UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 27, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number...............0-16376.................
THE VALLEY FAIR CORPORATION
.............................................................
(Exact name of registrant as specified in its charter)
DELAWARE 22-1727148
.............................................................
(State or other jurisdiction of (I.R.S. Employer)
incorporation or organization) (Identification No.)
260 Bergen Turnpike, Little Ferry, New Jersey 07643
.............................................................
(Address of principal executive offices) Zip Code
(201) 440-4000
.............................................................
(Registrant's telephone number, including area code)
NONE
.............................................................
(Former name, former address and former fiscal year,
if changed since last report.)
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 (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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports to be filed by Sections 12, 13 or 15(D) of the Securities Exchange Act
of 1934 subsequent to the distribution of the securities under a plan confirmed
by a court. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
367,913 shares October 27, 1996
<PAGE>
The Valley Fair Corporation and Subsidiary
C O N T E N T S
Consolidated Condensed Balance Sheets October 27, 1996 and January 28,
1996
Consolidated Condensed Statements of Income Thirteen Weeks and
Thirty-nine Weeks Ended October 27, 1996 and Thirteen Weeks and
Thirty-nine Weeks Ended October 29, 1995
Consolidated Statements of Cash Flows - Thirty-nine Weeks Ended October
27, 1996 Thirty-nine Weeks Ended October 29, 1995
Notes to Consolidated Condensed Financial Statements
Management's Discussion and Analysis of the Consolidated Condensed
Statements of Income
Other Information and Signatures
<PAGE>
<TABLE>
<CAPTION>
THE VALLEY FAIR CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
October 27, January 28,
1996 1996
----------- -----------
<C> <C> <C>
ASSETS
Current assets:
Cash ......................................................................... $ 3,357,432 $ 3,608,605
Accounts and notes receivable-net ............................................ 1,074,419 840,100
Inventories .................................................................. 24,039,969 23,955,006
Prepaid expenses ............................................................. 1,260,117 582,341
Deferred income taxes ........................................................ 418,000 443,000
----------- -----------
Total current assets ...................................................... 30,149,937 29,429,052
Property, plant, and equipment, net ............................................ 4,123,562 4,265,859
Other assets ................................................................... 312,625 336,174
----------- -----------
34,586,124 34,031,085
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable - bank .......................................................... 9,560,000 9,710,300
Current portion of long term debt ............................................ 42,226 65,010
Accounts payable Trade.................................................... 4,516,286 2,911,974
Affiliate ............................................... 255,572 405,764
Accrued expenses and other current liabilities................................ 2,117,498 1,626,208
----------- -----------
Total current liabilities ................................................. 16,491,582 14,719,256
=========== ===========
Long-term debt, less current maturities ........................................ 200,703 233,569
Deferred income and security deposits .......................................... 54,838 113,081
Deferred income taxes .......................................................... 472,000 497,000
----------- -----------
Total liabilities ......................................................... 17,219,123 15,562,906
=========== ===========
<PAGE>
<CAPTION>
THE VALLEY FAIR CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Continued)
October 27, January 28,
1996 1996
----------- -----------
<C> <C> <C>
Stockholder's equity Common stock par value
$.30 per share; authorized 666,666 shares,
issued 367,913 shares at October 27, 1996
367,983 shares at January 28, 1996 ........................................... 110,344 110,395
Additional paid-in capital ..................................................... 798,375 802,754
Retained earnings .............................................................. 16,458,282 17,555,030
----------- -----------
Total stockholders' equity ..................................................... 17,367,001 18,468,179
=========== ===========
Total liabilities and stockholders equity....................................... $34,586,124 $34,031,085
============= ===========
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE VALLEY FAIR CORPORATION AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Thirteen Weeks Thirty-nine Weeks
