<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Thirteen Weeks Ended Commission File Number
August 27, 1995 0-13944
GOODMARK FOODS, INC.
(Exact name of Registrant as specified in its charter)
North Carolina 56-1330788
(State of incorporation) (I.R.S. Employer
Identification No.)
6131 Falls of Neuse Road, Raleigh, North Carolina 27609
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (919) 790-9940
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, 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,
$.01 par value, as of October 1, 1995 7,826,661
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GOODMARK FOODS, INC.
Form 10-Q Quarterly Report
Index
Page
<TABLE>
<S> <C>
PART I. Financial information
Item 1. Consolidated financial statements
Consolidated balance sheets 3
Consolidated statements of income 4
Consolidated statements of cash flows 5
Notes to consolidated financial statements 6
Item 2. Management's discussion and analysis of
financial condition and results of operations 8
PART II. Other information
Item 4. Submission of matters to a vote of security
holders 8
Item 5. Other information 9
Item 6. Exhibits and reports on Form 8-K 9
</TABLE>
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PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
GOODMARK FOODS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
AUGUST 27, 1995 AND MAY 28, 1995
--------------------------------
($000's)
<TABLE>
<CAPTION>
August 27, 1995 May 28, 1995
--------------- ------------
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 96 $ 386
Accounts and notes receivable 11,518 11,026
Inventories 14,233 13,028
Prepaid expenses 4,639 4,906
Other assets 1,176 1,772
------- -------
Total current assets 31,662 31,118
Property and equipment, net 52,817 52,512
Other assets 2,903 3,047
------- -------
Total $87,382 $86,677
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,042 $ 8,818
Accrued expenses and other liabilities 6,218 7,719
------- -------
Total current liabilities 12,260 16,537
Long-term debt and other long-term obligations 21,650 20,150
Deferred income taxes 4,163 3,800
Commitments and contingencies
Shareholders' equity 49,309 46,190
------- -------
Total $87,382 $86,677
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------
GOODMARK FOODS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE 13 WEEK PERIODS ENDED
AUGUST 27, 1995 AND AUGUST 28, 1994
-----------------------------------
($000's)
<TABLE>
<CAPTION>
13 Weeks Ended
---------------------------------
August 27, 1995 August 28, 1994
--------------- ---------------
<S> <C> <C>
Net sales $46,273 $43,407
Cost of goods sold 28,683 26,187
------- -------
Gross profit 17,590 17,220
Selling, general, and administrative expenses 13,076 12,413
------- -------
Income from operations 4,514 4,807
Interest and other net expense (income) 250 239
------- -------
Income before income taxes 4,264 4,568
Income taxes 1,544 1,718
------- -------
Net income $ 2,720 $ 2,850
======= =======
Earnings per common share-primary and fully diluted $ 0.34 $ 0.37
======= =======
Average shares outstanding-primary 8,095 7,716
======= =======
Average shares outstanding-fully diluted 8,112 7,716
======= =======
Dividends per share $ 0.04 $ 0.03
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------
GOODMARK FOODS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEK PERIODS ENDED
AUGUST 27, 1995 AND AUGUST 28, 1994
-----------------------------------
($000's)
<TABLE>
<CAPTION>
13 Weeks Ended
--------------------------------
August 27, 1995 August 28, 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $2,720 $2,850
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,492 1,169
Provision for deferred income taxes 362 163
(Gain) Loss on disposal of fixed assets (1) 267
Changes in assets and liabilities:
Net increase in assets (834) (1,621)
Net increase (decrease) in liabilities (4,276) 1,680
------ ------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (537) 4,508
------ ------
Cash flows used in investing activities:
Capital expenditures, net of proceeds from
disposal of fixed assets (1,644) (4,973)
Increase in other assets (7) (10)
------ ------
NET CASH USED IN INVESTING ACTIVITIES (1,651) (4,983)
------ ------
Cash flows from (used in) financing activities:
Proceeds from issuance of long-term debt 5,600 4,800
Principal payments on long-term debt and
other long-term obligations (4,100) (3,815)
Common stock issued under dividend reinvestment plan 12 6
Stock options exercised 698 4
Cash dividends paid (312) (231)
------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,898 764
------ ------
Net increase (decrease) in cash and cash equivalents (290) 289
Cash and cash equivalents at beginning of period 386 522
------ ------
Cash and cash equivalents at end of period $ 96 $ 811
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
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PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------
GOODMARK FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($000's)
1) The Notes to Consolidated Financial Statements included in
Registrant's annual report for the fiscal year ended May 28, 1995
as incorporated in Form 10-K filed with the Securities and
Exchange Commission on August 25, 1995 should be read in
conjunction with these quarterly financial statements.
