-----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, RX/V9LYg1sC+XP+J/A68RCzP+DeCnUQRIZ4aLEo8JAsWqqbTo+z8T4ltxkhccs8F TnA3LlCp+zSvU3+M+xIJ2A== 0001047469-98-020053.txt : 19980515 0001047469-98-020053.hdr.sgml : 19980515 ACCESSION NUMBER: 0001047469-98-020053 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980403 FILED AS OF DATE: 19980514 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 SEC ACT: SEC FILE NUMBER: 000-04485 FILM NUMBER: 98619792 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, 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. 5,475,353 shares of Common Stock, $.05 par value, as of May 11, 1998. WESTERN BEEF, INC. AND SUBSIDIARIES INDEX
PAGE ------ PART I-FINANCIAL INFORMATION Item 1. Financial Statements Condensed consolidated balance sheets as of April 3, 1998 and January 2, 1998. 3 Condensed consolidated statements of income for the thirteen weeks ended April 3, 1998 and the twelve weeks ended March 28,1997. 4 Condensed consolidated statements of cash flows for the thirteen weeks ended April 3, 1998 and 5 the twelve weeks ended March 28, 1997. 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
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 taxes, 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)
April 3, January 2, ASSETS 1998 1998 ----------- --------- (Unaudited) Current assets: Cash and cash equivalents ............................. $ 9,476 $ 7,527 Accounts receivable, net of allowance for doubtful accounts ( $631 and $573) ........................... 5,392 6,275 Inventories ........................................... 14,740 14,113 Deferred income taxes ................................. 1,218 1,235 Prepaid expenses and other current assets ............. 2,473 2,933 -------- -------- Total current assets ................................ 33,299 32,083 Property, plant and equipment, net of accumulated depreciation and amortization ($21,527 and $20,526) ... 42,460 42,258 Other assets ............................................ 1,980 1,913 -------- -------- Total assets ........................................ $ 77,739 $ 76,254 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt ..................... $ 1,585 $ 1,571 Current portion of obligations under capital leases ... 871 1,090 Accounts payable ...................................... 10,598 8,903 Accrued liabilities ................................... 4,684 4,834 Accounts payable-related party ....................... 1,985 1,997 -------- -------- Total current liabilities ........................... 19,723 18,395 Deferred income taxes payable ........................... 2,086 2,059 Long-term debt, net of current portion .................. 5,302 5,707 Obligations under capital leases, net of current portion 2,961 3,130 Other non-current liabilities ........................... 1,575 1,834 -------- -------- Total liabilities ................................... 31,647 31,125 -------- -------- Stockholders' equity: Preferred stock, $.05 par value; 2,000 shares authorized; none issued ............................. -- -- Common stock, $.05 par value; 15,000 shares authorized; at April 3, 1998, 5,470 shares issued and outstanding; at January 3, 1998, 5,466 shares issued and outstanding .............................. 273 273 Capital in excess of par value ........................ 11,396 11,390 Retained earnings ..................................... 34,511 33,563 Deferred compensation ................................. (88) (97) -------- -------- Total stockholders' equity .......................... 46,092 45,129 -------- -------- Total liabilities and stockholders' equity .......... $ 77,739 $ 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)
Thirteen Twelve Weeks Ended Weeks Ended April 3, 1998 March 28, 1997 ------------- -------------- Net sales .................................. $70,061 $72,795 Cost of sales .............................. 51,056 54,653 ------- ------- Gross profit ............................... 19,005 18,142 Selling, general and administrative expenses 17,472 16,649 ------- ------- Income before income taxes ................. 1,533 1,493 Provision for income taxes ................. 585 680 ------- ------- Net income ................................. $ 948 $ 813 ------- ------- ------- ------- Net income per share of common stock-basic ............................. $ .17 $ .15 ------- ------- ------- ------- Net income per share of common stock-diluted ........................... $ .17 $ .15 ------- ------- ------- ------- Weighted average shares outstanding-basic ....................... 5,469 5,464 ------- ------- ------- ------- Weighted average shares outstanding-diluted ..................... 5,496 5,511 ------- ------- ------- -------
