<PAGE> 1
FORM 10-Q/A
AMENDMENT NO. 1
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 twenty-eight weeks ended December 8, 1995 Commission file number 0-6566
Thorn Apple Valley, Inc.
----------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Michigan 38-1964066
------------------------------- ---------------------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
26999 Central Park Blvd., Southfield, Michigan 48076
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 213-1000
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section II 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 .
----- -----
At December 8, 1995 , there were 5,777,957 shares of Common
stock outstanding.
<PAGE> 2
THORN APPLE VALLEY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
December 8, May 26,
1995 1995
------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $7,136,080 $4,730,637
Short-term investments 627,560 531,064
Accounts receivable, less allowance for doubtful
accounts (Dec. 8, 1995, $1,063,800;
May 26, 1995, $789,100) 75,672,510 40,083,861
Inventories (Note 2) 57,672,658 44,800,792
Refundable income taxes 5,849,573 1,366,231
Deferred income taxes (Note 6) 2,523,000 2,499,000
Prepaid expenses and other current assets 5,799,666 4,073,817
------------ -------------
Total current assets 155,281,047 98,085,402
------------ -------------
Property, plant and equipment :
Land 1,519,606 1,139,439
Buildings and improvements 70,082,936 37,694,988
Machinery and equipment 145,105,988 117,712,476
Transportation equipment 7,536,593 7,529,516
Property under capital leases 9,708,544 7,428,634
Construction in progress 7,893,690 22,206,233
------------ -------------
241,847,357 193,711,286
Less accumulated depreciation 100,506,585 95,643,621
------------ -------------
141,340,772 98,067,665
------------ -------------
Other assets:
Goodwill, net of accumulated amortization
of $452,000 (Note 7) 33,120,069
Other 8,556,878 8,143,298
------------ -------------
Total other assets 41,676,947 8,143,298
------------ -------------
$338,298,766 $204,296,365
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $44,154,003 $32,474,150
Notes payable, banks (Note 3) 5,960,000
Notes payable, officer 705,974 1,415,241
Accrued liabilities 31,610,745 23,378,430
Current portion of long-term debt 10,969,745 3,100,310
------------ -------------
Total current liabilities 87,440,467 66,328,131
------------ -------------
Long-term debt (Note 3) 154,734,974 35,464,669
------------ -------------
Deferred income taxes (Note 6) 4,724,000 3,908,000
------------ -------------
Shareholders' equity:
Preferred stock: $1 par value; authorized 200,000
shares; issued none
Common nonvoting stock: $.10 par value; authorized
20,000,000 shares; issued none
Common voting stock: $.10 par value; authorized
20,000,000 shares; issued 5,777,957 shares
Dec. 8, 1995 and 5,770,647 shares May 26, 1995 577,796 577,065
Capital in excess of par value 6,900,390 6,771,071
Retained earnings 83,921,139 91,247,429
------------- -------------
91,399,325 98,595,565
------------- -------------
$338,298,766 $204,296,365
============= =============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 3
THORN APPLE VALLEY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - The condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles and reflect, in the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position as of
December 8, 1995 and May 26, 1995, and the results of operations and cash flows
for the periods presented. The condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes contained in Thorn Apple Valley, Inc.'s Annual Report on Form 10-K for
the fiscal year ended May 26, 1995. The results for the twenty-eight weeks
ended December 8, 1995 are not necessarily indicative of the results to be
expected for the fiscal year ending May 31, 1996.
NOTE 2 - Inventories are stated at the lower of last-in, first-out (LIFO) cost
or market. Inventories would have been approximately $2,950,000 higher at
December 8, 1995 and May 26,1995 if they had been stated at the lower of
first-in, first-out (FIFO) cost or market. The following is a breakdown of
inventories by classifications:
<TABLE>
<CAPTION>
December 8, May 26,
1995 1995
---------------- ---------------
<S> <C> <C>
Supplies $ 9,820,085 $ 6,824,152
Raw materials 12,181,180 11,389,564
Work in progress 3,972,566 4,914,163
Finished goods 34,648,827 24,622,913
-------------- --------------
60,622,658 47,750,792
Less LIFO reserve 2,950,000 2,950,000
-------------- --------------
Inventory balance
$57,672,658 $44,800,792
============== ==============
</TABLE>
NOTE 3 - Concurrent with the previously announced acquisition, on May 30,
1995, the Company replaced its existing lines of credit with an $80 million
revolving credit agreement. (See Note 7 to the Notes to the Consolidated
Financial Statements for further discussion related to the acquisition). The
unsecured revolving credit agreement is with four financial institutions at
variable interest rates no higher than the prime rate or its equivalent. The
commitments under the revolving credit agreement expire on May 30, 1998, but
may be extended annually for successive one-year periods with the consent of
the financial institutions. The commitment fee on the unused portion of the
facility is .25% per annum. The Company is required under the revolving credit
agreement to maintain a minimum level of consolidated net worth. At December
8, 1995, the Company had $80 million in lines of credit, of which all was
drawn. Borrowings under the three year revolving credit agreement are
classified as long-term debt.
