0000912057-95-006553.txt : 19950824 0000912057-95-006553.hdr.sgml : 19950824 ACCESSION NUMBER: 0000912057-95-006553 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN BEEF INC /DE/ CENTRAL INDEX KEY: 0000081942 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 112042612 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04485 FILM NUMBER: 95563805 BUSINESS ADDRESS: STREET 1: 47 05 METROPOLITAN AVE CITY: RIDGEWOOD STATE: NY ZIP: 11385 BUSINESS PHONE: 7188210011 FORMER COMPANY: FORMER CONFORMED NAME: QUAREX INDUSTRIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: RANCHERS PACKING CORP DATE OF NAME CHANGE: 19830713 10-Q 1 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 1995 ------------- Commission File Number 0-4485 ------ WESTERN BEEF, INC. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3266114 ------------------------ ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 47-05 Metropolitan Avenue, Ridgewood, New York 11385 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (718)-417-3770 ---------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months 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 issuer's classes of common stock, as of the close of the period covered by this report. 5,463,317 shares of Common Stock, $.05 par value as of July 7, 1995. -------------------------------------------------------------------------------- INDEX WESTERN BEEF, INC. AND SUBSIDIARIES PAGE ---- PART I-FINANCIAL INFORMATION Item 1. Financial statements Condensed consolidated balance sheets as of June 30, 1995 and December 30, 1994. 2 Condensed consolidated statements of income and retained earnings for the twenty-six weeks and the thirteen weeks ended June 30, 1995 and July 1, 1994. 3 Condensed consolidated statements of cash flows for the twenty-six weeks ended June 30, 1995 and July 1, 1994. 4 Notes to the condensed consolidated financial statements. 5 Item 2. Management's discussion and analysis of financial condition and results of operations. 6 PART II-OTHER INFORMATION 7 ------------------------- Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES 9 --------- WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value)
June 30, 1995 December 30, 1994 ------------- ----------------- ASSETS (Unaudited) ------ Current assets: Cash and cash equivalents $ 1,316 $ 4,311 Accounts receivable, net of allowance for doubtful accounts ( $402 and $142) 7,556 6,907 Inventories 16,383 13,339 Prepaid expenses and other current assets 2,100 2,390 Deferred income taxes 1,029 907 --------- --------- Total current assets 28,384 27,854 Property, plant and equipment, net of accumulated depreciation and amortization ($15,529 and $14,437) 28,734 25,276 Deferred income taxes 223 176 Investment in low income housing tax credit 907 - Other assets 897 887 --------- --------- Total assets $ 59,145 $ 54,193 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable-bank $ 391 $ - Current portion of long-term debt 1,565 1,563 Current portion of obligations under capital leases 106 101 Accounts payable 15,163 12,597 Accrued expenses and other liabilities 1,786 1,482 Income taxes payable 497 - --------- --------- Total current liabilities 19,508 15,743 Long-term debt, net of current portion 5,070 5,779 Obligations under capital leases, net of current portion 1,390 1,445 --------- --------- Total liabilities 25,968 22,967 --------- --------- Shareholders' equity: Preferred stock, $.05 par value; shares authorized 2,000; none issued - - Common stock, $.05 par value; 15,000 shares authorized; 5,463 shares issued and outstanding 273 273 Capital in excess of par value 11,516 11,516 Retained earnings 21,388 19,437 --------- --------- Total shareholders' equity 33,177 31,226 --------- --------- Total liabilities and shareholders' equity $ 59,145 $ 54,193 --------- --------- --------- ---------
See accompanying notes to condensed consolidated financial statements -2- WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited) (In thousands, except per share data)
Twenty-Six Weeks Ended Thirteen Weeks Ended ------------------------ ---------------------- June 30, 1995 July 1, 1994 June 30, 1995 July 1, 1994 Net sales $140,632 $146,042 $73,058 $74,954 Cost of sales 107,401 111,973 55,353 57,561 --------- --------- -------- --------- Gross profit on sales 33,231 34,069 17,705 17,393 --------- --------- -------- --------- Operating expenses: Rent expense-affiliates 1,399 1,191 701 596 Interest expense 388 331 193 148 Selling, general and administrative expenses 27,773 28,888 14,654 14,427 --------- --------- -------- -------- Total operating expenses 29,560 30,410 15,548 15,171 --------- --------- -------- -------- Income before income taxes 3,671 3,659 2,157 2,222 Provision for income taxes 1,720 1,611 1,003 986 --------- --------- -------- -------- Net income 1,951 2,048 1,154 1,236 Retained earnings -beginning of period 19,437 14,664 20,234 15,476 --------- --------- -------- -------- Retained earnings -end of period $ 21,388 $16,712 $21,388 $16,712 --------- --------- -------- -------- --------- --------- -------- -------- Weighted average number of common shares outstanding 5,463 5,463 5,463 5,463 --------- --------- -------- -------- --------- --------- -------- -------- Earnings per common share $ .36 $ .37 $ .21 $ .23 --------- --------- -------- -------- --------- --------- -------- --------
