-----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, PMHeMdjwdd6lh9WTvnzqmi8bF/Rx3p93uGkzhRu5hdzuWEiMhyb2L1xy6DvsOUAy n21l/hnYDgdMik2ZYrkktw== 0001047469-99-021402.txt : 19990519 0001047469-99-021402.hdr.sgml : 19990519 ACCESSION NUMBER: 0001047469-99-021402 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990403 FILED AS OF DATE: 19990518 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 SEC ACT: SEC FILE NUMBER: 000-04485 FILM NUMBER: 99629329 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 APRIL 3, 1999 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 May 14, 1999 - -------------------------------------------------------------------------------- WESTERN BEEF, INC. AND SUBSIDIARIES INDEX Page ---- CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION 2 PART I-FINANCIAL INFORMATION Item 1. Financial Statements: Condensed consolidated balance sheets as of April 3, 1999 and January 1, 1999. 3 Condensed consolidated statements of income for the thirteen weeks ended April 3, 1999 and 1998. 4 Condensed consolidated statements of cash flows for the thirteen weeks ended April 3, 1999 and 1998. 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 SIGNATURE 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 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; 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)
APRIL 3, 1999 JANUARY 1, 1999 ------------- --------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 11,818 $ 12,086 Accounts receivable, net of allowance for doubtful accounts ($555 and $522) 5,701 5,632 Inventories 16,685 15,290 Deferred income taxes 1,542 1,550 Prepaid expenses and other current assets 2,262 2,133 -------- -------- Total current assets 38,008 36,691 Property, plant and equipment, net of accumulated depreciation and amortization ($25,302 and $24,267) 48,121 47,373 Other assets 2,281 2,293 -------- -------- Total assets $ 88,410 $ 86,357 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,543 $ 1,681 Current portion of obligations under capital leases 705 690 Accounts payable 12,365 10,564 Accounts payable-related party 3,050 3,765 Accrued expenses and other current liabilities 6,066 5,610 -------- -------- Total current liabilities 23,729 22,310 Long-term debt, net of current portion 8,681 8,819 Obligations under capital leases, net of current portion 2,256 2,438 Deferred income taxes 2,509 2,497 Other non-current liabilities 2,028 1,760 -------- -------- Total liabilities 39,203 37,824 -------- -------- Stockholders' equity: Preferred stock, $.05 par value; 2,000 shares authorized; none issued Common stock, $.05 par value; 15,000 shares authorized; 5,475 shares issued and outstanding 274 274 Capital in excess of par value 11,407 11,407 Retained earnings 37,580 36,915 Deferred compensation (54) (63) -------- -------- Total stockholders' equity 49,207 48,533 -------- -------- Total liabilities and stockholders' equity $ 88,410 $ 86,357 ======== ========
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)
THIRTEEN WEEKS ENDED APRIL 3, 1999 APRIL 3, 1998 ------------- ------------- Net sales $77,434 $70,061 Cost of sales 56,854 51,056 ------- ------- Gross profit 20,580 19,005 Selling, general and administrative expenses 19,516 17,472 ------- ------- Income before income taxes 1,064 1,533 Provision for income taxes 399 585 ------- ------- Net income $ 665 $ 948 ======= ======= Net income per share of common stock: Basic and diluted $ .12 $ .17 ======= ======= Weighted average shares outstanding: Basic 5,474 5,469 ======= ======= Diluted 5,495 5,496 ======= =======
See accompanying notes to condensed consolidated financial statements. -4- WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)
THIRTEEN WEEKS ENDED APRIL 3, 1999 APRIL 3, 1998 ------------- ------------- Cash flows from operating activities: Net income $ 665 $ 948 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,073 1,039 Deferred income taxes 20 44 Provision for losses on accounts receivable 32 68 Gain on disposal of property, plant and equipment -- (105) (Increase) decrease in assets: Accounts receivable (101) 815 Inventories (1,395) (627) Prepaid expenses and other current assets (148) 460 Other assets 19 (67) (Decrease) increase in liabilities: Accounts payable and accounts payable-related parties 1,086 1,683 Accrued expenses and other current liabilities 456 (150) Non-current liabilities 268 (259) -------- -------- Net cash provided by operating activities 1,975 3,849 -------- -------- Cash flows from investing activities: Capital expenditures (1,800) (1,275) -------- -------- Net cash used in investing activities (1,800) (1,275) -------- -------- Cash flows from financing activities: Proceeds from sale of property, plant and equipment -- 148 Proceeds from long-term debt 160 -- Payments on long-term debt and capital leases (603) (779) Issuance of common stock -- 6 -------- -------- Net cash used in financing activities (443) (625) -------- -------- Net (decrease) increase in cash and cash equivalents (268) 1,949 Cash and cash equivalents, beginning of period 12,086 7,527 -------- -------- Cash and cash equivalents, end of period $ 11,818 $ 9,476 ======== ======== Cash paid during the period for: Interest $ 273 $ 285 Income taxes $ 0 $ 0
