-----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, PR5WDLGyon9hyccL4Y06rzRUEoo234tXPPs23W0Tbm3FdNe9mV5soBvjRhcN1aoW ynpYOzX22K/9UM6Er2ZaHw== 0000912057-96-025003.txt : 19961108 0000912057-96-025003.hdr.sgml : 19961108 ACCESSION NUMBER: 0000912057-96-025003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960927 FILED AS OF DATE: 19961107 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN BEEF INC /DE/ CENTRAL INDEX KEY: 0000081942 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 133266114 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: 96656046 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 September 27,1996 ----------------- Commission File Number 0-4485 ------ WESTERN BEEF, INC - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-3266114 - ------------------------------------ ----------------------------------------- (State or other (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) 47-05 Metropolitan Avenue, Ridgewood, NY 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. As of October 19, 1996, 5,463,317 shares of Common Stock, par value $.05 per share were issued and outstanding. - -------------------------------------------------------------------------------- WESTERN BEEF, INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial statements: Condensed consolidated balance sheets as of September 27, 1996 and December 29, 1995. 2 Condensed consolidated statements of income for the thirty-nine weeks and the thirteen weeks ended September 27, 1996 and September 29, 1995. 3 Condensed consolidated statements of cash flows for the thirty-nine weeks ended September 27, 1996 and September 29, 1995. 4 Notes to the condensed consolidated financial statements. 5 Item 2. Management 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 SIGNATURE 8 WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value)
September 27, 1996 December 29, 1995 ------------------ ----------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $5,544 $2,431 Accounts receivable, net of allowance for doubtful accounts ($755 and $326) 8,300 8,754 Inventories 18,566 15,959 Prepaid expenses and other current assets 1,527 2,020 Deferred income taxes 996 702 ------------------ ----------------- Total current assets 34,933 29,866 Property, plant and equipment, net of accumulated depreciation and amortization ($15,934 and $15,026) 39,396 31,733 Other assets 1,716 1,714 ------------------ ----------------- Total assets $76,045 $63,313 ------------------ ----------------- ------------------ ----------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $2,399 $1,997 Current portion of obligations under capital leases 169 193 Accounts payable 18,167 13,134 Accrued expenses and other liabilities 3,477 3,190 ------------------ ----------------- Total current liabilities 24,212 18,514 Deferred income taxes payable 1,823 1,249 Long-term debt, net of current portion 8,543 6,280 Obligations under capital leases, net of current portion 1,279 1,411 ------------------ ----------------- Total liabilities 35,857 27,454 ------------------ ----------------- Shareholders' equity: Preferred stock, $.05 par value; 2000 shares authorized; 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 11,379 11,379 Retained earnings 28,675 24,371 Deferred compensation (139) (164) ------------------ ----------------- Total shareholders' equity 40,188 35,859 ------------------ ----------------- Total liabilities and shareholders' equity $76,045 $63,313 ------------------ ----------------- ------------------ -----------------
See accompanying notes to condensed consolidated financial statements. 2 WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share data)
Thirty-nine weeks ended Thirteen weeks ended ------------------------------ ------------------------------ September 27, September 29, September 27, September 29, 1996 1995 1996 1995 -------------- ------------- -------------- ------------- Net sales $248,696 $219,039 $85,167 $78,407 Cost of sales 188,413 166,599 64,487 59,198 -------------- ------------- -------------- ------------- Gross profit on sales 60,283 52,440 20,680 19,209 -------------- ------------- -------------- ------------- Operating expenses: Rent expense - affiliates 1,910 2,089 660 690 Interest expense 733 586 252 198 Selling, general and administrative expenses 49,651 43,703 16,947 15,930 -------------- ------------- -------------- ------------- Total operating expenses 52,294 46,378 17,859 16,818 -------------- ------------- -------------- ------------- Income before provision for income taxes 7,989 6,062 2,821 2,391 Provision for income taxes 3,685 2,751 1,299 1,031 -------------- ------------- -------------- ------------- Net income $4,304 $3,311 $1,522 $1,360 -------------- ------------- -------------- ------------- -------------- ------------- -------------- ------------- Weighted average number of common shares outstanding 5,501 5,463 5,505 5,463 -------------- ------------- -------------- ------------- -------------- ------------- -------------- ------------- Earnings per common share $.78 $.61 $.28 $.25 -------------- ------------- -------------- ------------- -------------- ------------- -------------- -------------