The Company's various loan agreements contain restrictive covenants that
include the maintenance of a minimum level of consolidated tangible net worth,
as defined, and of certain financial ratios. At December 8, 1995, the Company
was not in compliance with certain covenants contained in its industrial
revenue bond and limited obligation revenue bond agreements. The lenders have
granted the Company waivers of these covenant provisions through December 31,
1995 and May 31, 1996, respectively. The Company has classified these
obligations as current liabilities, as a result of the waivers being less than
one year in duration from the balance sheet date. The Company does not expect
its industrial revenue bond or limited obligation revenue bond lenders to call
the debt at the end of the waiver period and will seek to amend these
agreements.
At December 8, 1995 the Company was also not in compliance with the funded debt
and fixed charge ratios on its various long-term fixed debt agreements. The
Company has subsequently received amendments to its long-term agreements that
both amended the covenants and unconditionally waived the compliance and
defaults or events of defaults resulting from the failure to be in compliance
with such covenants.
5
<PAGE> 4
FINANCIAL CONDITION
The Company's business is characterized by high unit sales volume and
rapid turnover of inventories and accounts receivable. Because of the rapid
turnover rate, the Company considers its inventories and accounts receivable to
be highly liquid and readily convertible into cash. Borrowings under the
revolving credit agreement are used when needed to finance increases in the
levels of inventories and accounts receivable resulting from seasonal and other
market-related fluctuations in raw material costs and quantities. The demand
for seasonal borrowings usually peaks in early December when ham inventories
and accounts receivable are at their highest levels, and these borrowings are
generally repaid in January when the accounts receivable generated by the sales
of these hams are collected.
The Company has historically maintained lines of credit in excess of
the cash needs of its business. At December 8, 1995, the Company had total
lines of credit under its revolving credit agreement from four financial
institutions aggregating $80.0 million, of which all was drawn. Subsequent to
September 15, 1995, the Company had obtained an additional $25.0 million of
temporary short-term lines of credit to be used for seasonal ham inventory
buildup, the temporary lines expired on January 15, 1996. At December 8, 1995
all of the additional temporary short-term lines were unused.
The Company's various loan agreements contain restrictive covenants
that include the maintenance of a minimum level of consolidated net worth, as
defined, and of certain financial ratios (see Note 3 to the Notes to the
Consolidated Financial Statements for further discussion related to the
Company's various debt covenant violations).
In addition to the approximately $22 million of capital expenditures
related to the Wilson acquisition, the Company anticipates capital expenditures
during fiscal 1996 of approximately $37 million, primarily to complete the
construction of its new manufacturing facility in Ponca City, Oklahoma, and to
complete the planned modernization of its various manufacturing and slaughter
facilities. The Company's Ponca City facility was fully completed in November,
1995. The Company began limited operations in mid October and have adopted a
very aggressive schedule to bring production up to its planned capacity.
With the opening of the Company's Ponca City plant during the second
quarter, and some limited reconfiguring of some other facilities, the Company
will be closing two of the former Wilson operating facilities. Notification of
the plant closures was done in compliance with the federal Worker Adjustment
and Retraining Notification ("WARN") Act. The Company is unable at this time
to determine whether a charge will result from these plant closings.
Management believes that funds provided from operations and borrowings
under available lines of credit will permit it to continue to finance its
current operations and to further develop its business in accordance with its
operating strategies.
EXHIBITS AND REPORTS ON FORM 8-K
There were no reports filed on form 8-K for the period ending December
8, 1995.
10
<PAGE> 5
SIGNATURES
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.
THORN APPLE VALLEY, INC.
------------------------
(Registrant)
Date: May 1, 1996 By: /s/ Louis Glazier
------------------------------------
Louis Glazier
Executive Vice President of
Finance and Administration
Chief Financial Officer
11
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
<S> <C> <C>
EX-27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONSOLIDATED BALANCE SHEET AT DECEMBER 8, 1995, CONSOLIDATED STATEMENTS OF
INCOME FOR THE 28 WEEKS ENDED DECEMBER 8, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) FORM 10Q, QUARTERLY REPORT UNDER SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> MAY-27-1995
<PERIOD-END> DEC-08-1995
<CASH> 7,763,640
<SECURITIES> 0
<RECEIVABLES> 76,736,310
<ALLOWANCES> 1,063,800
<INVENTORY> 57,672,658
<CURRENT-ASSETS> 155,281,047
<PP&E> 241,847,357
<DEPRECIATION> 100,506,585
<TOTAL-ASSETS> 338,298,766
<CURRENT-LIABILITIES> 87,440,467
<BONDS> 154,734,974
0
0
<COMMON> 577,796
<OTHER-SE> 90,821,529
<TOTAL-LIABILITY-AND-EQUITY> 338,298,766
<SALES> 514,907,690
<TOTAL-REVENUES> 514,907,690
<CGS> 474,510,781
<TOTAL-COSTS> 474,510,781
<OTHER-EXPENSES> 46,517,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,546,783
<INCOME-PRETAX> (10,486,116)
<INCOME-TAX> (3,564,000)
<INCOME-CONTINUING> (6,922,116)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,922,116)
<EPS-PRIMARY> (1.20)
<EPS-DILUTED> (1.20)
</TABLE>
