-----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, LN4Y3wzk3X/PZ04O2Y30xWmTeiA2v2hTXfV1XcXmU8R1xS81lU687pPGzvYgLBhK 8bUpalE+hyWNjsmHnGNROw== 0000950112-96-002742.txt : 19960903 0000950112-96-002742.hdr.sgml : 19960903 ACCESSION NUMBER: 0000950112-96-002742 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960628 FILED AS OF DATE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN BEEF INC /DE/ CENTRAL INDEX KEY: 0000081942 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96608313 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 WESTERN BEEF, INC. ================================================================================ 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 28,1996 Commission File Number 0-4485 WESTERN BEEF, INC. (Exact name of registrant as specified in its charter) Delaware 13-3266114 (State or other jurisdiction (I.R.S. Employer of 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. As of August 8, 1996, 5,463,317 shares of Common Stock, par value $.05 per share, were issued and outstanding. ================================================================================ INDEX WESTERN BEEF, INC. AND SUBSIDIARIES PAGE ---- PART I-FINANCIAL INFORMATION Item 1. Financial statements (Unaudited) Condensed consolidated balance sheets as of June 28, 1996 and December 29, 1995 2 Condensed consolidated statements of income for the twenty-six weeks and the thirteen weeks ended June 28, 1996 and June 30, 1995 3 Condensed consolidated statements of cash flows for the twenty-six weeks ended June 28, 1996 and June 30, 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 SIGNATURES 9 WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) June 28, December 29, 1996 1995 -------- -------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 3,283 $ 2,431 Accounts receivable, net of allowance for doubtful accounts ( $582 and $326) 8,090 8,754 Inventories 18,257 15,959 Prepaid expenses and other current assets 2,666 2,020 Deferred income taxes 887 702 -------- -------- Total current assets 33,183 29,866 Property, plant and equipment, net of accumulated depreciation and amortization ($15,171 and $15,026) 36,943 31,733 Other assets 1,683 1,714 -------- -------- Total assets $ 71,809 $ 63,313 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 2,408 $ 1,997 Current portion of obligations under capital leases 166 193 Accounts payable 13,939 13,134 Accrued expenses and other liabilities 4,799 3,190 -------- -------- Total current liabilities 21,312 18,514 Deferred income taxes payable 1,629 1,249 Long-term debt, net of current portion 8,900 6,280 Obligations under capital leases, net of current portion 1,310 1,411 -------- -------- Total liabilities 33,151 27,454 -------- -------- 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 11,379 11,379 Retained earnings 27,153 24,371 Deferred compensation (147) (164) -------- -------- Total shareholders' equity 38,658 35,859 -------- -------- Total liabilities and shareholders' equity $ 71,809 $ 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) Twenty-Six Weeks Ended Thirteen Weeks Ended ---------------------- --------------------- June 28, June 30, June 28, June 30, 1996 1995 1996 1995 -------- -------- -------- -------- Net sales $163,529 $140,632 $ 84,180 $ 73,058 Cost of sales 123,926 107,401 64,166 55,353 -------- -------- -------- -------- Gross profit on sales 39,603 33,231 20,014 17,705 -------- -------- -------- -------- Expenses: Rent expense-affiliates 1,250 1,399 627 701 Selling, general and administrative expenses 32,704 27,773 16,278 14,654 Interest expense 481 388 273 193 -------- -------- -------- -------- Total expenses 34,435 29,560 17,178 15,548 -------- -------- -------- -------- Income before income taxes 5,168 3,671 2,836 2,157 Provision for income taxes 2,386 1,720 1,316 1,003 -------- -------- -------- -------- Net income $ 2,782 1,951 $ 1,520 1,154 ======== ======== ======== ======== Weighted average number of common shares and equivalents 5,501 5,463 5,498 5,463 ======== ======== ======== ======== outstanding Earnings per common share $ .51 $ .36 $ .28 $ .21 ======== ======== ======== ======== 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 28, June 30, 1996 1995 ------- ------- Cash flows from operating activities: Net income $ 2,782 $ 1,951 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,507 1,213 Deferred income tax (benefit) 195 (169) Provision for losses on accounts receivable 260 260 (Increase)decrease in assets: Accounts receivable 404 (909) Inventories (2,298) (3,044) Prepaid expenses and other current assets (646) 290 Other assets 31 (10) (Decrease) increase in liabilities: Accounts payable 805 2,566 Accrued expenses and other liabilities 1,609 304 Income taxes payable -- 497 ------- ------- Net cash provided by operating activities 4,649 2,949 ------- ------- Cash flows from investing activities: Capital expenditures (6,777) (4,671) Low income housing investment -- (907) Proceeds from sale of property, plant and equipment 77 -- ------- ------- Net cash used in investing activities (6,700) (5,578) ------- ------- Cash flows from financing activities: Net borrowings under line of credit agreement -- 391 Payments on long-term debt and capital leases (1,104) (757) Proceeds from issuance of long-term debt 4,007 -- ------- ------- Net cash provided by (used in) financing activities 2,903 (366) ------- ------- Net increase (decrease) in cash and cash equivalents 852 (2,995) Cash and cash equivalents, beginning