly by higher selling and administrative expenses previously discussed. Net interest expense in the third quarter of 1995 was $228,628, a decrease of $194,119 from the comparable period of 1994, as a result of the Company's decreased use of its working capital credit line and the redemption of the Company's subordinated note payable, partially offset by higher interest rates. The Company's effective tax rate of 18.0% resulting in a tax of $219,946 in the third quarter of 1995 includes the utilization of the Company's net operating loss carry-forwards generated in prior years. The Company accrued $38,000 at an effective tax rate of 9.6% for income taxes in the third quarter of 1994 as a result of the use of tax loss carry-forwards generated from the 1993 loss of $4,040,254. The Company's net earnings for the quarter ending September 30, 1995 was $1,001,977 compared to $356,945 for the same period of 1994 for the reasons discussed previously. 10 b. Results of Operations. Comparisons of the Registrant's first nine months (January 1, 1995 - September 30, 1995) of the current fiscal year ("1995") with the first nine months (January 1, 1994 - September 30, 1994) of the last fiscal year ("1994"). Net sales for the nine months ending September 30, 1995 were $103,685,546 as compared to $94,347,851 in the same period of 1994. The Alpine Lace Branded Division had increased sales of $6,085,121 for the first nine months ending September 30, 1995 going from $75,301,456 in 1994 to $81,386,577 in the same period of 1995 due to increased unit volume. Sales for the Company's cheese and dairy products trading business increased by 17.2% or $3,266,907 to $22,292,629 from $19,025,722 for the comparative period of 1994, primarily due to increased sales on the Green Bay, Wisconsin cheese exchange. As a percentage of sales, gross profit increased to 26.5% in the first nine months of 1995 from 25.3% in the comparable period of 1994. Gross profit increased by $3,599,654 in the nine months ending September 30, 1995 going from $23,867,898 in 1994 to $27,467,552 in 1995. This increase was the result of the 9.9% increase in sales, along with the lower cost to purchase cheese resulting from lower commodity prices and continuing manufacturing efficiencies. As a percentage of sales, selling and administrative expenses decreased from 23.4% in the first nine months of 1994 to 22.3% in the comparable period of 1995. Selling and administrative expenses increased from $22,123,880 in the first nine months of 1994 to $23,087,698 in the same period of 1995. The major contributors to this increase were for advertising and promotions which supported the 8.1% increase in branded sales. The Company's operating profit increased by $2,635,836 from $1,744,018 in the first nine months of 1994 to $4,379,854 in the comparable period of 1995. Operating profit as a percent of net sales increased to 4.2% in the first nine months of 1995 compared to 1.8% in the first nine months of 1994 due to the higher gross profit, offset partially by higher selling and administrative expenses previously discussed. Net interest expense in the first nine months of 1995 was $816,657 a decrease of $395,339 from the comparable period of 1994, as a result of the Company's decreased use of its working capital credit line and the redemption of the Company's subordinated note payable, partially offset by higher interest rates. The Company's effective tax rate of 13.0% resulting in a tax of $466,126 in the first nine months of 1995 includes the utilization of the Company's net operating loss carry-forwards generated in prior years. The Company accrued $38,000 at an effective tax rate of 6.2% for income taxes in the first nine months of 1994 as a result of tax loss carry-forwards generated from the 1993 loss of $4,040,254. The Company's net earnings for the nine months ending September 30, 1995 was $3,233,376 compared to $579,068 for the same period of 1994 for the reasons discussed above. Financial Condition The major sources of cash for the nine months ended September 30, 1995 came from net earnings and the decrease in accounts receivable. The major uses of cash for the nine months ended September 30, 1995 was to fund the decrease in accounts payable. On March 27, 1995, the Company redeemed its subordinated note payable and common stock purchase warrants for $3,000,150 and accrued interest of $42,750. The majority of the funds for the redemption came from the issuance of $2,250,000 of 7.5% cumulative preferred stock on March 22, 1995, which resulted in net proceeds of approximately $2,000,000. As of November 2, 1995, the Company had approximately $7,400,000 available on its revolving credit facility and $3,500,000 available on its equipment credit facility. 11 PART II. Other Information 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 September 30, 1995. 12 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: November 8, 1995 By: /s/ Arthur Karmel Arthur Karmel, Vice President-Finance (Chief Accounting Officer) Dated: November 8, 1995 13 Exhibit 11. ALPINE LACE BRANDS, INC. Computation of Earnings Per Share of Common Stock Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Net Earnings for the Period $1,001,977 $356,945 $3,233,376 $579,068 Preferred Stock Dividends 42,188 --- 82,031 --- Net Earnings for Computation of Earnings Per Share (1) 959,789(A) 356,945(A) 3,151,345(A) 579,068(A) Weighted Average Number of Common Shares Outstanding: Weighted Average Number of Issued and Outstanding Common Shares (2) 5,040,287 5,012,419 5,040,287 5,012,419 Incremental Shares Attributable to Assumed Exercise of Stock Options and Warrants (3) 322,853 16,659 245,830 34,539 Weighted Average Number of Common Shares (2) + (3) 5,363,140(B) 5,029,078(B) 5,286,117(B) 5,046,958(B) Earnings Per Common and Common Equivalent Share $.18(A)/(B) $.07(A)/(B) $.60(A)/(B) $.11(A)/(B) EX-27 2
5 9-MOS DEC-31-1995 SEP-30-1995 166,059 0 12,718,537 300,662 5,309,239 18,561,734 3,081,943 1,303,225 24,457,862 12,273,824 7,629,785 50,403 0 2,250,000 2,253,850 24,457,862 103,685,546 103,685,546 76,217,994 99,305,692 (32,545) 0 816,657 3,595,742 466,126 3,129,616 0 103,760 0 3,233,376 .61 .60
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