-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pJXjBEWcO4hF0bpS6KQ2m3bmUiJerYzxT+Uu7eyGocteyIYGUcMoNPAhWcIK3dpx 98lGr8wLfvhteRiGNK7NIQ== 0000898430-95-001410.txt : 19950814 0000898430-95-001410.hdr.sgml : 19950814 ACCESSION NUMBER: 0000898430-95-001410 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950808 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROVENA FOODS INC CENTRAL INDEX KEY: 0000814139 STANDARD INDUSTRIAL CLASSIFICATION: 2013 IRS NUMBER: 952782215 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10741 FILM NUMBER: 95559623 BUSINESS ADDRESS: STREET 1: 5010 EUCALYPTUS AVE CITY: CHINO STATE: CA ZIP: 91710 BUSINESS PHONE: 7146271082 MAIL ADDRESS: STREET 1: 5010 EUCALYPTUS AVENUE CITY: CHINO STATE: CA ZIP: 91710 10-Q 1 FORM 10-Q DATED 06/30/95 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q - -------------------------------------------------------------------------------- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 - -------------------------------------------------------------------------------- FOR THE QUARTER ENDED JUNE 30, 1995 Commission File Number 1-10741 PROVENA FOODS INC. (Exact name of registrant as specified in its charter) CALIFORNIA 95-2782215 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 5010 EUCALYPTUS AVENUE, CHINO, CALIFORNIA 91710 - -------------------------------------------------------------------------------- (Address of principal executive offices) (ZIP Code) (909) 627-1082 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 --- --- The number of shares of Provena Foods Inc. Common Stock outstanding as of the close of the period covered by this report was: Common Stock 2,705,593 PROVENA FOODS INC. 1995 Form 10-Q Second Quarter Report Table of Contents -----------------
Item Page - ---- ---- PART I. FINANCIAL INFORMATION ----------------------------- 1. Financial Statements................................................................... 1 Condensed Statements of Operations................................................... 1 Condensed Balance Sheets............................................................. 2 Condensed Statements of Cash Flows................................................... 3 Notes to Condensed Financial Statements.............................................. 4 (1) Basis of Presentation.......................................................... 4 (2) Inventories.................................................................... 4 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 4 Results of Operations................................................................ 4 Swiss American Division.............................................................. 4 Royal-Angelus Division............................................................... 5 The Company.......................................................................... 5 Liquidity and Capital Resources...................................................... 5 PART II. OTHER INFORMATION -------------------------- 1. Legal Proceedings.................................................................... 6 2. Changes in Securities................................................................ 6 3. Defaults Upon Senior Securities...................................................... 6 4. Submission of Matters to a Vote of Security Holders.................................. 6 5. Other Information.................................................................... 7 Common Stock Repurchase and Sale................................................... 7 American Stock Exchange Listing.................................................... 7 Cash Dividend Paid................................................................. 7 Management Stock Transactions...................................................... 7 6. Exhibits and Reports on Form 8-K..................................................... 7 Signature............................................................................ 7
-ii- PART I. FINANCIAL INFORMATION ----------------------------- ITEM I. FINANCIAL STATEMENTS PROVENA FOODS INC. Condensed Statements of Operations (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------- -------------------------- 1995 1994 1995 1994 Net sales $5,880,402 6,819,377 11,718,786 13,599,065 Cost of sales 5,309,734 6,234,607 10,540,924 12,445,586 ---------- --------- ---------- ---------- Gross profit 570,668 584,770 1,177,862 1,153,479 Operating expenses: Distribution 257,232 254,829 467,638 509,460 General and administrative 291,004 314,230 573,036 607,866 ---------- --------- ---------- --------- Operating income 22,432 15,711 137,188 36,153 Interest expense, net 28,383 5,007 26,561 6,280 Other income, net 61,673 41,331 81,867 81,714 ---------- --------- ---------- --------- Earnings before income taxes 55,722 52,035 192,494 111,587 Income tax expense 22,500 19,294 77,000 42,994 ---------- --------- ---------- --------- Net earnings $ 33,222 32,741 115,494 68,593 ========== ========= ========== ========= Earnings per share $ .01 .01 .04 .03 ========== ========= ========== ========= Weighted average number of shares outstanding 2,702,561 2,662,270 2,700,069 2,659,377 ---------- --------- ---------- ---------