See accompanying notes to condensed consolidated financial statements. -3- WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Twenty-Six Weeks Ended --------------------------------- June 30, 1995 July 1, 1994 Cash flows from operating activities: Net income $1,951 $2,048 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,213 1,410 Deferred income tax benefit (169) - Provision for losses on accounts receivable 260 211 (Increase)decrease in assets: Accounts receivable (909) (232) Inventories (3,044) (2,623) Prepaid expenses and other current assets 290 (349) Prepaid income taxes - 444 Other assets (10) (54) (Decrease) increase in liabilities: Accounts payable 2,566 7,196 Accrued expenses and other liabilities 304 1,014 Payroll and related taxes payable - 160 Income taxes payable 497 - -------- -------- Net cash provided by operating activities 2,949 2,745 Cash flows from investing activities: Capital expenditures (4,671) (1,244) Low income housing investment (907) - -------- -------- Net cash used in investing activities (5,578) (1,244) -------- ------- Cash flows from financing activities: Net borrowings (repayments) under line of credit agreement 391 (750) Payments on long-term debt and capital leases (757) (493) Net advances (to) from affiliates and shareholders - (401) -------- -------- Net cash used in financing activities (366) (1,644) -------- -------- Net decrease in cash and cash equivalents (2,995) (143) Cash and cash equivalents, beginning of period 4,311 1,080 -------- -------- Cash and cash equivalents, end of period $1,316 $ 937 -------- -------- -------- -------- Cash paid during the twenty-six weeks for: Interest $ 388 $ 331 Income taxes $1,233 $1,168
See accompanying notes to condensed consolidated financial statements. -4- WESTERN BEEF, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the twenty-six weeks ended June 30, 1995, are not necessarily indicative of the results that may be expected for the year ending December 29, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 30, 1994. (2) INVESTMENT IN LOW INCOME HOUSING TAX CREDITS: At the end of the second quarter, 1995, the Company invested in low income housing credits. The investments will be accounted for utilizing the effective-yield method. -5- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales for the second fiscal quarter of 1995 were $73,058,000 a 2.53% decrease from the comparable quarter of 1994. On a year-to-date basis, net sales were $140,632,000 a decrease of 3.70% from 1994. The sales decline results from a decrease in same store sales of 6.55% and 7.27% respectively, for the three months, and six months ended June 30, 1995, and the closing of a small wholesale produce business in the second quarter of 1995. Management's efforts of resetting stores, better advertising and merchandising are having a positive effect on slowing the decline in same store sales that result from competitive pressures. The two new stores which were opened for two and six weeks respectively, had total sales of $2,138,000, a portion of which helped cause the decline in same store sales. For the remainder of the year, total sales should increase as a result of the new stores. Gross profit, as a percentage of sales, increased to 24.23% in the second fiscal quarter of 1995 from 23.20% in the same quarter of 1994. On a year-to-date basis, gross profit increased to 23.63% as compared with 23.33%, last year. The increase in gross profit is attributable to higher sales of Western Beef brand products and purchasing efficiencies. Selling, general and administrative expenses, including rent expense-affiliates and interest expense, as a percentage of sales, increased to 21.28% in the second fiscal quarter of 1995 from 20.24% in the same quarter of 1994. On a year-to-date basis, selling, general and administrative expenses, including rent expense-affiliates and interest expense, increased to 21.02% as compared with 20.82% in 1994. The selling, general and administrative cost category includes payroll, bonuses and operating costs. These increases are primarily due to 1995 store opening costs of approximately $600,000 of which $500,000 was incurred in the second quarter. Liquidity and Capital Resources Cash flows from operations were $2,949,000 for the twenty-six weeks ended June 30, 1995 as compared to $2,745,000 for the comparable