2) The financial information herein is unaudited. The information
reflects all normal recurring adjustments which are necessary in
management's opinion for a fair statement of results for the
interim periods presented. Certain reclassifications have been
made to prior year's financial statements to conform to the
classifications used in 1996.
3) Inventories are stated at the lower of last-in, first-out (LIFO)
cost or market. Inventories consisted of the following in
thousands of dollars:
<TABLE>
<CAPTION>
8/27/95 5/28/95
-------- -------
<S> <C> <C>
Raw materials $ 5,218 $ 5,324
Work-in-process 1,158 1,269
Finished goods 8,184 6,762
Less LIFO reserve (327) (327)
------- -------
Inventories, net $14,233 $13,028
======= =======
</TABLE>
4) Interest and other net expense (income) consisted of the
following in thousands of dollars:
<TABLE>
<CAPTION>
13 Weeks Ended
---------------------
8/27/95 8/28/94
------- -------
<S> <C> <C>
Interest expense $330 $ 17
Interest income (20) (26)
Other expense (income) (60) 248
----- -----
Other expense (income), net $250 $239
===== =====
</TABLE>
Interest expense for the first quarter of fiscal 1995, ending
August 28, 1994, excludes $42 of interest that was
capitalized with the Garner plant expansion project.
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PART I, ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------
GOODMARK FOODS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
($000's)
5) The computation of earnings per common and common equivalent
share is based upon the weighted average number of common shares
outstanding during the period plus (in periods in which they have
a dilutive effect) the effect of common shares contingently
issuable from stock options using the treasury stock method.
Weighted average shares oustanding under the primary earnings per
share calculation for the first quarter of fiscal 1995 include
316,709 of equivalent shares from options. Weighted average
shares oustanding under the fully diluted earnings per share
calculation for the first quarter of fiscal 1995 include 333,575
of equivalent shares from options. In the first quarter of the
prior year, stock options did not impact per share data as they
were either insignificant or antidilutive.
6) Interim results are not necessarily indicative of results for the
fiscal year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
($000's)
Material Changes in Financial Condition from Fiscal Year End
------------------------------------------------------------
There were no material changes in financial condition during the first
quarter. The current ratio at August 27, 1995 was 2.6 compared to 1.9
at May 28, 1995. Long term debt and obligations were 31% of total
capitalization versus 30% at fiscal year end.
Material Changes in Results of Operations for the First Fiscal Quarter
------------------------------------------------------------------------
Sales for the first quarter of fiscal 1996 were 7% favorable to last
year's first quarter. Snack sales were up by 8%. Packaged meats sales
(which account for approximately 11% of total sales) were down by 2%.
We believe our aggressive marketing programs for meat snacks continue to
drive category growth and market share gains.
Continuing favorable ingredient costs, coupled with improved
efficiencies and a decline in start-up costs at our Garner, North
Carolina plant expansion returned this quarter to a 38% gross profit
margin rate, approaching the 40% gross profit rate of a year ago.
Selling, general, and administrative expenses were 28% as a percentage
of sales for the first quarter compared to 29% for last year's first
quarter. We are continuing our support of our major brands with
aggressive advertising, promotion and merchandising programs.
Net income for the first quarter was $2,720, or $.34 per share, down
slightly from $2,850, or $.37 per share for last year's first quarter.
