-----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, CWJjhuDVVzsmY+Cqr0tQn8PWuF2POUjchMqopR37pC9EgxfhUh5gPrGCYnYu/9aW V0yzNzcc9i9tIn7YHsyDlQ== 0001005477-97-001321.txt : 19970522 0001005477-97-001321.hdr.sgml : 19970522 ACCESSION NUMBER: 0001005477-97-001321 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970328 FILED AS OF DATE: 19970512 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: 0103 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04485 FILM NUMBER: 97600550 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 FORM 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 March 28, 1997 --------------- 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 13 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. 5,465,530 shares of Common Stock, $.05 par value as of May 6, 1997. - - -------------------------------------------------------------------------------- INDEX WESTERN BEEF, INC. AND SUBSIDIARIES PAGE ---- PART I-FINANCIAL INFORMATION Item 1. Financial Statements Condensed consolidated balance sheets as of March 28, 1997 and January 3, 1997. 3 Condensed consolidated statements of income for the twelve weeks ended March 28, 1997 and the thirteen weeks ended March 29,1996. 4 Condensed consolidated statements of cash flows for the twelve weeks ended March 28, 1997 and the thirteen weeks ended March 29, 1996. 5 Notes to the condensed consolidated financial statements. 6 Item 2. Management discussion and analysis of financial condition and results of operations. 7 PART II-OTHER INFORMATION 8 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 -1- CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor" for forward-looking statements. Certain information included in this quarterly report on Form 10-Q contains or may contain forward-looking statements such as those statements pertaining to the renovation of the Company's existing stores, the continued availability of credit lines for capital expansion, the expected profitability of the wholesale division resulting from the elimination of high risk accounts and the successful outcome of the legal proceedings detailed in Part II (Other Information on page eight of this quarterly report). Such forward-looking information involves important risks and uncertainties that could significantly affect expected results in the future from those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks and uncertainties include, but are not limited to, uncertainties relating to economic conditions; delays and other hazards inherent in building and construction; competition in both the retail and wholesale markets and government and regulatory policies and certifications (in particular those relating to the United States Department of Agriculture Food Stamp Program). -2- ITEM 1: Financial Statements WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) March 28, January 3, 1997 1997 --------- ---------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 3,779 $ 2,634 Accounts receivable, net of allowance for doubtful accounts ( $506 and $386) 7,881 8,434 Inventories 16,889 17,668 Prepaid expenses and other current assets 1,885 1,461 Deferred income taxes 1,278 1,253 -------- -------- Total current assets 31,712 31,450 Property, plant and equipment, net of accumulated depreciation and amortization ($17,611 and $16,935) 42,069 41,276 Other assets 1,810 1,773 -------- -------- Total assets $ 75,591 $ 74,499 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 2,608 $ 2,391 Current portion of obligations under capital leases 608 455 Accounts payable 12,627 11,414 Accrued expenses and other liabilities 4,865 5,862 -------- -------- Total current liabilities 20,708 20,122 Deferred income taxes payable 1,581 1,484 Long-term debt, net of current portion 6,961 7,764 Obligations under capital leases, net of current portion 3,634 3,247 -------- -------- Total liabilities 32,884 32,617 -------- -------- Stockholders' equity: Preferred stock, $.05 par value; shares authorized 2,000; none issued -- -- Common stock, $.05 par value; 15,000 shares authorized; at March 28, 1997, 5,464 shares issued and outstanding; at January 3, 1997, 5,463 shares issued and outstanding 273 273 Capital in excess of par value 11,383 11,379 Retained earnings 31,173 30,360 Deferred compensation (122) (130) -------- -------- Total stockholders' equity 42,707 41,882 -------- -------- Total liabilities and stockholders' equity $ 75,591 $ 74,499 ======== ======== See accompanying notes to condensed consolidated financial statements. -3- WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) Twelve Thirteen Weeks Ended Weeks Ended March 28, 1997 March 29, 1996 -------------- -------------- Net sales $72,795 $79,349 Cost of sales 54,653 59,760 ------- ------- Gross profit on sales 18,142 19,589 ------- ------- Operating expenses: Rent expense-affiliates 649 623 Selling, general and administrative expenses 15,719 16,426 Interest expense 281 208 ------- ------- Total operating expenses 16,649 17,257 ------- ------- Income before income taxes 1,493 2,332 Provision for income taxes 680 1,070 ------- ------- Net income $ 813 $ 1,262 ======= ======= Weighted average number of shares of common stock and equivalents outstanding 5,510 5,492 ======= ======= Earnings per share of common stock $ .15 $ .23 ======= ======= See accompanying notes to condensed consolidated financial statements. -4- WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Twelve Thirteen Weeks Ended Weeks Ended March 28, 1997 March 29, 1996 -------------- -------------- Cash flows from operating activities: Net income $ 813 $ 1,262 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 991 741 Deferred income tax benefit 72 98 Provision for losses on accounts receivable 120 130 (Increase) decrease in assets: Accounts receivable 433 894 Inventories 779 (473) Prepaid expenses and other current assets (424) (38) Other assets (37) 18 (Decrease) increase in liabilities: Accounts payable 1,213 (529) Accrued expenses and other liabilities (997) 510 Income taxes payable -- 16 ------- ------- Net cash provided by operating activities 2,963 2,629 ------- ------- Cash flows from investing activities: Capital expenditures (2,046) (5,039) Proceeds from sale of property, plant and equipment 270 77 ------- ------- Net cash used in investing activities (1,776) (4,962) ------- ------- Cash flows from financing activities: Proceeds from issuance of long-term debt 647 4,007 Payments on long-term debt and capital leases (693) (468) Issuance of common stock 4 -- ------- ------- Net cash provided by (used in) financing activities (42) 3,539 ------- ------- Net increase in cash and cash equivalents 1,145 1,206 Cash and cash equivalents, beginning of period 2,634 2,431 ------- ------- Cash and cash equivalents, end of period $ 3,779 $ 3,637 ======= ======= Cash paid during the period for: Interest $ 281 $ 208 Income taxes $ 650 $ 730 See accompanying notes to condensed consolidated financial statements. -5- 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 twelve weeks ended March 28, 1997 are not necessarily indicative of the results that may be expected for the year ending January 2, 1998. 