-----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, MsHOnEJa1WJq7CiRyZi4p6IBET5HnrzhuzAUZPETP0AvMhA/OOVie78Cx+Te4NlC wug6R8OnJtAEd2SCpbNJ8Q== 0001047469-98-031600.txt : 19980817 0001047469-98-031600.hdr.sgml : 19980817 ACCESSION NUMBER: 0001047469-98-031600 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980703 FILED AS OF DATE: 19980814 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: 0103 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-04485 FILM NUMBER: 98689680 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/A 1 FORM 10-Q/A FORM 10-Q/A 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 July 3, 1998 ------------ 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. 5,475,153 shares of Common Stock, par value $.05, as of August 10, 1998. WESTERN BEEF, INC. AND SUBSIDIARIES INDEX PAGE ---- PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements (unaudited) Condensed consolidated balance sheets as of July 3, 1998 and January 2, 1998. 3 Condensed consolidated statements of income for the twenty-six weeks ended July 3, 1998, the twenty-five weeks ended June 27, 1997, and the thirteen weeks ended July 3, 1998 and June 27, 1997. 4 Condensed consolidated statements of cash flows for the twenty-six weeks ended July 3, 1998 and the twenty-five weeks ended June 27, 1997. 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 9 - --------------------------- 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 10 - ---------- 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 construction or acquisition of new stores, the recoverability of deferred tax assets, the continued availability of credit lines for capital expansion, the suitability of facilities, access to suppliers, implementation of technological improvement programs and year 2000 issues relating to computer applications. 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); the pricing and availability of the products the Company sells and distributes, including Western Beef label brand products; potential delays in the implementation of the Company's technological improvement programs; and the effectiveness of such programs upon the implementation of, and the Company's ability to resolve, any and all year 2000 computer applications. 2 ITEM 1: FINANCIAL STATEMENTS -------------------- WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PAR VALUE)
July 3, 1998 January 2, 1998 ------------- --------------- (Unaudited) ASSETS - ------ Current assets: Cash and cash equivalents $ 9,617 $ 7,527 Accounts receivable, net of allowance for doubtful accounts ($711 and $573) 5,731 6,275 Inventories 15,852 14,113 Deferred income taxes 1,218 1,235 Prepaid expenses and other current assets 2,796 2,933 ------- ------- Total current assets 35,214 32,083 Property, plant and equipment, net of accumulated depreciation and amortization ($22,517 and $20,526) 45,013 42,258 Other assets 2,007 1,913 ------- ------- Total assets $82,234 $76,254 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Current portion of long-term debt $ 1,685 $ 1,571 Current portion of obligations under capital leases 740 1,090 Accounts payable 10,990 8,903 Accrued liabilities 6,498 4,834 Accounts payable-related party 2,387 1,997 ------- ------- Total current liabilities 22,300 18,395 Deferred income taxes payable 2,086 2,059 Long-term debt, net of current portion 6,868 5,707 Obligations under capital leases, net of current portion 2,790 3,130 Other non-current liabilities 1,220 1,834 ------- ------- Total liabilities 35,264 31,125 ------- ------- Stockholders' equity: Preferred stock, $.05 par value; 2000 shares authorized; none issued -- -- Common stock, $.05 par value; 15,000 shares authorized; 5,475 and 5,466 shares issued and outstanding 273 273 Capital in excess of par value 11,408 11,390 Retained earnings 35,369 33,563 Deferred compensation (80) (97) ------- ------- Total stockholders' equity 46,970 45,129 ------- ------- Total liabilities and stockholders' equity $82,234 $76,254 ======= =======
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)
Twenty-Six Twenty-Five Weeks Ended Weeks Ended Thirteen Weeks Ended July 3, 1998 June 27, 1997 July 3, 1998 June 27, 1997 ------------ ------------- ------------ ------------- Net sales $146,254 $154,676 $76,193 $81,881 Cost of sales 106,926 116,595 55,870 61,942 -------- -------- ------- ------- Gross profit 39,328 38,081 20,323 19,939 Selling, general and administrative expenses 36,432 35,207 18,960 18,558 -------- -------- ------- ------- Income before income taxes 2,896 2,874 1,363 1,381 Provision for income taxes 1,090 1,282 505 602 -------- -------- ------- ------- Net income $ 1,806 $ 1,592 $ 858 $ 779 ======== ======== ======= ======= Net income per share of common stock-basic and diluted $ .33 $ .29 $ .16 $ .14 ======== ======== ======= ======= Weighted average shares outstanding-basic 5,472 5,465 5,475 5,466 ======== ======== ======= ======= Weighted average shares outstanding-diluted 5,498 5,507 5,498 5,504 ======== ======== ======= =======
See accompanying notes to condensed consolidated financial statements. 4 WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Twenty-Six Twenty-Five Weeks Ended Weeks Ended July 3, 1998 June 27, 1997 ------------ ------------- Cash flows from operating activities: Net income $ 1,806 $ 1,592 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,009 2,054 Deferred income tax expense 44 144 Provision for losses on accounts receivable 163 250 Gain on disposal of property, plant and equipment (114) (71) (Increase) decrease in assets Accounts receivable 381 169 Inventories (1,739) (664) Prepaid expenses and other current assets 137 (1,487) Other assets (94) (34) (Decrease) increase in liabilities: Accounts payable and accounts payable-related party 2,477 3,529 Accrued expenses and other liabilities 1,664 214 Non-current liabilities (614) -- ------- ------- Net cash provided by operating activities 6,120 5,696 ------- ------- Cash flows from investing activities: Capital expenditures (5,579) (4,115) Proceeds from sale of property, plant and equipment 946 ------- Net cash used in investing activities (4,633) (3,816) ------- ------- Cash flows from financing activities: Proceeds from issuance of long-term debt 2,055 647 Payments on long-term debt and capital leases (1,470) (1,487) Issuance of common stock 18 6 ------- ------- Net cash provided by (used in) financing activities 603 (834) ------- ------- Net increase in cash and cash equivalents 2,090 1,046 Cash and cash equivalents, beginning period 7,527 2,634 ------- ------- Cash and cash equivalents, end of period $ 9,617 $ 3,680 ======= ======= Cash paid for: Interest $ 504 $ 575 Income taxes $ 324 $ 1,860
