File No. 0-7277
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________________________________________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL QUARTER ENDED NOVEMBER 1, 1996
__________________________________________________
WSMP, INC.
Incorporated in North Carolina
CLAREMONT, NORTH CAROLINA 28610 56-0945643
(704) 459 - 7626 (I.R.S. Employer Identification No.)
__________________________________________________
WSMP, Inc. 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 has been
subject to such filing requirements for the past 90 days.
The number of shares of WSMP, Inc. Common Stock outstanding as of December 12,
1996 was 2,760,338.
===============================================================================
WSMP, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information:
-------------------------------------------------
Page No.
--------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
November 1, 1996 and February 23, 1996........................... 1-2
Consolidated Condensed Statements of
Operations and Retained Earnings -
Three Months Ended November 1, 1996
and November 3, 1995 and Nine Months Ended
November 1, 1996 and November 3, 1995............................ 3-4
Consolidated Condensed Statements of Cash
Flows - Nine Months Ended November 1, 1996 and
November 3, 1995................................................. 5
Notes to Consolidated Condensed Financial
Statements....................................................... 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations................. 8-10
Part II. Other Information:
---------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K........................ 11
Signatures....................................................... 11
Index to Exhibits................................................ 12
Exhibit 11 - Computation of Earnings (Loss) per
Common and Common Equivalent Share............................... 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WSMP, INC. AND SUBSIDIARIES
----------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Condensed Balance Sheets
(Unaudited)
November 1, February 23,
ASSETS 1996 1996
- ------ ------------ -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 276,400 $ 430,311
Marketable equity securities 160,205 148,997
Accounts receivable and current portion of
notes receivable, net:
Trade and other 5,100,053 3,981,563
Related party 894,841 1,257,280
Inventories 6,445,244 5,553,641
Income taxes refundable 80,504 369,728
Prepaid expenses and other 264,321 116,400
Deferred income taxes 538,247 518,490
------------ ------------
Total current assets 13,759,815 12,376,410
------------ ------------
Property, plant and equipment, net 23,804,715 25,288,033
------------ ------------
Other assets:
Properties held for sale 2,081,609 1,569,752
Excess of cost over fair value of net assets
of businesses acquired, net 638,689 662,321
Noncurrent notes receivable 167,989 204,941
Noncurrent related party notes receivable 301,357 515,944
Investment in affiliates 286,533 381,533
Investment in restricted equity securities 242,050 242,050
Other 383,837 393,390
------------ ------------
Total other assets 4,102,064 3,969,931
------------ ------------
Total assets $ 41,666,594 $ 41,634,374
============ ============
See accompanying notes to unaudited consolidated condensed financial statements.
</TABLE>
WSMP, INC. AND SUBSIDIARIES
----------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
November 1, February 23,
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1996
- ------------------------------------ -------------- -------------
<S> <C> <C>
Current liabilities:
Notes payable $ 4,000,000 $ 4,000,000
Current installments of long-term debt 1,116,089 2,030,953
Trade accounts payable 3,143,177 2,810,229
Income taxes payable 15,658 10,651
Other accrued liabilities 2,929,600 2,540,221
------------- -------------
Total current liabilities 11,204,524 11,392,054
Deferred income 5,000 5,000
Deferred income taxes 908,195 903,639
Long-term debt, excluding current installments 12,675,602 12,890,060
------------- -------------
Total liabilities 24,793,321 25,190,753
------------- -------------
Commitments and Contingencies
Shareholders' equity:
Preferred stock - par value $.10, authorized
2,500,000 shares; no shares issued
Common stock - par value $1, authorized 10,000,000
shares; issued 2,760,338 shares at November 1, 1996
and 2,760,338 shares at February 23, 1996 2,760,338 2,760,338
Capital in excess of par value 6,579,347 6,579,347
Unrealized gain on securities available for
sale, net of deferred income taxes of $(6,247) at
November 1, 1996 and $(3,164) at February 23, 1996 9,895 5,278
Retained earnings 7,523,693 7,098,658
------------- -------------
Total shareholders' equity 16,873,273 16,443,621
------------- -------------