-1- PROVENA FOODS INC. Condensed Balance Sheets
June 30, December 31, Assets 1995 1994 ------ --------- ------------ (Unaudited) Current assets: Cash and marketable securities $ 128,002 56,593 Accounts receivable, less allowance for doubtful accounts of $39,500 in 1995 and $17,800 in 1994 1,976,808 2,021,095 Inventories 2,676,802 2,799,819 Prepaid expenses 95,475 58,347 Income taxes receivable 17,464 -- ----------- --------- Total current assets 4,894,551 4,935,854 ----------- --------- Property and equipment (net) 5,131,955 4,070,035 Other assets 52,916 30,412 ----------- --------- $10,079,422 9,036,301 =========== ========= Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Note payable to bank $ 114,135 -- Current portion of long-term debt 8,460 -- Accounts payable 910,741 669,725 Accrued retirement plans 276,836 507,556 Accrued expenses 637,327 578,484 ----------- --------- Total current liabilities 1,947,499 1,755,765 ----------- --------- Long-term debt, less current portion 964,425 -- Deferred income 31,014 35,667 Shareholders' equity: Capital stock, no par value, authorized 10,000,000 shares; issued and outstanding 2,705,593 in 1995 and 2,698,642 in 1994 4,057,887 4,041,695 Retained earnings 3,085,101 3,212,912 Note receivable from shareholder (6,504) (9,738) ----------- --------- Total shareholders' equity 7,136,484 7,244,869 ----------- --------- $10,079,422 9,036,301 =========== =========
-2- PROVENA FOODS INC. Condensed Statements of Cash Flows (Unaudited)
Six Months Ended June 30, ----------------------------- 1995 1994 Cash flows from operating activities: Net earnings $ 115,494 68,593 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation and amortization 265,001 244,469 Decrease in accounts receivable 44,287 15,245 Decrease (increase) in inventories 123,017 (606,500) Increase in prepaid expenses (38,994) (57,355) Decrease (increase) in other assets (22,504) 6,266 Increase in accounts payable 241,016 142,863 Decrease in accrued retirement plans (230,720) (201,712) Increase in accrued expenses 58,843 22,198 Increase (decrease) in income taxes payable (17,464) 49,964 Decrease in deferred income, net of related deferred taxes (2,785) (2,785) --------- --------- Net cash provided by (used in) operating activities 535,191 (318,754) --------- --------- Cash flows from investing activities: Addition to property and equipment (1,326,921) (149,181) ---------- --------- Net cash used in investing activities (1,326,921) (149,181) ---------- --------- Cash flows from financing activities: Increase in long-term debt 972,885 -- Net borrowings of bank credit line 114,135 565,423 Repurchase of capital stock (68,513) (35,167) Proceeds from sale of capital stock 84,704 73,316 Payments received on note from shareholder 3,234 2,828 Cash dividends paid (243,306) (226,296) ---------- --------- Net cash provided by financing activities 863,139 380,104 ---------- --------- Net increase (decrease) in cash and cash equivalents 71,409 (87,831) Cash and cash equivalents at beginning of period 56,593 107,333 ---------- --------- Cash and cash equivalents at end of period $ 128,002 19,502 ========== ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 26,979 7,957 Income taxes $ 95,630 800
-3- PROVENA FOODS INC. Notes to Condensed Financial Statements June 30, 1995 and 1994 (1) Basis of Presentation - ------------------------- The accompanying unaudited financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes which would be presented were such financial statements prepared in accordance with generally accepted accounting principles. These statements should be read in conjunction with the audited financial statements presented in the Company's Form 10-K for the year ended December 31, 1994. In the opinion of management, the accompanying financial statements reflect all adjustments which are necessary for a fair presentation of the results for the interim periods presented. Such adjustments consisted only of normal recurring items. The results of operations for the three months and six months ended June 30, 1995 are not necessarily indicative of results to be expected for the full year. (2) Inventories - --------------- Inventories at June 30, 1995 (unaudited) and December 31, 1994 consist of:
