FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 2O549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended _April 1, 1995_________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number __0-7166____________
DOUGHTIE'S FOODS, INC.
(Exact name of Registrant as specified in its charter)
VIRGINIA 54-0903892
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2410 WESLEY STREET, PORTSMOUTH, VIRGINIA 23707
(Address of principal executive offices)
(804) 393-6007
(Registrant's telephone number, including area code)
______________________________________________________
(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 CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $1 par value - 1,008,518 shares as of May 10, 1995.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited) <F1>
<CAPTION>
April 1, December 31,
1995 1994
_____________ ____________
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 453,487 $ 1,361,207
Accounts receivable, net:
Trade 4,958,577 4,839,764
Finance 1,117,198 1,279,467
Officers and employees 18,805 16,289
Inventories 4,803,737 4,521,753
Deferred income taxes 248,296 248,296
Prepaid expenses and other
current assets 322,517 139,886
_____________ ____________
Total Current Assets 11,922,617 12,406,662
_____________ ____________
PROPERTY, PLANT AND EQUIPMENT -
AT COST:
Land 283,304 283,304
Buildings 4,320,960 4,320,960
Delivery equipment 495,767 495,767
Plant and refrigeration equipment 4,257,510 4,057,168
Office equipment 966,067 951,842
Leasehold improvements 221,227 217,680
_____________ ____________
10,544,835 10,326,721
Less - accumulated depreciation 6,232,408 6,071,055
_____________ ____________
4,312,427 4,255,666
_____________ ____________
OTHER ASSETS 134,235 135,535
_____________ ____________
$ 16,369,279 $ 16,797,863
_____________ ____________
_____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 133,333 $ 133,333
Accounts payable 1,805,488 2,095,099
Income taxes payable 105,310 399,504
Accrued salaries, commissions and
bonuses 54,187 127,917
Accrued employee group insurance 216,445 215,409
Other accrued liabilities 120,343 45,603
_____________ ____________
Total Current Liabilities 2,435,106 3,016,865
LONG-TERM DEBT - less current portion 5,483,334 5,031,667
DEFERRED INCOME TAXES 48,900 48,900
_____________ ____________
Total Liabilities 7,967,340 8,097,432
_____________ ____________
STOCKHOLDERS' EQUITY:
Common stock - $1 par value;
authorized 2,000,000 shares, issued
and outstanding 1,008,518 shares 1,008,518 1,008,518
Additional paid-in capital 2,841,570 2,841,570
Retained earnings 4,551,851 4,850,343
_____________ ____________
Total Stockholders' Equity 8,401,939 8,700,431
_____________ ____________
$ 16,369,279 $ 16,797,863
_____________ ____________
_____________ ____________
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) <F1>
<CAPTION>
THREE MONTHS ENDED
___________________________________
April 1, March 26,
1995 1994
_____________ ____________
<S> <C> <C>
NET SALES $ 16,401,046 $ 15,810,183
COST OF GOODS SOLD 13,346,804 12,926,461
_____________ ____________
GROSS PROFIT 3,054,242 2,883,722
_____________ ____________
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 3,275,030 3,013,820
INTEREST EXPENSE 89,563 49,245
_____________ ____________
3,364,593 3,063,065
_____________ ____________
LOSS BEFORE INCOME TAXES (310,351) (179,343)
INCOME TAX BENEFIT (52,200) (67,300)
_____________ ____________
NET LOSS $ (258,151) $ (112,043)
_____________ ____________
_____________ ____________
NUMBER OF SHARES USED IN COMPUTING
LOSS AND CASH DIVIDENDS PER
SHARE 1,008,518 1,013,852
_____________ ____________
_____________ ____________
NET LOSS PER SHARE $ (.26) $ (.11)
_____________ ____________
_____________ ____________
CASH DIVIDENDS PER SHARE $ .04 $ .04
_____________ ____________
_____________ ____________
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <F1>
<CAPTION>
THREE MONTHS ENDED
___________________________________
April 1, March 26,
1995 1994
_____________ ____________
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (258,151) $ (112,043)
Adjustments to reconcile net loss
to net cash provided by (used for)
operations:
Depreciation 161,353 126,920
Gain on sale of property, plant and
equipment (3,599) (7,913)
(Increase) decrease in assets:
Accounts receivable, net 40,940 185,282
Inventories (281,984) (183,846)
Prepaid expenses and other current
assets (182,631) (102,351)
Other assets 1,300 12,719
Increase (decrease) in liabilities:
Accounts payable (289,611) 919,263
Income taxes payable (294,194) (130,379)
Accrued salaries, commissions and
bonuses (73,730) 28,802
Accrued employee group insurance 1,036 (2,423)
Other accrued liabilities 74,740 68,142
_____________ ____________
(1,104,531) 802,173
_____________ ____________
Cash flows from investing activities:
Additions to property, plant and
equipment (218,113) (166,549)
Proceeds from sale of property,
plant and equipment 3,598 7,912
_____________ ____________
(214,515) (158,637)
_____________ ____________
Cash flows from financing activities:
Changes in long-term debt, including
current portion 451,667 (593,333)
Acquisition of treasury stock 0 (11,003)
Cash dividends (40,341) (40,554)
_____________ ____________
411,326 (644,890)
_____________ ____________
Net decrease in cash (907,720) (1,354)
Cash at beginning of period 1,361,207 238,286
_____________ ____________
Cash at end of period $ 453,487 $ 236,932
_____________ ____________
_____________ ____________
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
DOUGHTIE'S FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1 -
The consolidated financial statements include the accounts of
Doughtie's Foods, Inc. (the "Company") and its two majority-owned
subsidiaries. All material intercompany accounts and transactions
have been eliminated in consolidation.