Total liabilities and shareholders' equity $ 41,666,594 $ 41,634,374
============= =============
</TABLE>
WSMP, INC. AND SUBSIDIARIES
----------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Condensed Statements of Operations and Retained Earnings
Three Months Ended November 1, 1996 and November 3, 1995
(Unaudited)
1996 1995
---- ----
<S> <C> <C>
Operating revenues:
Food sales $ 20,009,711 $ 17,911,710
Franchise, royalty and other fees
(includes related party transactions
totaling $190,895 in 1996 and $252,230 in 1995) 578,311 638,108
-------------- --------------
Total operating revenues 20,588,022 18,549,818
-------------- --------------
Costs and expenses:
Cost of goods sold (includes related party transactions
totaling $125,677 in 1996 and $96,393 in 1995) 15,065,992 12,839,441
Operating expenses (includes related party transactions
totaling $92,568 in 1996 and $169,751 in 1995) 2,776,643 2,984,366
Selling, general and administrative expenses (includes
related party transactions totaling $420,096 in 1996
and $466,694 in 1995) 1,665,285 1,686,342
Depreciation and amortization 595,344 652,973
-------------- --------------
Total costs and expenses 20,103,264 18,163,122
-------------- --------------
Operating income 484,758 386,696
-------------- --------------
Other income (expense):
Other income (including interest) (includes related
party transactions totaling $22,335 in 1996 and
$25,979 in 1995) 156,949 162,108
Net gain on dispositions and write-downs of
assets (including related party transactions totaling
$251,408 in 1996) 257,380 57,198
Equity in loss of affiliates (10,500) (23,000)
Interest expense (451,749) (437,657)
Other expense (includes related party transactions
totaling $16,126 in 1996 and $21,062 in 1995) (147,781) (101,540)
-------------- --------------
Net other expense (195,701) (342,891)
-------------- --------------
Earnings before income taxes 289,057 43,805
Provision for income taxes 110,652 30,788
-------------- --------------
Net earnings $ 178,405 $ 13,017
============== ==============
Retained earnings:
Balance at beginning of period $ 7,345,288 $ 8,237,418
Net earnings 178,405 13,017
-------------- --------------
Balance at end of period $ 7,523,693 $ 8,250,435
============== ==============
Net earnings per common and common equivalent share $ .06 $ .00
============== ==============
See accompanying notes to unaudited consolidated condensed financial statements.
</TABLE>
WSMP, INC. AND SUBSIDIARIES
----------------------------------------------------
<TABLE>
<CAPTION>
Consolidated Condensed Statements of Operations and Retained Earnings
Nine Months Ended November 1, 1996 and November 3, 1995
(Unaudited)
1996 1995
---- ----
<S> <C> <C>
Operating revenues:
Food sales $ 58,474,782 $ 53,953,395
Franchise, royalty and other fees
(includes related party transactions
totaling $634,388 in 1996 and $804,210
in 1995) 1,855,748 2,066,787
-------------- --------------
Total operating revenues 60,330,530 56,020,182
-------------- --------------
Costs and expenses:
Cost of goods sold (includes related party
transactions totaling $396,380 in 1996 and
$300,509 in 1995) 43,553,248 38,866,487
Operating expenses (includes related party
transactions totaling $496,532 in 1996 and
$552,379 in 1995) 8,388,051 9,141,018
Selling, general and administrative expenses
(includes related party transactions totaling
$1,345,079 in 1996 and $1,617,337 in 1995) 5,062,188 5,376,150
Depreciation and amoritization 1,779,179 1,912,307
-------------- --------------
Total costs and expenses 58,782,666 55,295,962
-------------- --------------
Operating income 1,547,864 724,220
-------------- --------------
Other income (expense):
Other income (including interest) (includes
related party transactions totaling $152,054
in 1996 and $120,934 in 1995) 798,440 568,769
Net gain on dispositions and write-downs
of assets (includes related party transaction
totaling $251,408 in 1996) 257,530 5,692
Equity in loss of affiliates (95,000) (23,000)
Interest expense (1,285,376) (1,378,718)
Other expense (includes related party transactions
totaling $46,682 in 1996 and $65,409 in 1995) (530,090) (483,651)
-------------- --------------
Net other expense (854,496) (1,310,908)
-------------- --------------
Earnings (loss) before income taxes 693,368 (586,688)
Provision for income taxes (benefit) 268,333 (243,476)
-------------- --------------
Net earnings (loss) $ 425,035 $ (343,212)
============== ==============
Retained earnings:
Balance at beginning of period $ 7,098,658 $ 8,593,647
Net earnings (loss) 425,035 (343,212)
-------------- --------------
Balance at end of period $ 7,523,693 $ 8,250,435
============== ==============
Net earnings (loss) per common and common
equivalent share $ .14 $ (.13)
============== ==============
See accompanying notes to unaudited consolidated condensed financial statements.