Ended Ended Ended Ended
Oct.27,1996 Oct.29,1995 Oct.27,1996 Oct.29,1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales
excluding licensee .. $ 14,460,429 $ 15,999,305 $ 43,679,875 $ 47,882,732
Cost of Sales ........ 10,057,212 10,639,307 30,427,879 31,958,013
------------ ------------ ------------ ------------
4,403,217 5,359,998 13,251,996 15,924,719
Tenant departments
licensee revenue .... 1,294,997 1,208,290 4,070,144 3,609,720
------------ ------------ ------------ ------------
5,698,214 6,568,288 17,322,140 19,534,439
------------ ------------ ------------ ------------
Expenses:
Selling, general .... 5,769,253 6,264,847 18,418,417 18,547,176
and administrative
Interest expense .... 186,568 257,589 559,898 770,235
------------ ------------ ------------ ------------
5,955,821 6,522,436 18,978,315 19,317,411
Income - (Loss) before
income taxes ........ (257,607) 45,852 (1,656,175) 217,028
Income taxes (benefit) 0 18,311 (559,400) 86,811
------------ ------------ ------------ ------------
Net Income - (loss) .. $ (257,607) $ 27, 541 $ (1,096,775) $ 130,217
Earnings per ......... $ (0.70) $ 0.07 $ (2.98) $ 0.35
common share
Weighted average
number of shares
outstanding.......... 367,934 368,026 367,948 368,036
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE VALLEY FAIR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty-nine Weeks Ended October 27, 1996 and
Thirty-nine Weeks Ended October 29, 1995
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income - (loss) ......................... $(1,096,775) $ 130,217
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amortization ........... 432,351 457,023
Increase in accounts and
notes receivable ....................... (234,319) (43,981)
Increase in inventories ................. (84,963) (4,863,897)
Increase in prepaid items ............... (677,776) (305,058)
(Decrease) increase in deferred
income and security deposits ........... (58,243) 46,887
Decrease in deferred taxes .............. -0- -0-
Increase in accounts payable and
accrued expenses ....................... 1,945,410 722,232
Decrease in cash value life
insurance and other .................... 23,549 30,110
----------- -----------
Total adjustments ....................... 1,346,009 (3,956,684)
----------- -----------
Net cash provided (used) by
operating activities ................... 249,234 (3,826,467)
----------- -----------
Cash flows from investing activities:
Capital expenditures .................... (290,027) (249,178)
----------- -----------
Net cash used in investing
activities ............................. (290,027) (249,178)
----------- -----------
<PAGE>
<CAPTION>
THE VALLEY FAIR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty-nine Weeks Ended October 27, 1996
Thirty-nine Weeks Ended October 29, 1995
(continued)
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from issuance
of debt -0- 3,689,000
Principal payments of debt (205,950) (806,923)
Purchase of common stock (4,430) (884)
---------- ----------
Net cash provided by
financing activities (210,380) 2,881,193
---------- ----------
Net increase (decrease)
in cash ( 251,173) (1,194,452)
Cash and cash equivalents at
beginning of period 3,608,605 3,652,566
----------- ----------
Cash and cash equivalents at
end of period $3,357,432 $2,458,114
========== ==========
</TABLE>
<PAGE>
THE VALLEY FAIR CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
For the Thirty-nine Weeks Ended October 27, 1996
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The financial information included herein is unaudited. In addition,
the financial information does not include all disclosures required
under generally accepted accounting principles because certain note
information included in the company's annual report has been
omitted: however, such information reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary to a fair statement of the
result for the interim periods.
The results of operations for the Thirty-nine Weeks Ended October
27, 1996 are not necessarily indicative of the results to be
expected for the full year.
NOTE 1(b)
Effective February 1, 1993, the Company adopted statement of
Financial Accounting Standards No. 109, Accounting For Income Taxes.
Statement 109 requires a charge for deferred taxes to an asset and
liability method of accounting for income taxes. Under the asset and
liability method, deferred tax assets and liabilities are recognized
for the future tax consequences. attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. The change in accounting
method for income taxes had no effect on consolidated earnings for
the period and prior financial statements were not restated.
NOTE 2 - EARNINGS PER SHARE
Earnings per share were computed by dividing net income by the
weighted average number of shares of common stock outstanding during
the periods. The Company has purchased and retired additional shares
during the current periods. The earnings per share calculation has
been adjusted to reflect these retirements during the periods.