Although the accompanying financial statements are unaudited,
management believes that they contain all adjustments (consisting
only of normal recurring accruals) necessary to present fairly the
financial position as of April 1, 1995 and December 31, 1994, results
of operations for the three months ended April 1, 1995 and March 26,
1994, and cash flows for the three months ended April 1, 1995 and March
26, 1994. The results of operations for the periods cited above are
not necessarily indicative of the results to be expected for the full
year.
Note 2 -
Finance receivables, consisting of retail installment sales
contracts, include approximately $225,OOO and $200,OOO at April 1,
1995 and December 31, 1994, respectively, which will not become due
within one year of the balance sheet date.
Note 3 -
Inventories are stated at the lower of last-in, first-out (LIFO)
cost or market. Because inventory valuations under the LIFO method
are based on an annual determination, estimates must be made at
interim dates of year-end costs and levels of inventories. The possi-
bility of variations between estimated year-end costs and levels of
LIFO inventories and the actual year-end amounts may materially
affect the results of operations as finally determined for the full
year.
Note 4 -
Cash paid for interest totaled $89,563 and $54,131 for the
quarters ended April 1, 1995 and March 26, 1994, respectively.
Cash paid for income taxes totaled $234,000 and $4,100 for the
quarters ended April 1, 1995 and March 26, 1994, respectively.
Note 5 -
During the third quarter of 1994, the Company entered into a
joint venture agreement with a gourmet food business. The Company
owns seventy percent of the joint venture, which did not commence
operations until the fourth quarter of 1994.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Sales for the quarter ended April 1, 1995 were $16.4 million or
3.8% higher than sales for the prior year's first quarter of $15.8
million. Steady improvement has been accomplished in the commercial
distribution and manufacturing sectors of the Company. The Company's
gross profit margin (gross profit as a percentage of net sales) rose
slightly during this period.
The Company's selling, general and administrative expenses,
expressed as a percentage of net sales, increased to 19.96% in the
first quarter of 1995 compared to 19.06% in the first quarter of 1994.
Expenses associated with the Company's gourmet foods subsidiary,
TWB Gourmet Foods, Inc., and rising health insurance costs were the
main reasons for this increase.
Interest expense for the quarter ended April 1, 1995 increased
to 0.55% of sales compared to 0.31% of sales for the first quarter
of 1994. Higher interest rates during 1995 together with increased
borrowing levels were the cause of the increased expense. As the
interest on the Company's debt is prime related, interest expense
will increase or decrease in subsequent periods based on fluctuations
in the prime rate and the borrowing levels of the Company.
Income tax benefit was $52,200 for the quarter ended April 1,
1995 compared to an income tax benefit of $67,300 for the corresponding
period of 1994. The lower effective tax benefit resulted from the
non-recognition of tax benefits for the net operating loss of a
subsidiary that is not a member of the controlled group for income tax
purposes.
The Company reported a net loss of $258,151 or $.26 per share
for the first quarter of 1995 compared to a net loss of $112,043
or $.11 per share in the first quarter of 1994. Losses incurred by
TWB Gourmet Foods, Inc. accounted for $.17 of the 1995 per share net
loss.
Liquidity
The Company uses a number of liquidity indicators for internal
evaluation purposes. Certain of these measures as of April 1, 1995
and December 31, 1994 are set forth below:
April 1, December 31,
1995 1994
____________ ____________
Total Debt to Total Debt Plus
Stockholders' Equity .40 .37
Current Assets to Current
Liabilities 4.90 4.11
Inventory Turnover (The
Annualized Cost of Goods
Sold to Ending Inventory) 11.11 13.06
The ratio of current assets to current liabilities increased
to 4.90 at April 1, 1995 from 4.11 at December 31, 1994 primarily due
to a decrease in accounts payable and income taxes payable, along
with an increase in long-term debt.