</TABLE>
WSMP, INC. AND SUBSIDIARIES
----------------------------------------------------
Consolidated Condensed Statements of Cash Flows
Nine Months Ended November 1, 1996 and November 3, 1995
(Unaudited)
1996 1995
---- ----
Cash flows from operating activities:
Net earnings (loss) $ 425,035 $ (343,212)
------------ ------------
Adjustments to reconcile net earnings
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,779,180 1,872,522
Depreciation on properties leased to others 194,668 195,331
Provision for losses on receivables 178,883 63,107
Net gain on disposition and writedowns
of assets (257,530) (5,692)
Increase in deferred income taxes (18,284) (644,962)
Other non-cash adjustments to earnings 115,978 123,029
Changes in operating assets and liabilities
(net of effects from purchase of restaurant
companies) providing (using) cash:
Receivables (1,262,187) (455,560)
Inventories (891,603) (638,068)
Income taxes refundable, prepaid expenses
and other 141,304 23,086
Trade accounts payable and other accrued
liabilities 687,334 (151,397)
------------ ------------
Total adjustments 667,743 381,396
------------ ------------
Net cash provided by operating activities 1,092,778 38,184
------------ ------------
Cash flows from investing activities:
Increase in marketable equity securities (3,508) (3,290)
Proceeds from sales of assets to related
parties 785,000
Proceeds from sales of assets 215,037 2,028,180
Decrease in related party notes receivables 176,460 176,025
Decrease in other notes receivable 319,030 390,545
Deposits, net of refunds (14,887) (246,365)
Capital expenditures to related parties (289,131) (260,567)
Capital expenditures - others (777,673) (785,322)
Other investing activities (404,473)
------------ ------------
Net cash provided by investing activities 410,328 894,733
------------ ------------
Cash flows from financing activities:
Proceeds from borrowings 85,000
Principal payments on long-term debt (1,657,017) (2,878,862)
Net proceeds under short-term borrowing
agreements 1,000,000
Proceeds from exercise of stock options 290,000
------------ ------------
Net cash used in financing activities (1,657,017) (1,503,862)
------------ ------------
Net increase in cash and cash equivalents (153,911) (570,945)
Cash and cash equivalents at beginning of
period 430,311 940,120
------------ ------------
Cash and cash equivalents at end of period $ 276,400 $ 369,175
============ ============
See accompanying notes to unaudited consolidated condensed financial statements.
WSMP, INC. AND SUBSIDIARIES
----------------------------------------------------
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position
as of November 1, 1996 and February 23, 1996, the results of operations for
the fiscal quarters and nine months ended November 1, 1996 and November 3,
1995 and the cash flows for the nine months ended November 1, 1996 and
November 3, 1995.
2. The results of operations for the fiscal quarters and nine months ended
November 1, 1996 and November 3, 1995 are not necessarily indicative of the
results to be expected for the full year.
3. Financial statements for fiscal 1996 have been reclassified, where
applicable, to conform to financial statement presentation used in fiscal
1997.