period of 1994. The increases in accounts receivable and inventory were offset by increases in accounts payable, accrued expenses and taxes payable. The increases in inventory and accounts payable resulted from the two new stores that opened in the second quarter of 1995. Cash flow from operations plus cash on hand were sufficient to pay for capital expenditures and long-term debt requirements. Most of the capital expenditures incurred were made in connection with the three new stores under construction, two of which were opened by the end of June 1995, and the upgrading of point-of-sale equipment in three stores. The Company believes that cash on hand and its $3,000,000 bank line of credit which expires on July 31, 1996, will be sufficient to meet its operational needs and to fund the remaining costs to open the third new store. The Company also has several financial institutions that would be available to refinance new store equipment, usually over a five year period. -6- PART II-OTHER INFORMATION Item 1. Legal Proceedings The Company has various outstanding litigation matters which it considers to be in the ordinary course of business. In the opinion of management, the outcome of these litigation matters will not materially, adversely affect the Company's financial position. In April 1991 in New York Supreme Court, Putnam County, an action was commenced against the Company to prevent a scheduled foreclosure of certain collateral held by the Company as security for its loan to one of the plaintiffs in the original principal amount of $85,000 of which approximately $65,000 was outstanding. Thereafter, in a complaint served in March 1992, plaintiffs interposed three causes of action on behalf of themselves and a previously unnamed plaintiff, C.B. Foods, Inc., which was owned by the plaintiffs and was a customer of the Company's wholesale business, seeking (1) a declaration that the loan had been repaid; (2) compensatory damages of $30,000,000 and exemplary damages of $10,000,000 for fraud allegedly committed by the Company; and (3) compensatory damages of $2,000,000 and exemplary damages of $10,000,000 for abuse of process allegedly committed by the Company. In its answer, the Company denied liability and all material allegations of the complaint. Following a motion by the Company the court ordered plaintiffs' third cause of action for abuse of process dismissed for failure to state a claim and ordered all claims of C.B. Foods, Inc., struck from the complaint on the ground that it was not a party to the action. Plaintiffs have appealed the court's order. By order made on the record on January 19, 1994, the court dismissed the complaint for plaintiff's disobedience of prior court orders and their failure to prosecute their claims. Plaintiffs have moved to modify the January 19, 1994 order. If they are not successful, an appeal is anticipated, which the Company would vigorously defend. The Company believes the resolution of this matter will not adversely affect its financial position. Item 2. Changes in Securities None Item 3. Default upon Senior Securities None Item 4. Submission of Matters to a Vote of Security holders. The Company held its Annual Meeting of Shareholders on June 13, 1995, and transacted the following business: (a) Election of Directors:
Nominee Votes For % For Votes Withheld -------------------- ----------- -------- -------------- Frank Castellana 4,894,913 99.21% 39,131 Joseph Castellana 4,894,913 99.21% 39,131 Peter Castellana, Jr. 4,895,013 99.21% 39,031 Stephen R. Bokser 4,897,593 99.26% 36,451 Daniel M. Healy 4,897,593 99.26% 36,451 Arnold B. Becker 4,897,593 99.26% 36,451
-7- (b) Adoption of 1995 Employee Stock Option Plan: Votes For % For Votes Against Abstentions -------- ------ ------------ ----------- 4,302,173 97.79% 82,643 14,267 (c) Adoption of 1995 Non Employee Director Stock Option Plan: Votes For % For Votes Against Abstentions --------- ------ ------------ ----------- 4,176,860 94.94% 210,751 11,832 (d) Election of BDO Seidman as Independent Auditors: Votes For % For Votes Against Abstentions --------- ------ ------------ ----------- 4,912,262 99.56% 8,440 13,342 Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K The registrant has not filed a report on Form 8-K during the quarter just ended. -8- 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. WESTERN BEEF, INC.WESTERN BEEF, INC. By: /s/Robert C. Ludlow ------------------- Robert C. Ludlow Senior Vice-President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: August 14, 1995 -9- EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE WESTERN BEEF, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-29-1995 DEC-31-1994 JUN-30-1995 1,316 0 7,958 402 16,383 28,384 44,263 15,529 59,145 19,508 6,460 273 0 0 32,904 59,145 73,058 73,058 55,353 55,353 15,355 0 193 2,157 1,003 1,154 0 0 0 1,154 .21 .21