See accompanying notes to condensed consolidated financial statements. 3 WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Thirty-nine weeks ended ----------------------------- September 27, September 29, 1996 1995 ------------- ------------- Cash flows from operating activities: Net income $4,304 $3,311 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,337 1,998 Deferred income tax benefit 280 (253) Provision for losses on accounts receivable 430 390 (Increase) decrease in assets: Accounts receivable 24 (1,332) Inventories (2,607) (1,876) Prepaid expenses and other current assets 493 630 Other assets (2) 6 (Decrease) increase in liabilities: Accounts payable 5,033 902 Accrued expenses and other liabilities 287 786 Income taxes payable - 326 ------------- ------------- Net cash provided by operating activities 10,579 4,888 ------------- ------------- Cash flows from investing activities: Capital expenditures (9,975) (7,153) Low income housing investment - (907) ------------- ------------- Net cash used in investing activities (9,975) (8,060) ------------- ------------- Cash flows from financing activities: Proceeds from issuance of long-term debt 4,224 1,603 Payments on long-term debt and capital leases (1,715) (1,652) ------------- ------------- Net cash provided by (used in) financing activities 2,509 (49) ------------- ------------- Net increase (decrease) in cash and cash equivalents 3,113 (3,221) Cash and cash equivalents, beginning of period 2,431 4,311 ------------- ------------- Cash and cash equivalents, end of period $5,544 $1,090 ------------- ------------- ------------- ------------- Cash paid during the thirty-nine weeks for: Interest $733 $586 Income taxes $3,103 $3,311
See accompanying notes to condensed consolidated financial statements. 4 WESTERN BEEF, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 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 thirty-nine weeks ended September 27, 1996 are not necessarily indicative of the results that may be expected for the year ending January 3, 1997. 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 29, 1995. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 established a fair value method for accounting for stock-based compensation plans either through recognition or disclosure. The Company adopted the employee stock-based compensation provisions of SFAS No. 123, and will disclose the pro forma net income and pro forma net income per share amounts assuming the fair value method for fiscal year 1996 at year-end. The adoption of this standard will not impact the Company's consolidated results of operations, financial position or cash flows. Stock arrangements with non-employees, as applicable, will be recorded at fair value. NOTE 2 - LITIGATION There has been no material change in litigation from the year ended December 29, 1995. See Part II of this report for further disclosure. 5 WESTERN BEEF, INC. AND SUBSIDIARIES ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales for the third fiscal quarter of 1996 were $85,167,000, an increase of $6,760,000 from the comparable quarter of 1995. On a year-to-date basis, net sales were $248,696,000, an increase of $29,657,000 from 1995. The sales increase continues to be generated primarily from the new stores opened in 1995 and 1996. The nineteenth retail outlet was opened on September 25, 1996 and management is pleased with the early results. Same store sales increased 4.0% for the third fiscal quarter of 1996 versus 1995 and increased 1.6% for the year-to-date period. The overall sales increase for the quarter was the result of a positive response to the renovations of several older stores. Gross profit, as a percentage of sales, was 24.3% in the third fiscal quarter of 1996 and was consistent with the 24.5% in the same quarter of 1995. On a year-to-date basis, gross profit increased to 24.2% as compared with 23.9% last year. The increase in gross profit on a year-to-date basis profit is attributable to higher sales of Western Beef brand products and purchasing efficiencies. Operating expenses, including selling, general and administrative expenses, rent expense-affiliates and interest expense, as a percentage of sales, were 21.03% in the third fiscal quarter of 1996 as compared to 21.44% in the same quarter of 1995. On a year-to-date basis, operating expenses, including selling, general and administrative expenses, rent expense-affiliates and interest expense, were 21.03% as compared to 21.17% in 1995. The selling, general and administrative cost category includes payroll, bonuses and operating costs. The increase in operating expenses of $5,916,000 and $1,041,000 for the comparable nine month and three month periods respectively in 1996 are mainly attributable to the operations of the new retail outlets. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operations were $10,579,000 for the thirty-nine weeks ended September 27, 1996 as compared to $4,888,000 for the comparable period of 1995. The increase in inventory was offset by increases in accounts payable and accrued expenses. The increases in inventory and accounts payable resulted from the two new stores that opened during 1996. Ongoing store improvements will be financed by capital leases expected to be drawn down during the fourth quarter of 1996. Cash flows from operations plus cash on hand will be sufficient to pay for capital expenditures and long-term debt requirements. Equipment purchases and improvements for the two new stores, renovations of several older stores and the exercise of a $3,000,000 purchase option for one of the Company's retail locations (previously leased from a non-affiliated entity) accounted for a majority of capital expenditures. The Company believes that cash on hand and its $3,000,000 bank line of credit, which expires on July 31, 1997, will be sufficient to meet its operational needs. The Company also has financial institutions that would be available to refinance new store equipment, usually over a five-year period. 6 WESTERN BEEF, INC. AND SUBSIDIARIES 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 plaintiff's 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 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. 7 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. by:/s/Robert C. Ludlow ----------------------------------- Robert C. Ludlow Senior Vice-President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: October 22, 1996 8 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 SEPTEMBER 27, 1996. 1,000 9-MOS JAN-03-1997 JUN-29-1996 SEP-27-1996 5544 0 9055 755 18566 34933 55330 15934 76045 24212 9822 0 0 273 39915 76045 85167 85167 64487 64487 17607 0 252 2821 1299 1522 0 0 0 1522 .28 .28
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