The decrease in the Company's inventory turnover ratio reflects
increased purchases of meat and other inventory in anticipation of
the historical increase in the volume of sales in the second quarter
of the year.
On April 1, 1994, the Company entered into an agreement to
sell certain properties in Carroll County, Maryland. The net book
values of these properties total approximately $250,000. If all
conditions of the sale are met, settlement will occur over a five-
year period with a total sale price of $1,200,000. If settlement
occurs, the Company intends to use the proceeds, net of applicable
income taxes, to reduce its long-term debt.
Capital Resources
The Company's debt financing at April 1, 1995, consisted of
the following:
A $7,500,000 revolving bank note at prime. The prime rate at
April 1, 1995, was 9.0%. The note is due three years after the annual
renewal date, currently July, 1997, subject to annual renewal. As of
April 1, 1995, the Company had borrowed $4,650,000 against this credit
line and had $2,850,000 of additional borrowing capacity.
A $2,000,000 Industrial Revenue Bond from a bank for the purpose
of expanding the Company's plant and office facilities in Portsmouth,
Virginia at an annual interest rate of 91.50% of prime. As of April 1,
1995, the Company had fully utilized the Industrial Revenue Bond and
the outstanding balance was $966,667.
While the Company does not anticipate a material increase in its
capital requirements in the near future, such an increase, if it occurs,
is likely to be met through additional long-term debt financing.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which the
Company or any of its subsidiaries is a party or to which any of
their property is the subject.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a). Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the year ended December 29, 1984).
3(b). Bylaws of the Company (incorporated by
reference to Exhibit 3(b) to the Company's Annual Report on Form
10-K for the year ended December 26, 1992).
4(a). Amended and Restated Revolving Credit Agreement
dated as of November 15, 1994, between the Company and Crestar Bank
relating to a $7,500,000 revolving credit commitment (incorporated
by reference to Exhibit 4(a) to the Company's Annual Report on Form
10-K for the year ended December 31, 1994).
4(b). Amended and Restated Promissory Note dated
November 15, 1994, made by the Company in favor of Crestar Bank in
the principal amount of $7,500,000 (incorporated by reference to
Exhibit 4(b) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994).
10(a)(1). Agreement dated October 24, 1992 between
the Company and the Bakery, Confectionery and Tobacco Workers'
International Union, Local No. 66 (incorporated by reference to
Exhibit 10(a)(1) to the Company's Annual Report on Form 10-K for
the year ended December 26, 1992).
10(b)(1). Lease dated June 9, 1989 between the
Company and Cardon Associates relating to premises located at
800-840 Florida Avenue, Portsmouth, Virginia (incorporated by
reference to Exhibit 10(b)(1) to the Company's Annual Report on
Form 10-K for the year ended December 30, 1989).
10(b)(2). Lease dated September 22, 1975 and Renewal
of Lease dated March 6, 1980 between Doughtie's Barbecue of
Maryland, Inc. and Tuxedo Properties relating to premises located
at 5111 Creston Street, Tuxedo, Maryland (incorporated by
reference to Exhibit 10 to the Company's Annual Report on Form
10-K for the year ended December 27, 1975 and Exhibit 10(b)(2)
to the Company's Annual Report on Form 10-K for the year ended
December 27, 1980). Doughtie's Barbecue of Maryland, Inc.,
a wholly-owned subsidiary of the Company, was dissolved in
December 1985.
10(b)(3). Sublease Agreement dated May 6, 1985 between
Doughtie's Barbecue of Maryland, Inc. and John Sexton & Co. relating
to premises located at 5111 Creston Street, Tuxedo, Maryland
(incorporated by reference to Exhibit 10(b)(3) to the Company's
Annual Report on Form 10-K for the year ended December 28, 1985).
Doughtie's Barbecue of Maryland, Inc., a wholly-owned subsidiary of
the Company, was dissolved in December 1985.
10(b)(4). Lease dated June 19, 1989 between Keen Leasing,
Inc. of Carlisle, Pennsylvania and Doughtie's Foods, Inc. and related
agreements relating to the sale and lease back of the Company's
existing fleet of trucks (incorporated by reference to Exhibit
10(b)(8) to the Company's Annual Report on Form 10-K for the year
ended December 30, 1989).
10(b)(5). Lease dated May 10, 1990 between Rouse-Teachers
Properties, Inc. and Dutterer's of Manchester Corporation relating to
premises located at 2700 Lord Baltimore Drive, Baltimore, Maryland
(incorporated by reference to Exhibit 10(b)(7) to the Company's Annual
Report on Form 10-K for the year ended December 29, 1990).
