<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
Commission File Number 1-12599
VITA FOOD PRODUCTS, INC.
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(Name of Small Business Issuer in its Charter)
NEVADA #36-3171548
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2222 WEST LAKE STREET
CHICAGO, ILLINOIS (312) 738-4500 60612
- ---------------------- ----------------------------- ----------
(Address of principal Registrant's telephone number (Zip Code)
executive offices) including area code
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares outstanding of Registrant's common stock, par value $.01 per
share, as of May 5, 1997 is 3,700,000.
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VITA FOOD PRODUCTS, INC.
REPORT ON FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31, 1997
INDEX
I. FINANCIAL INFORMATION:
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Item 1. Financial Statements (unaudited)
Balance Sheets .......................................................................................... 3
Statements of Income .................................................................................... 5
Statements of Shareholders' Equity (Deficit) ............................................................ 6
Statements of Cash Flows ................................................................................ 7
Notes to Financial Statements ........................................................................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations ........................................................................................... 8
II. OTHER INFORMATION: .............................................................................................. 9
</TABLE>
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VITA FOOD PRODUCTS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
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MARCH 31, DECEMBER 31,
1997 1996
(UNAUDITED) (AUDITED)
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 113,318 $ 88,221
Accounts receivable-trade, net of allowance for doubtful
accounts of $170,750 in 1997 and $190,000 in 1996 1,919,627 3,212,157
Inventories
Raw material and supplies 4,114,002 3,167,911
work in process 111,604 168,604
Finished goods 1,293,371 1,473,172
Prepaid expenses and other current assets 193,992 152,845
Deferred Income Taxes 448,431 300,000
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TOTAL CURRENT ASSETS 8,194,345 8,562,910
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PROPERTY, PLANT AND EQUIPMENT
Building and Improvements 1,383,431 1,379,056
Machinery and Office Equipment 4,107,607 3,984,517
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5,491,038 5,363,573
Less accumulated depreciation and amortization (3,401,099) (3,337,129)
- ------------------------------------------------------------------------------------------------------------------------------
2,089,939 2,026,444
Land 35,000 35,000
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NET PROPERTY, PLANT & EQUIPMENT 2,124,939 2,061,444
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OTHER ASSETS 214,202 715,677
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$10,533,486 $11,340,031
==============================================================================================================================
See accompanying notes to financial statements
</TABLE>
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VITA FOOD PRODUCTS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
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MARCH 31, DECEMBER 31,
1997 1996
(UNAUDITED) (AUDITED)
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations $ 315,013 $ 307,403
Accounts payable 2,235,436 3,455,681
Accrued other expenses 1,216,009 1,322,171
Income tax payable 0 249,482
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TOTAL CURRENT LIABILITIES 3,766,459 5,334,737
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LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 3,183,312 5,419,159
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, authorized 1,000,000
shares; none issued
Common stock, $.01 par value; authorized 10,000,000
shares; issued and outstanding 3,700,000 at March 31,
1997; 2,950,000 at December 31, 1996 37,000 29,500
Additional paid in capital 3,348,273 196,000
Retained Earnings 198,442 360,635
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TOTAL SHAREHOLDERS' EQUITY 3,583,715 586,135
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$10,533,486 $11,340,031
===============================================================================================================================
See accompanying notes to financial statements
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
VITA FOOD PRODUCTS, INC.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
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FOR THE THREE MONTHS ENDED
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MARCH 31, MARCH 31,
1997 1996
(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
NET SALES 4,721,576 5,515,714
COST OF GOODS SOLD 3,487,958 3,779,832
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Gross Margin 1,233,618 1,735,882
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SELLING, MARKETING AND
ADMINISTRATIVE EXPENSES
Selling and Marketing 1,050,599 1,079,365
Administrative 421,637 458,379
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1,472,236 1,537,744
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Operating Profit (Loss) (238,618) 198,138
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OTHER (INCOME) EXPENSE
Interest 72,006 129,130
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72,006 129,130
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Income before income tax expense (benefit) (310,624) 69,008