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 thirteen weeks ended April 3, 1999 are not necessarily indicative of the actual results for the year ending January 1, 2000. 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 1, 1999. (2) Litigation: Except as discussed below, there has been no significant change in litigation as discussed in Note 7 of Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended January 1, 1999 as filed on March 26, 1999. On December 3, 1998, a purported class action, Plumpe v. Castellana et al., No. 16807 NC, was filed in the Delaware Chancery Court against Western Beef, Peter Castellana, Jr., Joseph Castellana, Stephen R. Bokser and Arnold B. Becker. The action seeks to enjoin a transaction pursuant to which the Company would be acquired by an entity formed by certain Company officials and their family members, on the grounds that the transaction would create a breach of fiduciary duties to shareholders. The action also seeks recission of the transaction if it is consummated, and accounting, damages and attorneys' fees. By agreement with plaintiff, defendants' time to answer the complaint has been extended indefinitely, pending possible settlement discussions with plaintiff. Western Beef believes that plaintiff's claims are without legal merit and is prepared to defend them vigorously. (3) Change in Fiscal Year-End: The Company has changed its retail 52-53 week year-end to end on the Saturday closest to the end of the calendar year from the Friday closest to the end of the calendar year. -6- ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the thirteen weeks ended April 3, 1999, Western Beef, Inc. (the "Company") achieved net income of $665,000 or $0.12 per share on net sales of $77,434,000 as compared to net income of $948,000 or $0.17 per share on net sales of $70,061,000 for the comparable period in 1998. Net sales for the first quarter of fiscal 1999 were $77,434,000 or 10.5% higher than the sales for the first quarter of fiscal 1998. Retail division sales increased by $6,279,000 primarily as a result of the 1998 openings of two Western Beef supermarkets in New Jersey and two Junior's Food Outlet stores in New York. Comparable store retail sales were basically unchanged from the retail sales of the first quarter of 1998. Wholesale division sales increased $1,094,000 or 7.7% resulting from an expansion of the Company's sales force. Gross profit, as a percentage of net sales, for the 1999 and 1998 quarters was 26.6% and 27.1%, respectively. The 0.5% decrease in the gross profit margin resulted from increased sales in the Company's wholesale division and Junior's Food Outlet stores which operate at lower gross profit margins. Selling, general and administrative expenses expressed as a percentage of sales increased to 25.2% from 24.9% in 1998. The increase was primarily the result of costs associated with the opening of the two new supermarkets in New Jersey and the two new Junior's Food Outlet stores in New York and increases in insurance reserves under the Company's self- insurance program. LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations was $1,975,000 for the thirteen weeks ended April 3, 1999 as compared to $3,849,000 for the comparable period in 1998. Such decrease primarily resulted from higher wholesale division sales, thereby increasing accounts receivable and an increase in inventories as a result of the new supermarkets and Junior's Food Outlet stores that opened in 1998. Capital expenditures of $1,800,000 related principally to the acquisition of a parcel of land in Queens, NY on which the Company intends to construct a Junior's Food Outlet store, construction costs at a new Junior's Food Outlet store to be opened on Prospect Avenue in the Bronx, N.Y., and various expenditures for equipment and leasehold improvements for existing stores. 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 June 30, 1999 will be sufficient to meet its operational needs. The Company expects that this line of credit will be renewed by the bank on similar terms. The Company also has several financial institutions that would be available to finance new store equipment, usually over a five to seven year period. In 1999, the Company intends to commence construction of one Western Beef Supermarket and four Junior's Food Outlet stores. The Company expects that the aggregate 1999 capital commitments for these projects will be approximately $11,600,000. -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 materially adversely affect the Company's financial position. See Note 2. Litigation of Notes to Condensed Consolidated Financial Statements for further disclosure. 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/ Thomas F. Moranzoni ----------------------------- Thomas F. Moranzoni Chief Financial Officer (Principal Financial and Accounting Officer) Date: May 18, 1999 -9- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED APRIL 3, 1999 FOR WESTERN BEEF, INC. 1,000 3-MOS JAN-01-2000 JAN-02-1999 APR-03-1999 11,818 0 6,256 555 16,685 38,008 73,423 25,302 88,410 23,729 10,937 0 0 274 48,933 88,410 77,434 77,434 56,854 56,854 19,243 0 273 1,064 399 665 0 0 0 665 .12 .12
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