See accompanying notes to condensed consolidated financial statements. 4 WESTERN BEEF, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Thirteen Twelve Weeks Ended Weeks Ended April 3, 1998 March 28, 1997 ------------- -------------- Cash flows from operating activities: Net income .............................................. $ 948 $ 813 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ....................... 1,039 991 Deferred income tax expense ......................... 44 72 Provision for losses on accounts receivable ......... 68 120 Gain on disposal of property, plant and equipment ... (105) -- (Increase) decrease in assets: Accounts receivable ............................... 815 433 Inventories ....................................... (627) 779 Prepaid expenses and other current assets ......... 460 (424) Other assets ...................................... (67) (37) (Decrease) increase in liabilities: Accounts payable and accounts payable-related party 1,683 1,213 Accrued liabilities ............................... (150) (997) Increase in non-current liabilities ............... (259) -- ------- ------- Net cash provided by operating activities ....... 3,849 2,963 ------- ------- Cash flows from investing activities: Capital expenditures .................................... (1,275) (2,046) Proceeds from sale of property, plant and equipment ..... 148 270 ------- ------- Net cash used in investing activities ........... (1,127) (1,776) ------- ------- Cash flows from financing activities: Proceeds from issuance of long-term debt ................ -- 647 Payments on long-term debt and capital leases ........... (779) (693) Issuance of common stock ................................ 6 4 ------- ------- Net cash used in financing activities ........... (773) (42) ------- ------- Net increase in cash and cash equivalents ................. 1,949 1,145 Cash and cash equivalents, beginning of period ............ 7,527 2,634 ------- ------- Cash and cash equivalents, end of period .................. $ 9,476 $ 3,779 ------- ------- ------- ------- Cash paid during the period for: Interest ................................................ $ 285 $ 281 Income taxes ............................................ $ 0 $ 650
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, 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 thirteen weeks ended April 3, 1998, Western Beef, Inc. (the "Company") achieved net income of $948,000 or $0.17 per share on net sales of $70,061,000 as compared to net income of $813,000 or $0.15 per share on net sales of $72,795,000 for the twelve weeks ended March 28, 1997. Net sales for the first quarter of fiscal 1998 were $2,734,000 or 3.8% lower than the sales for the first quarter of fiscal 1997 (a twelve week period). Wholesale division sales decreased $7,151,000 due in part to the divestiture of its wholesale outlet business segment in February 1998 as well as the effects of the continued tightening of its credit policies initiated in the prior year. Retail division sales increased $4,417,000 due to the additional sales week in the current year's quarter. After adjusting for the additional week, comparable store sales increased 0.5% during the quarter. Gross profit as a percentage of net sales for the 1998 and 1997 quarters was 27.1% and 24.9%, respectively. The increased gross profit margin of 2.2% resulted from the increased ratio of retail to wholesale sales in 1998 as compared to 1997 wherein the retail segment generates higher gross profits than does the wholesale segment. Selling, general and administrative expenses expressed as a percentage of sales increased to 24.9% in 1998 from 22.9% in 1997. The increased expense percentage was primarily the result of the increased retail sales composition of the business wherein retail sales operating expenses are higher than wholesale sales operating expenses. In addition, the Company incurred certain pre-opening expenses of approximately $85,000 associated with the March 30, 1998 opening of its first Junior's Food Outlet store. Liquidity and Capital Resources: Cash flow from operations was $3,849,000 for the thirteen weeks ended April 3, 1998 as compared to $2,963,000 for the twelve week period of 1997. Lower wholesale division sales accounted for the accounts receivable decrease. Inventories increased as a result of the build-up of inventories in preparation for the Easter holiday which occurred in April 1998. In 1997, the Easter holiday was celebrated in March. Overall operating cash flow benefited from increased accounts payable leverage. Cash flow from operations plus cash on hand were sufficient to pay for capital expenditures and long-term debt requirements. Capital expenditures of $1,275,000 related principally to equipment purchases for, and renovations of, existing supermarkets and the new Junior's Food Outlet store. 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, 1998, will be sufficient to meet its operational needs. The bank is expected to renew this line of credit in 1998. he Company also has severalfinancial institutions that would be available to finance new store equipment, usually over a five or seven year period. As of April 3, 1998 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. 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 14, 1998 9 EX-27 2 EX-27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED APRIL 3, 1998. 1,000 3-MOS JAN-01-1999 JAN-03-1998 APR-03-1998 9,476 0 6,023 631 14,740 33,299 63,987 21,527 77,739 19,723 8,263 0 0 273 45,819 77,739 70,061 70,061 51,056 17,187 0 0 285 1,533 585 948 0 0 0 948 .17 .17
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