1995 1994 ---------- --------- Raw materials $ 943,940 866,608 Work-in-process 441,561 507,127 Finished goods 1,291,301 1,426,084 ---------- --------- $2,676,802 2,799,819 ========== =========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations Three Months Ended Six Months Ended - ---------------------- June 30, June 30, ------------------ ------------------ (Unaudited) 1995 1994 1995 1994 (amounts in thousands) Net sales by division: Swiss American $3,153 $4,501 $ 6,507 $ 9,333 Royal-Angelus 2,727 2,318 5,212 4,266 ------ ------ ------- ------- Total $5,880 $6,819 $11,719 $13,599 ====== ====== ======= ======= Sales in thousands of pounds by division: Swiss American 2,305 3,015 4,710 6,273 Royal-Angelus 5,352 4,333 10,038 8,038
Swiss American Division - ----------------------- Sales by the processed meat division decreased about 30% in dollars and 25% in pounds in the 1st six months of 1995 over the same period in 1994. Sales in dollars decreased proportionately more than in pounds because of lower selling prices reflecting lower meat costs. Swiss's sales decrease reflects an underlying long-term erosion in sales at Swiss attributed to industry factors. Swiss has attracted and retained new business but not enough to reverse the underlying erosion. -4- Swiss's loss for the 2nd quarter of 1995 exceeded its loss for the 2nd quarter of 1994 and its loss for the 1st quarter of 1995. Plant employees are represented by United Food & Commercial Workers Union, Local 101, UFCWI, AFL-CIO-CLC, under a collective bargaining agreement which expired March 31, 1995 and was renewed July 10, 1995 to expire March 31, 1998. There has been no significant labor unrest at the division's plants and the Company believes it has a satisfactory relationship with its employees. Royal-Angelus Division - ---------------------- The pasta division's sales increased about 22% in dollars and 25% in pounds in 1995's 1st half compared to the 1st half of 1994. The sales increase in dollars was proportionately lower than in pounds because of a higher proportion of sales of bulk rather than specialty products in the 2nd quarter of 1995. Royal's profit for the 2nd quarter of 1995 exceeded its profit for the 2nd quarter of 1994 and for the 1st quarter of 1995. The Company - ----------- Company sales were down 14% in the 1st half of 1995 compared to the 1st half of 1994 and were down the same percentage in each of the 1st and 2nd quarters of 1995 compared to the same quarters of 1994. Earnings for the 1st half were up significantly but most of the increase was attributable to the 1st quarter of 1995 since earnings for the 2nd quarter increased only slightly because of decreased sales and margins at Swiss caused by competitive pressure. Sales at Royal increased but were more than offset by declines at Swiss. Losses at Swiss continued but were offset by profits at Royal. Margins for the 1st half of 1995 were 10% compared to 8.5% a year ago, but were 9.7% for the 2nd quarter compared to 8.6% last year. The main cause of the increase in Company margins over a year ago is an increased proportion of Company sales by Royal which has higher margins than Swiss. The decline in margins from the 1st quarter to the 2nd quarter of 1995 was caused by a decline in margins at Swiss. Administrative expense was down about $35,000 for the 1st half of 1995 compared to the same period in 1994, primarily due to reductions in officer payroll, health claims and outside services, offset by an increase in bad debt expense. The increase in bad debt expense resulted from accrual of a reserve based on prior years' experience. Distribution expense was down over $40,000 or 8% compared to a 14% decrease in sales. The decrease was less than proportionate because of an increase in sales at a delivered price at both divisions in the 2nd quarter of 1995. Net interest expense increased due to interest on the term loan used to purchase the building adjacent to the pasta plant. Liquidity and Capital Resources - ------------------------------- The Company has generally satisfied its normal working capital requirements with funds derived from operations and borrowings under its bank line of credit. At June 30, 1995, the Company had $114,135 of borrowings under its $2,000,000 unsecured bank line of credit with Wells Fargo Bank, NA. The line was renewed in May 1995 to expire June 1, 1996, and bears interest at a variable rate of 3/8% over prime, requires a minimum tangible net worth of $6,890,000, a maximum debt to tangible net worth ratio of 0.75, a minimum debt coverage ratio of 1.75, profitable operations on a cumulative quarterly