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 January 3, 1997. In 1997, the Financial Accounting Standards Board Issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128 specifies the computation, presentation, and disclosure requirements for earnings per share. SFAS No. 128 is effective for periods ending after December 15, 1997. The adoption of this statement is not expected to have a material effect on the consolidated financial statements. (2) Litigation: There has been no material change in litigation from the year ended January 3, 1997. See Part II of this report for further disclosure. -6- ITEM 2: Management Discussion and Analysis of Financial Condition and Results of Operations For the twelve weeks ended March 28, 1997, Western Beef, Inc., (the "Company") achieved net income of $813,000 or $0.15 per share on net sales of $72,795,000, as compared to net income of $1,262,000 or $0.23 per share on net sales of $79,349,000 for the thirteen weeks ended March 29, 1996. Cost of sales, as a percentage of net sales, decreased to 75.1% from 75.3% with a resultant increase in the gross profit percentage to 24.9% from 24.7%. Net sales for the first quarter of fiscal 1997 were $6,554,000 or 8.3% lower than the sales for the first quarter of fiscal 1996. Approximately $6,100,000 of this decline was due to the first quarter of fiscal 1996 containing one additional week. 1997 store sales for the comparable twelve week period were down 5.6% resulting from reductions in the redemption of United States Department of Agriculture food stamps; store renovations of two of its larger-volume units and milder-than-normal winter weather. The comparable store sales decline was offset by sales of the two new stores that the Company opened during 1996. The increase in the gross profit percentage for the first quarter of 1997 resulted from a higher percentage of retail sales which produce higher gross profits than wholesale sales. Operating expenses including selling, general and administrative expenses, rent expense affiliates and interest expense, as a percentage of sales, increased to 22.9% for the twelve weeks ended March 28, 1997 from 21.7% for the comparable thirteen week period in 1996. The 1997 rate increase is reflective of fixed charge expenses, such as rent and depreciation that do not directly vary with sales. Liquidity and Capital Resources: Cash flows from operations were $2,963,000 for the twelve weeks ended March 28, 1997 as compared to $2,629,000 for the comparable thirteen week period of 1996. Decreases in accounts receivable, accrued expenses and inventories were partially offset by increases in accounts payable and prepaid expenses. The decrease in accounts receivable resulted from lower wholesale division sales caused by the Company's elimination of certain high risk accounts with the goal of improving the profitability of its wholesale division. Cash flow from operations plus cash on hand were sufficient to pay for capital expenditures and long-term debt requirements. Capital expenditures of $2,046,000 related to equipment purchases for, and renovations of, several of the Company's supermarkets. The Company funded these expenditures with cash flow from operations. The Company believes that cash on hand and its $3,000,000 bank line of credit which expires on July 31, 1997 and which is expected to be renewed by the bank, will be sufficient to meet its operational needs. The Company also has several financial institutions that would be available to finance new store equipment, usually over a five or seven year period. As of March 28, 1997 there were no material commitments for capital expenditures. -7- 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 adversely affect the Company's financial position materially. 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 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 motion practice and appeals addressed to the sufficiency and adequacy of the claims asserted, which resulted in the dismissal of plaintiffs' third claim for abuse of process, the parties engaged in extensive discovery procedures which are now completed. Plaintiffs have filed a note of issue placing this case on the trial calendar, and sought to have this action tried by a jury. On the grounds that the action sought a mixture of equitable and legal relief, the Company moved to strike the jury demand and compel a bench trial. The court granted the motion to strike the jury demand and plaintiffs have filed a notice of appeal from that order. The trial of this matter is scheduled to commence on September 9, 1997. The Company intends to continue vigorously defending this action. Although the Company believes it has meritorious defenses to this action, an evaluation of the likelihood of an unfavorable outcome cannot be made. 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 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule (b) 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/Chris Darrow ------------------------- Chris Darrow Chief Financial Officer (Principal Financial and Accounting Officer) Date: May 12, 1997 -9- EX-27 2 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTERN BEEF, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE TWELVE WEEKS ENDED MARCH 28, 1997 1,000 3-MOS JAN-02-1998 JAN-04-1997 MAR-28-1997 3,779 0 8,387 506 16,889 31,712 59,680 17,611 75,591 20,708 10,595 0 0 273 42,434 75,591 72,795 72,795 54,653 54,653 16,368 0 281 1,493 680 813 0 0 0 813 .15 .15
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