10(b)(6). Truck lease and Service Agreement dated May 2,
1991 between Lend Lease Trucks, Inc. and Dutterer's of Manchester
Corporation and certain amendments thereto relating to the leasing of
certain trucks (incorporated by reference to Exhibit 10(b)(10) to
the Company's Annual Report on Form 10-K for the year ended December
28, 1991).
10(b)(7). Industrial Lease Agreement dated as of August
17, 1994, between Wendell's Machine & Welding, Inc., lessor,
TWB Gourmet Foods, Inc., lessee, and Riddle Associates, Inc., agent,
relating to premises located at 2620 Elmhurst Lane, Portsmouth,
Virginia (incorporated by reference to Exhibit 10(b)(7) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1994).
10(c)(1). Amended and Restated Security Agreement
dated as of November 15, 1994 made by the Company to Crestar Bank
granting a security interest in inventory and certain intangibles
(incorporated by reference to Exhibit 10(c)(1) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994).
10(c)(2). Security Agreement dated as of November 15,
1994, made by Dutterer's of Manchester Corporation to Crestar Bank
granting a security interest in inventory and certain intangibles
(incorporated by reference to Exhibit 10(c)(2) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994).
10(c)(3). Guaranty Agreement dated as of November 15,
1994, made by Dutterer's of Manchester Corporation for the benefit
of Crestar Bank (incorporated by reference to Exhibit 10(c)(3) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994).
10(d)(1). Crestar Bank Defined Contribution Master
Plan and Trust Agreement, Basic Plan Document #01, an employee
benefit plan under which the Company became a participating
employer on January 1, 1992 (incorporated by reference to Exhibit
10(d)(1) to the Company's Annual Report on Form 10-K for the year
ended December 26, 1992).
10(d)(2). Crestar Bank Adoption Agreement #005, Non
Standardized Code 401(k) Profit Sharing Plan, an agreement by which
the Company became a participating employer in the Crestar Bank
Defined Contribution Master Plan and Trust Agreement dated June 5,
1992 (incorporated by reference to Exhibit 10(d)(2) to the
Company's Annual Report on Form 10-K for the year ended December
26, 1992).
10(e)(1). Stockholders' Agreement dated as of August
5, 1994, between TWB Gourmet Foods, Inc., the Company, and
Loetitia Adam-St. James and Chris L. St. James (incorporated
by reference to Exhibit 10(e)(1) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994).
10(e)(2). License Agreement dated as of August 5,
1994, between Chris L. James and Loetitia Adam-St. James,
licensors, and TWB Gourmet Foods, Inc., licensee (incorporated
by reference to Exhibit 10(e)(2) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994).
10(e)(3). Agreement dated as of August 5, 1994,
between the Company and TWB Gourmet Foods, Inc., establishing
a $600,000 line of credit (incorporated by reference to
Exhibit 10(e)(3) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994).
10(e)(4). Security Agreement dated as of August
5, 1994, made by TWB Gourmet Foods, Inc. to the Company
granting the Company a security interest in accounts, equipment,
inventory, and general intangibles (incorporated by reference
to Exhibit 10(e)(4) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
10(e)(5). Line of Credit Note dated August 5, 1994,
made by TWB Gourmet Foods, Inc. in favor of the Company in the
principal amount of $600,000 (incorporated by reference to
Exhibit 10(e)(5) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994).
10(f). Agreement of Sale dated as of April 1,
1994, between Dutterer's of Manchester Corporation, seller, and
Westwood Development of Manchester, Inc., buyer, relating to
the sale of certain real property situated in Carroll County,
Maryland (incorporated by reference to Exhibit 10(f) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994).
27. Financial Data Schedule.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the
quarter ended April 1, 1995.
<PAGE>
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.
DOUGHTIE'S FOODS, INC.
May 16, 1995 By: Marion S. Whitfield, Jr.
(Signature)
Senior Vice President
(Principal Financial and
Chief Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OF
DOUGHTIE'S FOODS, INC. FOR THE THREE MONTHS ENDED APRIL 1,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 453
<SECURITIES> 0
<RECEIVABLES> 6,495
<ALLOWANCES> 419
<INVENTORY> 4,804
<CURRENT-ASSETS> 11,923
<PP&E> 10,545
<DEPRECIATION> 6,232
<TOTAL-ASSETS> 16,369
<CURRENT-LIABILITIES> 2,435
<BONDS> 5,483
<COMMON> 1,009
0
0
<OTHER-SE> 7,393
<TOTAL-LIABILITY-AND-EQUITY> 16,369
<SALES> 16,401
<TOTAL-REVENUES> 16,401
<CGS> 13,347
<TOTAL-COSTS> 16,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (22)
<INTEREST-EXPENSE> 90
<INCOME-PRETAX> (310)
<INCOME-TAX> (52)
<INCOME-CONTINUING> (258)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (258)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> (.26)
</TABLE>