basis and a zero balance for 30 days during the term and prohibits mergers, acquisitions, lending, borrowing, guaranteeing, annual capital expenditures over $500,000 and new annual lease obligations over $100,000. -5- On April 7, 1995, the Company purchased the building adjacent to the pasta plant for $1,270,500, borrowing $975,000 from Wells Fargo Bank, NA under a 5 year term loan secured by the building, bearing interest at 2% over 90 day LIBOR. At June 30, 1995 the balance of the term loan was $972,885, including the $8,460 current portion. Cash increased $71,000 in the 1st half of 1995 compared to a decrease of $88,000 in the 1st half of 1994, a $159,000 improvement. Operations provided $535,000 of cash compared to $319,000 used in operations last year, an $854,000 improvement resulting primarily from differences in earnings, inventories and payables. The improvement in cash from operations was reduced by the net effect of the increase in investing and financing activities resulting from the purchase of the building adjacent to the pasta plant. The Company believes that its operations and bank line of credit will provide adequate working capital to satisfy the normal needs of its operations for the foreseeable future. The Company has no long-term debt except the $972,885 secured by the building adjacent to the pasta plant. All of its other assets are unencumbered, and could be borrowed against as a source of liquidity if an unforeseen need arises. PART II. OTHER INFORMATION -------------------------- ITEM 1. LEGAL PROCEEDINGS No significant litigation. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its annual meeting of shareholders on Tuesday, April 25, 1995, at 11:00 a.m. at the Company's principal office. Shareholders representing 2,554,500 or 94.7% of the 2,698,696 shares entitled to vote were present in person or by proxy, with 27,327 broker non-votes. The following persons were nominated and elected directors, with votes for, withheld from specified nominees, or without authority to vote for directors, as indicated:
Without Nominee For Withheld Authority ------- --- -------- --------- John D. Determan 2,547,792 -0- 6,708 Theodore L. Arena 2,547,792 -0- 6,708 Ronald A. Provera 2,547,192 600 6,708 Santo Zito 2,547,792 -0- 6,708 Thomas J. Mulroney 2,547,792 -0- 6,708 James P. McClune 2,546,492 1,300 6,708 Louis A. Arena 2,545,692 100 6,708 Joseph W. Wolbers 2,547,792 -0- 6,708 John M. Boukather 2,547,792 -0- 6,708
-6- ITEM 5. OTHER INFORMATION Common Stock Repurchase and Sale - -------------------------------- During the 1st six months of 1995 the Company purchased 26,600 shares of its common stock under its stock repurchase program. Also during the 1st six months of 1995 the Company sold 30,811 newly issued shares of its common stock under its 1988 Employee Stock Purchase Plan, at an average selling price of $2.55 per share. From inception of the Plan through June 30, 1995, employees have purchased a total of 260,566 shares. In addition, the Company sold 2,740 newly issued shares during the 2nd quarter of 1995 for $2.25 per share pursuant to the exercise of incentive stock options. American Stock Exchange Listing - ------------------------------- The Company's common stock trades on the American Stock Exchange under the ticker symbol "PZA". Cash Dividends Paid - ------------------- A cash dividend of $0.045 per share was paid June 30, 1995. Management Stock Transactions - ----------------------------- During the quarter ended June 30, 1995, Santo Zito, a vice president and director of the Company, purchased 4,600 shares of the Company's common stock and Thomas J. Mulroney, Chief Financial Officer and director, purchased 2,740 shares by exercise of incentive stock options. No other purchases and no sales of the Company's common stock by officers or directors during the 2nd quarter of 1995 were reported. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 27. Financial Data Schedule (b) No reports on Form 8-K were filed during the three months ended June 30, 1995, except a Form 8-K in April for the April 7, 1995 purchase of the building adjacent to the pasta plant. SIGNATURE 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. Date: August 2, 1995 PROVENA FOODS INC. By /s/ Thomas J. Mulroney -------------------------------- Thomas J. Mulroney Vice President and Chief Financial Officer -7- EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 107,678 20,324 1,976,808 0 2,676,802 4,894,551 8,863,100 3,731,145 10,079,422 1,944,679 0 4,057,887 0 0 3,078,597 10,079,422 11,718,786 11,800,653 10,540,924 1,040,674 0 0 26,561 192,494 77,000 115,494 0 0 0 115,494 .04 .04
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