INCOME TAX BENEFIT (148,431) ---
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NET INCOME ($162,193) $69,008
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NET INCOME PER COMMON ($0.05) $0.02
SHARE
- ----------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,576,100 2,960,000
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See accompanying notes to financial statements
</TABLE>
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VITA FOOD PRODUCTS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
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COMMON STOCK
------------------------- ADDITIONAL RETAINED
SHARES AMOUNT PAID-IN EARNINGS
CAPITAL (DEFICIT) TOTAL
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, at January 1, 1996 2,950,000 $ 29,500 $ 196,000 ($457,319) ($231,819)
Net income - - - 69,008 69,008
- -------------------------------------------------------------------------------------------------------------------------------
Balance, at March 31, 1996 2,950,000 29,500 196,000 (388,311) (162,811)
Balance, at January 1, 1997 2,950,000 29,500 196,000 360,635 586,135
Net proceeds from initial public offering 750,000 7,500 3,152,273 - 3,159,773
Net income - - - (162,193) (162,193)
- -------------------------------------------------------------------------------------------------------------------------------
Balance, at March 31, 1997 3,700,000 $37,000 $3,348,273 $198,442 $3,583,715
===============================================================================================================================
See accompanying notes to financial statements
</TABLE>
<PAGE> 7
VITA FOOD PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
<TABLE>
<CAPTION>
==================================================================================================================================
FOR THE THREE MONTHS ENDED
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MARCH 31, MARCH 31,
1997 1996
(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
Net Income (162,193) 69,008
Adjustments to reconcile Net Income to
net cash provided by operating activities
Depreciation and amortization 64,461 68,975
Deferred income taxes (148,431)
Changes in assets and liabilities:
Decrease (increase) in accounts 1,292,530 1,399,590
receivable
Decrease (increase) in inventories (709,290) 319,072
Decrease (increase) in prepaid expenses and (41,147) 10,685
other current assets
Decrease (increase) in other assets (112,044) (1,567)
Increase (decrease) in accounts (1,220,245) (1,827,515)
payable
Increase (decrease) in accrued expenses (106,161) 15,729
Increase (decrease) in income taxes payable (249,482) (6,550)
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Net cash provided by (used in) operating activities (1,392,002) 47,427
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (127,465) (118,891)
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Net cash used in investing activities (127,465) (118,891)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from initial public offering 3,772,801
Proceeds from (payments on) bank and other debt obligations (2,228,237) 54,330
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities 1,544,564 54,330
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Net Increase (decrease) in Cash 25,097 (17,134)
Cash, at beginning of period 88,221 45,294
Cash, at end of Period 113,318 28,160
==================================================================================================================================
See accompanying notes to financial statements
</TABLE>
<PAGE> 8
VITA FOOD PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
A. The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-QSB and do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements and should be read
in conjunction with the financial statements and related notes included in
the Company's Annual Report on Form 10-KSB for the year ended December 31,
1996. In the opinion of management, all adjustments necessary for a fair
presentation of such interim financial statements have been included. All
such adjustments are of a normal recurring nature.
B. The Financial Accounting Standards Board issued SFAS 128 in February,
1997 regarding the earnings per share calculation. If this statement were
adopted today, there would be no material effect upon either the Company's
calculation of Basic earnings per share or Diluted earnings per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
REVENUES. Net sales for the three months ended March 31, 1997 were $4,722,000
compared to $5,515,000 for the same period in 1996, a decrease of $793,000 or
14%. This decrease was largely attributable to the timing of certain customers'
orders. First, two customers which have historically placed large purchase
orders in the first quarter delayed placing those orders based on their
inventory levels in the first quarter of 1997. These inventory levels were
partially the result of price increases beginning January 1, 1997 on some
products. Second, the Passover holiday occurred later in the year in 1997 than
1996, resulting in a significant portion of Passover-related orders being
placed in the second quarter rather than the first quarter.
GROSS MARGIN. Gross margin for the three months ended March 31, 1997 was
$1,234,000 compared to $1,735,000 for the same period in 1996, a decrease of
$501,000 or 29%. As a percentage of net sales, gross margin was 26.1% in the
three months versus 31.5% in the first three months of 1996. The decrease in
the gross margin percentage was largely attributable to higher per unit costs
resulting from the lower sales volume and decreased utilization of the
production facilities, and was also partially attributable to an increase in
sales mix of lower margin products.