of period 2,431 4,311 ------- ------- Cash and cash equivalents, end of period $ 3,283 $ 1,316 ======= ======= Cash paid during the twenty-six weeks for: Interest $ 481 $ 388 Income taxes $ 2,413 $ 1,233 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 28, 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. (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- ITEM 2. Management Discussion and Analysis of Financial Condition and Results of Operations Net sales for the second fiscal quarter of 1996 were $84,180,000, a 15.2% increase from the comparable quarter of 1995. On a year-to-date basis, net sales were $163,529,000, an increase of 16.3% over 1995 net sales. The sales increase was generated predominantly from the new stores that were opened in 1995 and 1996. Same store sales declined approximately 1% in the second quarter of 1996 compared to the similar quarter in 1995. The decline is attributable to the renovation of two stores and some existing customers who began shopping at the new stores opened in Brooklyn and Staten Island because of proximity to their homes. For the six months ended June 28, 1996 same stores sales were flat compared to the similar period in 1995. Gross profit, as a percentage of sales decreased to 23.78% in the second quarter of 1996 from 24.23% in the same quarter of 1995. On a year-to-date basis, gross profit increased to 24.22% as compared with 23.63% last year. The variances result from changes in the market conditions of perishable products such as, meat, deli, dairy and produce. Selling, general and administrative expenses, including rent expense-affiliates and interest expense as a percentage of sales, decreased to 20.41% in the second fiscal quarter of 1996 from 21.28% in the same quarter of 1995. On a year-to-date basis, selling, general and administrative expenses, including rent expense-affiliates and interest expense, was essentially flat at 21.06% as compared with 21.02% in 1995. The selling, general and administrative cost category includes payroll, bonuses and operating costs. The decline in the second quarter was due to increased efficiencies along with lower start up costs incurred during the period. Liquidity and Capital Resources Cash flows from operations were $4,649,000 for the twenty-six weeks ended June 28, 1996 as compared to $2,949,000 for the comparable period of 1995. The increase results from higher net income, decreased accounts receivable, increased accounts payable and accrued expenses offset by increases in inventories and prepaid expenses. The increase in inventories and accounts payable occurred because of increased buying in preparation for the July 4th weekend sales. The increase in accrued expenses arises from a change to a self-insured plan for liability, automobile and workmen's compensation insurance. Cash flow from operations plus cash on hand were sufficient to pay for capital expenditures and long-term debt requirements. The capital expenditures of $6,777,000 were primarily for the exercise of an option to purchase for $3,000,000, one of the Company's retail locations currently leased from a non-affiliated company, the opening of the West End Avenue store in Manhattan, renovation of the College Point Boulevard store and a new telephone communications system. The exercise of the store option was funded by a 20 year mortgage at 8.25% per annum with a balloon payment of $2,084,095 due on the tenth anniversary date of the purchase. The additions and improvements were funded by cash flow from operations and a $1,000,000 loan from a finance company for five years at 7.54% per annum. The Company believes that cash on hand and its $3,000,000 bank line of credit which expires on June 30, 1997 will be sufficient to meet its operational needs. The Company also has available a $3,000,000 line of credit from a finance company to fund future capital expenditures. As of June 28, 1996, the Company plans to spend approximately $2,000,000 renovating its Metropolitan Avenue store and its newest location in Roosevelt, New York. -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 12, 1996, and transacted the following business: (a) Election of Directors: Nominee Votes For % For Votes Withheld ---------------------- ------------- -------- -------------- Frank Castellana 4,806,757 87.98% 189,924 Joseph Castellana 4,806,757 87.98% 189,924 Peter Castellana, Jr. 4,802,757 87.91% 193,924 Stephen R. Bokser 4,805,037 87.95% 191,644 Arnold B. Becker 4,805,017 87.95% 191,664 Richard G. Klein 4,805,037 87.95% 191,644 -7- (b) Adoption of Amendment to the 1995 Employee Stock Option Plan: Votes For % For Votes Against Abstentions ---------------- ------------ --------------- ------------- 4,675,836 85.59% 225,829 10,363 (c) Selection of BDO Seidman as Independent Auditors: Votes For % For Votes Against Abstentions ---------------- ------------ --------------- ------------- 4,989,075 91.32% 3,040 4,566 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. By: /s/ Robert C. Ludlow --------------------------------- Robert C. Ludlow Senior Vice-President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: August 7, 1996 -9- EX-27 2
5 The Western Beef, Inc. quarterly report on Form 10-Q for the quarter ended June 28, 1996 1,000 6-MOS JAN-03-1997 MAR-30-1996 JUN-28-1996 3,283 0 8,672 582 18,257 33,183 52,114 15,171 71,809 21,312 10,210 0 0 273 (147) 71,809 84,180 84,180 64,166 64,166 16,905 0 273 2,836 1,316 1,520 0 0 0 1,520 .28 .28
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