4. Earnings (loss) per share are based on the weighted average number of common
shares and dilutive common equivalent shares outstanding during each fiscal
period. Common equivalent shares relate to outstanding stock options. The
weighted average number of shares used in the calculation are 3,023,596 and
2,715,819 for the nine months ended in 1996 and 1995, respectively. The
weighted average number of shares used in the calculation for the third
fiscal quarter ended in 1996 and 1995, are 3,114,571 and 2,898,478
respectively.
5. The Company reports the results of its operations using a 52-53 week basis.
In line with this, reports for interim fiscal periods are prepared on the
basis of 12-12-12-16 week periods. The Company follows this policy
consistently.
6. A summary of inventories entering into cost of goods sold is:
<TABLE>
<CAPTION>
November 1, February 23, November 3, February 24,
1996 1996 1995 1995
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Hams in curing process $ 1,655,574 $ 1,326,420 $ 1,848,838 $ 1,748,375
Other food (includes cured hams) 3,089,247 2,818,418 2,521,393 2,104,940
Supplies 1,700,423 1,408,803 1,394,172 1,273,020
----------- ----------- ----------- -----------
Totals $ 6,445,244 $ 5,553,641 $ 5,764,403 $ 5,126,335
=========== =========== =========== ===========
</TABLE>
7. At November 1, 1996, the Company had $8,287,251 in Senior Note obligations
maturing on October 1, 1997, with two major life insurance companies.
However, the Company has entered into agreements with two banks which will
allow the Company to refinance $7.5 million on a long-term basis. In
addition, the insurance companies have agreed to give the Company a discount
totaling $787,251 upon the early retirement of the Senior Notes.
One of the agreements provides financing in the amount of $5 million at a
rate of prime plus 1% for a five year term with principal payments to be
made based a ten year amortization and a balloon payment at maturity. The
second agreement provides financing in the amount of $2.5 million at a rate
of prime plus 1% and is payable at the end of two years. The notes are to be
secured by deeds of trust on certain pieces of real property which currently
secure the Senior Note obligations as well as certain investments in common
stock. In addition, under the terms of the notes, the Company will be
required to meet certain financial requirements regarding tangible net worth,
working capital, debt ratio, and ratio of interest coverage.
Due to the Company's intent and ability as evidence by the refinancing
agreements, the Senior Notes are classified as short-term debt expected to
be refinanced on a long-term basis. At November 1, 1996, $291,275 is
included in current installments of long-term debt based on the principal
payments required within one year from the balance sheet date under the terms
of the new financing agreements.
8. The Company has guaranteed a loan obligation of one of its franchisees in an
amount not to exceed $322,000. The loan is secured by certain restaurant
equipment purchased by the franchise.
Effective December 1, 1993, the Company entered into a three year endorsement
with Richard Childress Racing Enterprises, Inc. and Dale Earnhardt, Inc. The
agreement calls for total payments of $1,200,000 over the three year period.
As of November 1, 1996, remaining payments under this agreement are $250,000.
9. Stock options for 100,000 shares were exercised during the nine month period
ended November 3, 1995 and resulted in cash proceeds totaling $290,000.
10.Supplemental cash flow disclosures - cash paid during the period for:
Nine Months Ended
-------------------------------
November 1, November 3,
1996 1995
----------- -----------
Interest $ 1,143,289 $ 1,382,111
=========== ===========
Income taxes $ 14,666 $ 170,000
=========== ===========
Accounts receivable from franchisees totaling $84,762 and $22,488 in fiscal
1997 and 1996, respectively, were converted to notes receivable.
During fiscal 1997, the Company purchased a restaurant property by assuming
debt on the property totaling $527,645 and exchanging an existing piece of
property with a book value of $260,236.
The Company received notes receivable totaling $6,392 from the sale of
property, plant and equipment in fiscal 1996.