<PAGE>
THE VALLEY FAIR CORPORATION AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Consolidated net sales decreased approximately $4,203,000 or 8.8% for the
thirty-nine week period ended October 27, 1996, as compared to the thirty-nine
weeks ended October 29, 1995. Consolidated net sales decreased $1,539,000 or
9.6% for the thirteen week period ended October 27, 1996, as compared to the
same prior year period. Same store sales decreased approximately $3,297,000 or
7.4 % for the thirty-nine week period as compared with the prior year period.
Sales decreased $941,000 or 6.3% for the thirteen week period as compared with
the prior year period as competition and economic uncertainties continue to
effect consumer buying patterns. Tenant licensee revenue and other increased
$460,000 or 12.7 % for the thirty-nine week period ended October 27, 1996 as
compared to the thirty-nine weeks ended October 29, 1995. Tenant licensee
revenue and other increased $87,000 or 7.2% for the thirteen week period ended
October 29, 1995 as compared to the same prior year period.
The gross margins for the thirty-nine and thirteen week periods ended October
27, 1996 were 30.3% and 30.5% respectively as compared to 33.3%, and 33.5%
respectively, for both the periods a year ago. A decrease in merchandise which
had been purchased on terms favorable to the Corporation and the change in mix
of sales from stores generated these lower margins.
Selling, general and administrative expenses decreased approximately $129,000 or
.7% compared to the thirty-nine weeks ended October 29, 1995. For the thirteen
week period, selling, general and administrative expenses decreased $496,000 or
7.9 % compared to the prior year period. For the thirty-nine weeks ended October
27, 1996 the decrease was due to those expenses directly attributable to the
sales decreases and partially offset by an increase in expenses incurred in the
closing of sixteen locations. For the thirteen weeks ended October 27, 1996 the
decrease was due to expenses directly attributable to the sales decreases. The
relationship of selling, general and administrative expenses to net sales was
42.2% and 39.9% respectively, for the thirty-nine and thirteen week periods
ended October 27, 1996 compared to 38.7% and 39.2 % for the thirty-nine and
thirteen week periods ended October 19, 1995.
Interest expense for the thirty-nine weeks ended October 27, 1996 decreased
approximately $210,000 or 27.3% as compared to the 1995 period. For the thirteen
week period ended October 27, 1996, interest expense decreased $71,000 or 28.0%.
These decreases are a result of decreased borrowings in the current year .
The Corporation's effective income tax benefit for the thirty-nine weeks ended
October 27, 1996 was $662,000 or 40.0%. For the thirty-nine week period ended
October 30, 1995 the tax rate was $87,000 or 40%.
Liquidity and Capital Resources
As of October 27, 1996, the Corporation's cash and short-term investment
balances amounted to $3,357,000. The Corporation's principal sources of
liquidity are its available cash balances and funds available through its line
of credit.
The Corporation believes that its cash and investment balances will be
sufficient to meet its anticipated needs throughout the remainder of the fiscal
year 1997.
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports from 8-K - There were no reports on form 8-K filed for
the quarter ended October 27, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
THE VALLEY FAIR CORPORATION
---------------------------
(Registrant)
Date: December 9, 1996 /s/Erwin Lehr
----------
Erwin Lehr
President
Date: December 9, 1996 /s/Ross N. Alfieri
---------------
Ross N. Alfieri
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-28-1997
<PERIOD-END> OCT-27-1996
<CASH> 3,357,432
<SECURITIES> 0
<RECEIVABLES> 1,074,419
<ALLOWANCES> 0
<INVENTORY> 24,039,969
<CURRENT-ASSETS> 30,149,937
<PP&E> 11,488,166
<DEPRECIATION> 7,364,604
<TOTAL-ASSETS> 34,586,124
<CURRENT-LIABILITIES> 16,491,582
<BONDS> 0
0
0
<COMMON> 110,344
<OTHER-SE> 17,256,657
<TOTAL-LIABILITY-AND-EQUITY> 34,586,124
<SALES> 43,679,875
<TOTAL-REVENUES> 47,750,019
<CGS> 30,427,879
<TOTAL-COSTS> 48,846,296
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559,898
<INCOME-PRETAX> (1,656,175)
<INCOME-TAX> (559,400)
<INCOME-CONTINUING> (1,096,775)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,096,775)
<EPS-PRIMARY> (2.98)
<EPS-DILUTED> 0
</TABLE>