<PAGE> 9
OPERATING EXPENSES. Selling, marketing and administrative expenses for the
three months ended March 31, 1997 were $1,473,000 compared to $1,537,000 for
the same period in 1996, a decrease of $64,000 or 4%. The decrease was
primarily attributable to lower variable selling costs such as freight expenses
and brokerage commissions. As a percentage of net sales, selling, marketing
and administrative expenses increased to 31.2% from 27.9% for the same period
in 1996. This increase was attributable to certain fixed and semi-fixed
selling and administrative expenses which do not decrease as a result of a
decrease in net sales.
INTEREST EXPENSE. Interest and other expense, net, for the three months ended
March 31, 1997 was $72,000 compared to $129,000 for the same period in 1996, a
decrease of $57,000 or 44%. This decrease was primarily attributable to a
decrease in interest expense resulting from lower average borrowings during the
three months ended March 31, 1997. The net proceeds from the Company's initial
public offering in January, 1997 resulted in lower average borrowings by the
Company.
INCOME TAXES. The Company provided for an income tax benefit of $148,000 for
the three months ended March 31, 1997, compared to no income tax expense or
benefit for the same period in 1996. The income tax benefit is comprised of
$115,000 of expected future income tax benefits resulting from the loss
incurred in the first three months of 1997, and $33,000 representing a partial
recognition of the deferred tax asset valuation allowance. At March 31, 1997,
the Company's valuation allowance was $101,000.
NET INCOME AND LOSS. Net loss for the three months ended March 31, 1997 was
$162,000 compared to net income of $69,000 for the same period in 1996, a
decrease of $231,000.
FINANCIAL CONDITION
Since December 31, 1996, the Company's key liquidity and capitalization ratios
improved. As of March 31, 1997, The current ratio increased to 2.2 from 1.6.
The ratio of long-term debt-to-total capitalization decreased from 0.9 to 0.5.
CASH FLOWS FROM OPERATING ACTIVITIES. Net cash used in operating activities was
$1,392,000 for the three months ended March 31, 1997, compared to net cash
provided by operating activities of $47,000 for the same period in 1996. This
difference was primarily attributable to a decrease in net income, an increase
in inventories, and the decrease in income taxes payable. The increase in
inventories was largely attributable to the Company's purchases of salmon at
relatively low prices in volumes in excess of production requirements. The
decrease in income taxes payable was attributable to the payment of income
taxes in the first quarter of 1997 for the 1996 fiscal year. In the first
quarter of 1996, no payment for federal income taxes was due because federal
income tax carryforwards offset taxable income for the 1995 fiscal year.
CASH FLOWS FROM INVESTING ACTIVITIES. Net cash used in investing activities was
$127,000 for the three months ended March 31, 1997, compared to $119,000 for
the same period in 1996.
CASH FLOWS FROM FINANCING ACTIVITIES. Net cash provided by financing activities
was $1,545,000 for the three months ended March 31, 1997, compared to $54,000
for the same period in 1996. The increase in net cash provided by financing
activities was attributable to the net proceeds from the Company's initial
public offering, offset by payments under the Company's bank credit facilities.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company's Common Stock and Redeemable Common Stock Purchase Warrants were
listed and began trading on the American Stock Exchange (the "AMEX") on May
12, 1997. These securities are currently listed and traded on both the AMEX
and the Chicago Stock Exchange.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<PAGE> 10
(27) Financial Schedule
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VITA FOOD PRODUCTS, INC.
Date: May 12, 1997 By: //Stephen D. Rubin//
----------------------------------
Stephen D. Rubin
President
Date: May 12, 1997 By: //Jay H. Dembsky//
----------------------------------
Jay H. Dembsky
Vice President and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 113,318
<SECURITIES> 0
<RECEIVABLES> 2,089,877
<ALLOWANCES> 170,250
<INVENTORY> 5,518,977
<CURRENT-ASSETS> 8,194,345
<PP&E> 5,526,038
<DEPRECIATION> 3,401,099
<TOTAL-ASSETS> 10,533,486
<CURRENT-LIABILITIES> 3,766,459
<BONDS> 3,183,312
0
0
<COMMON> 37,000
<OTHER-SE> 3,546,715
<TOTAL-LIABILITY-AND-EQUITY> 10,533,486
<SALES> 4,721,576
<TOTAL-REVENUES> 4,721,576
<CGS> 3,487,958
<TOTAL-COSTS> 3,487,958
<OTHER-EXPENSES> 1,472,236
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 72,006
<INCOME-PRETAX> (310,624)
<INCOME-TAX> (310,624)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (162,193)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