11.In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation", which will be effective for the Company beginning February 24,
1996. SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require)
compensation cost to be measured based on the fair value of the equity
instrument awarded. Companies are permitted, however, to continue to apply
APB Opinion No. 25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue
to apply APB Opinion No. 25 to its stock based compensation awards to
employees and will disclose the required pro forma effect on net income and
earnings per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated percentages which
certain items reflected in the financial data bear to operating revenue of the
Company:
<TABLE>
<CAPTION>
Relationship to Total Operating Revenue
-----------------------------------------------------
Three Months Ended Nine Months Ended
------------------------- -------------------------
November 1, November 3, November 1, November 3,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Restaurant food sales 30.1 31.4 30.8 33.7
Manufacturing sales 67.1 65.2 66.2 62.6
Franchise, royalty and other fees 2.8 3.4 3.0 3.7
------- ------- ------- -------
Total operating revenue 100.0 100.0 100.0 100.0
Cost of goods sold 73.2 69.2 72.2 69.4
Operating expenses 13.5 16.1 13.9 16.3
Selling, general and administrative expenses 8.1 9.1 8.5 9.6
Depreciation and amortization 2.9 3.5 2.9 3.4
------- ------- ------- -------
Total operating income 2.3 2.1 2.5 1.3
Net other income (expenses) (.9) (1.9) (1.4) (2.3)
------- ------- ------- -------
Earnings (loss) before income taxes 1.4 .2 1.1 (1.0)
Provision for income taxes (benefit) .5 .2 .4 (.4)
------- ------- ------- -------
Net earnings (loss) .9% 0.0% .7% (.6)%
======= ======= ======= =======
</TABLE>
The Company operates in three principal lines of business. Segment information
is presented as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- -----------------------------------
November 1, 1996 November 3, 1995 November 1, 1996 November 3, 1995
---------------- ---------------- ---------------- ----------------
Operating Revenues:
- -------------------
<S> <C> <C> <C> <C>
Food processing $ 13,817,910 $ 12,086,906 $ 39,922,343 $ 35,088,262
Restaurant operations 6,191,801 5,824,804 18,552,439 18,865,133
Restaurant franchising 578,311 638,108 1,855,748 2,066,787
-------------- -------------- -------------- --------------
Total operating revenues $ 20,588,022 $ 18,549,818 $ 60,330,530 $ 56,020,182
============== ============== ============== ==============
Operating Profits:
- ------------------
Food processing $ 375,390 $ 740,334 $ 1,271,627 $ 1,338,942
Restaurant operations 736,522 189,274 2,117,117 959,875
Restaurant franchising 324,227 370,215 1,078,494 1,347,424
-------------- -------------- -------------- --------------
1,436,139 1,299,823 4,467,238 3,646,241
Corporate expenses (951,381) (913,127) (2,919,374) (2,922,021)
Other income (expense) 256,048 94,766 430,880 67,810
Interest expense (451,749) (437,657) (1,285,376) (1,378,718)
-------------- -------------- -------------- --------------
Earnings (loss) before
income taxes
$ 289,057 $ 43,805 $ 693,368 $ (586,688)
============== ============== ============== ==============
</TABLE>
RESULTS OF OPERATIONS
- ----------------------
Third Quarter Ended November 1, 1996 Compared With Third Quarter Ended
November 3, 1995
Consolidated food sales revenue totaled $20.0 million in the third quarter of
fiscal 1997 compared to $17.9 million during the corresponding quarter of the
prior year. Approximately $1.7 million of the increase occurred in the food
processing segment and reflects an increase in sales in the bakery division.
As previously discussed, the bakery division's sales during the prior year
were substantially impacted by its largest customer discontinuing a line of
product previously purchased from the Company. Although actions to replace
this business were put in place early in fiscal 1996, benefits from these
actions were realized at a slower pace than originally expected, and
significant improvements in bakery sales did not occur until late in the
fourth quarter of fiscal 1996. Sales in the bakery division continue to
improve during fiscal 1997, with third quarter sales showing a $1.7 million
increase over the corresponding period of fiscal 1996.