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 conformity 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 July 3, 1998 are not necessarily indicative of the results that may be expected for the year ending January 1, 1999. 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 2, 1998. (2) LITIGATION There has been no material change in litigation from the year ended January 2, 1998. 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 quarter ended July 3, 1998, Western Beef, Inc. (the "Company") achieved net income of $858,000 or $0.16 per share on net sales of $76,193,000, as compared to net income of $779,000 or $0.14 per share on net sales of $81,881,000 for the comparable period in 1997. On a year to-date basis the Company achieved net income of $1,806,000, or $0.33 per share on net sales of $146,254,000 for the twenty-six week period ended July 3, 1998 as compared to net income of $1,592,000 or $0.29 per share on net sales of $154,676,000 for the twenty-five week period ended June 27, 1997. Retail division sales increased $3,312,000 and $7,729,000 for the quarter and year-to-date periods ended July 3, 1998 as compared with sales for the prior year periods ended June 27, 1997. Second quarter retail division sales included the July fourth holiday as well as incremental sales from the Company's capital expansion program which included its first Junior's Food Outlet store opened on March 30, 1998 and a new supermarket in Manalapan, New Jersey opened on June 14, 1998. After adjusting for the additional week, 1998 year-to-date comparable store sales declined by 0.3% versus 1997. Wholesale division sales decreased $9,000,000 and $16,151,000 for the quarter and year-to-date periods ended July 3, 1998 as compared with sales for the prior year periods ended June 27, 1997. Wholesale division sales continue to reflect tightening of the Company's credit policies initiated in 1997. Overall Company net sales for the 1998 second quarter and year-to-date periods ended July 3, 1998 were $5,688,000 and $8,422,000 lower than the prior year periods ended June 27, 1997 Gross profit as a percentage of sales increased to 26.7% in the second quarter of 1998 from 24.4% in the same quarter of 1997. On a year-to-date basis gross profit increased to 26.9% for the twenty-six weeks ended July 3, 1998 as compared to 24.6% for the twenty-five weeks ended June 27, 1997. The increase in the gross profit percentage for the second fiscal quarter of 1998 resulted from the increased ratio of retail division sales to wholesale division sales. Selling, general and administrative expenses as a percentage of sales increased to 24.9% for the second quarter of 1998 from 22.7% in the comparable period in 1997. On a year-to-date basis, selling, general and administrative expenses increased to 24.9% of sales for the twenty-six weeks ended July 3, 1998 from 22.8% for the twenty-five weeks ended June 27, 1997. The increased quarterly and year-to-date selling, general and administrative percentage rate is attributable to the increased ratio of retail division sales versus wholesale division sales. In addition, the 1998 second quarter results include $126,000 in pre-opening expense associated with the opening of two new retail locations. 7 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES Cash flows from operations were $6,120,000 for the twenty-six weeks ended July 3, 1998 as compared to $5,696,000 for the twenty-five weeks ended June 27, 1997. Cash flow from operations improved due to higher net income and reductions in accounts receivable attributable to improved collections thereof. Inventory increases associated with new retail locations were offset by related increases in trade accounts payable and accrued expenses. Cash flow from operations plus cash on hand were sufficient to pay for capital expenditures and long-term debt requirements. Capital expenditures of $5,579,000 included the exercise of an option to purchase an existing store location for approximately $2,055,000 funded by the prior owner to be repaid over 15 years at 6.25% per annum. The remaining capital expenditures were related to equipment purchases and leasehold improvements for the new retail locations. The Company funded these expenditures with cash flow from operations. The Company has renewed its $3,000,000 line of credit (expiring July 3, 1999) which, along with cash on hand, is expected to 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 July 3, 1998, the Company was in contract to purchase land for future Junior's Food Outlet locations in Manhattan and Queens, NY. The acquisition price for these locations is $640,000 and $250,000, respectively. In addition, the Company was also in contract to purchase land for $1,700,000 in the Bronx, NY upon which it intends to construct a supermarket and satellite rental units. 8 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 or results of operations. 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 None 9 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 ------------------------- Chief Financial Officer (Principal Financial and Accounting Officer) Date: August 13, 1998 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JULY 31, 1998. 6-MOS JAN-01-1999 APR-04-1998 JUL-03-1998 9,617 0 6,442 711 15,852 35,214 67,530 22,517 82,234 22,300 9,658 273 0 0 46,697 82,234 146,254 146,254 106,926 106,926 35,790 138 504 2,896 1,090 1,806 0 0 0 1,806 .33 .33
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