Additionally, the restaurant segment accounted for approximately $367,000 of
the increase in consolidated food sales. This increase can be attributed to
increases in same store sales totaling $421,000, or 8.2%, between the two
quarters. This increase is offset by the net reduction in company units from
22 to 19 between the quarters ended November 3, 1995 and November 1, 1996.
Franchise, royalty and other fees decreased $60,000, or 9.4% in the third
quarter of fiscal 1997 over the comparable period in fiscal 1996. This is
attributed to a net decline in the number of franchise units from seventy-five
at the beginning of the third quarter in fiscal 1996 to sixty-seven at the end
of the current year third quarter.
Operating income increased from $386,696 in the third quarter of fiscal 1996
to $484,758 in the third quarter of fiscal 1997. This increase is the result
of an increase in profitability in restaurant operations. During the third
quarter ended November 1, 1996, the restaurant segment experienced an increase
in operating profits totaling $547,000 over the comparable prior year quarter.
This increase is attributed to the increase in same store sales discussed
previously, the closing of several poorly performing restaurants between the
two quarters, and better management of costs in existing restaurant units.
The increase in operating profits in the restaurant segment was partially
offset by a reduction in profitability in the food processing segment. Total
operating profits in the food processing segment decreased approximately
$365,000 during the third quarter of fiscal 1997 compared to the same period
in fiscal 1996. Approximately $356,000 of the decrease occurred in the ham
curing division and reflects a reduction in margins due to increased ham
costs. The bakery division experienced little change in operating profits
from the prior year third quarter despite the increase in sales discussed
previously. This is primarily attributed to increased costs associated with
new product development.
In addition, the restaurant franchising segment experienced a decline in
operating profits totaling $46,000 during the third quarter of fiscal 1997
compared to the same period in fiscal 1996. This decrease reflects the
decline in franchise, royalty and other fees discussed above.
Nine Months Ended November 1, 1996 Compared With Nine Months Ended November 3,
1995
Consolidated food sales revenue increased $4.5 million, or 8.4%, to $58.5
million during the first nine months of fiscal 1997, compared to the first
nine months of fiscal 1996. The food processing segment experienced an
increase totaling $4.8 and is responsible for the overall consolidated
increase. As discussed previously, revenues in the food processing segment
continue to increase as the sales of the bakery division rebuild. Sales in
the bakery division increased $6.2 million during the first nine months of
fiscal 1997 over the comparable period of the prior year. However, this
increase was offset by a decrease in revenues in the ham curing division
totaling $1.4 million during the same period.
Offsetting the net increase in sales from the food processing segment was a
decrease in sales in the restaurant segment totaling $313,000. This decrease
is due to a net decline in the number of units from twenty-three at the
beginning of fiscal 1996 to nineteen at the end of the third quarter of fiscal
1997. However, the impact of the reduction in the number of units has been
partially offset by a net increase in same store sales totaling $682,000, or
4.2%, during the nine months ended November 1, 1996.
Franchise, royalty and other fees for the first half of fiscal 1997 declined
$211,000 from the corresponding period of fiscal 1997. As discussed above,
this is the result of the reduction in the overall number of franchisees.
Operating income increased from $724,000 for the first nine months of fiscal
1996 to $1.5 million for the first nine months of fiscal 1997. This increase
was driven by the restaurant segment which experienced an increase in
operating profits totaling $1.2 million during the first nine months of fiscal
1997 over the same period in fiscal 1996. Although the total revenues in this
segment declined, operating income increased due to increases in same store
sales, the closing of several poorly performing units and better management of
costs.
Offsetting this increase were decreases in operating income from the food
processing segment and the franchising segment. Operating income in the food
processing segment declined $67,000 during the first nine months of fiscal
1997 as compared with the same period in fiscal 1996. Although the increase
in sales in the bakery division did increase that divisions operating income
by approximately $581,000, operating income declined in the ham curing
division due to higher ham costs and the decline in sales previously
mentioned.
The restaurant franchising division also experienced a decline in operating
income of approximately $270,000. The majority of this decrease is due to the
reduction in existing franchise units and the relating reduction in royalties
as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------
Total cash and cash equivalents decreased $154,000 during the nine months
ended November 1, 1996. Profitable operations during this period generated
cash totaling $1.1 million. In addition, the sale of assets and collection of
notes receivable generated $1.0 million and $495,000, respectively.
Offsetting these inflows of cash were capital expenditures and repayments of
long-term debt which totaled $1.1 million and $1.7 million, respectively.
The Company had total working capital of $2.6 million at November 1, 1996, up
from $984,000 at February 23, 1996. Approximately $915,000 of this increase
is due to a reduction in current installments of long-term debt. This is
primarily the result of the reclassification of certain short-term amounts due
under the senior notes to long-term debt to reflect management's intent and
ability to refinance these amounts on a long term basis as discussed in Note 7
to the consolidated financial statements. The remaining increase reflects
working capital generated through profitable operations during the first nine
months of fiscal 1997.
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8 - K
- --------------------------------------------
(a) Exhibits
See Index to Exhibits
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended November 1, 1996.
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.
WSMP, INC.
----------
Date 12-13-96 By: JAMES C. RICHARDSON, JR.
---------------- ----------------------------------
James C. Richardson, Jr.
(Chief Executive Officer)
Date 12-13-96 By: MATTHEW V. HOLLIFIELD
---------------- ----------------------------------
Matthew V. Hollifield
(Vice President of Accounting and
Chief Accounting Officer)
INDEX TO EXHIBITS
For inclusion in Quarterly Report on Form 10-Q Quarter Ended November 1, 1996
Exhibit No. Page No.
----------- --------
11 Computation of Earnings (Loss) Per Common
and Common Equivalent Share 13
Exhibit 11
----------
WSMP, INC. AND SUBSIDIARIES
-----------------------------------------------------
Computation of Earnings (Loss) Per Common and Common Equivalent Share
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 1, November 3, November 1, November 3,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings (loss) computations:
Net earnings (loss) $ 178,405 $ 13,017 $ 425,035 $ (343,212)
============ ============ ============ ============
Weighted average shares computation:
Actual outstanding shares at beginning
of period 2,760,338 2,710,338 2,760,338 2,660,338
Add (deduct) weighted average shares
applicable to:
Common stock issued 38,690 55,481
Common stock options outstanding 354,233 149,450 263,258
------------ ------------ ------------ -----------
Weighted average shares as adjusted 3,114,571 2,898,478 3,023,596 2,715,819
============ ============ ============ ===========
Earnings (loss) per common and common
equivalent share $ .06 $ .00 $ .14 $ (.13)
============= ============ ============ ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the 1996 3rd
quarter 10-Q for WSMP, Inc. and is qualified in its entirety by reference to
such 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> FEB-24-1996
<PERIOD-END> NOV-01-1996
<CASH> 276,400
<SECURITIES> 160,205
<RECEIVABLES> 4,474,238
<ALLOWANCES> 35,000
<INVENTORY> 6,445,244
<CURRENT-ASSETS> 13,759,815
<PP&E> 45,567,394
<DEPRECIATION> 21,762,678
<TOTAL-ASSETS> 41,666,594
<CURRENT-LIABILITIES> 11,204,524
<BONDS> 13,791,691
0
0
<COMMON> 2,760,338
<OTHER-SE> 14,112,935
<TOTAL-LIABILITY-AND-EQUITY> 41,666,594
<SALES> 58,474,782
<TOTAL-REVENUES> 60,330,530
<CGS> 43,553,248
<TOTAL-COSTS> 43,553,248
<OTHER-EXPENSES> 8,388,051
<LOSS-PROVISION> 178,883
<INTEREST-EXPENSE> 1,285,376
<INCOME-PRETAX> 693,368
<INCOME-TAX> 268,333
<INCOME-CONTINUING> 425,035
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 425,035
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
</TABLE>