The weighted average shares outstanding for the first quarter include
317,000 equivalent shares in options to conform to GAAP requirements
whereas no options were reflected in the year earlier period as their
effect was immaterial. See note 5 of Notes to Consolidated Financial
Statements. All share and per share figures reflect the two-for-one
stock split that was effected on August 1, 1994.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
On September 28, 1995, the Company held its Annual Meeting of
Shareholders. At the Annual Meeting, the appointment of Deloitte and
Touche, LLP as indepdendent auditors for the Company and its
subsidiaries for the fiscal year ending May 26, 1996, was ratified. The
only other proposal considered by shareholders was the election of
directors. The following seven nominees were elected to the Board of
Directors: Ron E. Doggett, Richard C. Miller, H. Hawkins Bradley,
Donald H. Grubb, Thomas W. D'Alonzo, Rollie Tillman, Jr., and Robert B.
Seidensticker. The number of votes cast for, against, or withheld, as
well as the number of abstentions and broker nonvotes, as to the
election of directors and ratification of Deloitte & Touch, LLP was as
follows:
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A. Election of Directors
<TABLE>
<CAPTION>
Director Votes Votes Votes Absten- Broker
Nominee For Against Withheld tions Nonvotes
------- --- ------- -------- ----- --------
<S> <C> <C> <C>
Ron E. Doggett 6,461,526 48,285 1,307,212
Richard C. Miller 6,462,066 47,745 1,307,212
H. Hawkins Bradley 6,451,897 57,915 1,307,212
Donald H. Grubb 6,496,313 13,499 1,307,212
Thomas W. D'Alonzo 6,496,476 13,335 1,307,212
Rollie Tillman, Jr. 6,495,616 14,195 1,307,212
Robert B. Seidensticker 6,495,766 14,045 1,307,212
</TABLE>
B. Ratification of Appointment of Auditors
<TABLE>
<CAPTION>
Votes Votes Absten- Broker
For Against tions Nonvotes
--- ------- ----- --------
<S> <C> <C> <C>
Ratification of
Deloitte & Touche, LLP 6,504,816 4,995 1,307,212
</TABLE>
ITEM 5. OTHER INFORMATION
--------------------------
On June 23, 1995, the Board of Directors authorized the repurchase of up
to 250,000 shares of the Company's common stock from time to time in
open market transactions during the current 1996 fiscal year.
On September 29, 1995, the Board of Directors declared a regular
quarterly cash dividend of $.04 per share. The dividend is payable
November 1, 1995, to shareholders of record as of the close of business
on October 13, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) Exhibits: Ex-27 Financial Data Schedules (for SEC only).
(b) Reports on Form 8-K: No reports on Form 8-K were filed during
the quarter ended August 27, 1995.
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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.
GoodMark Foods, Inc.
(Registrant)
Date: October 11, 1995 /s/ Ron E. Doggett
------------------------
Ron E. Doggett
Chairman and
Chief Executive Officer
Date: October 11, 1995 /s/ Paul L. Brunswick
------------------------
Paul L. Brunswick
Vice President
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FIRST
QUARTER ENDED AUGUST 27, 1995 FOR GOODMARK FOODS, INC. 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> MAY-26-1996
<PERIOD-START> MAY-29-1995
<PERIOD-END> AUG-27-1995
<CASH> 96
<SECURITIES> 0
<RECEIVABLES> 11,518
<ALLOWANCES> 0
<INVENTORY> 14,233
<CURRENT-ASSETS> 31,662
<PP&E> 52,817
<DEPRECIATION> 0
<TOTAL-ASSETS> 87,382
<CURRENT-LIABILITIES> 12,260
<BONDS> 21,650
<COMMON> 78
0
0
<OTHER-SE> 49,231
<TOTAL-LIABILITY-AND-EQUITY> 87,382
<SALES> 46,273
<TOTAL-REVENUES> 46,273
<CGS> 28,683
<TOTAL-COSTS> 28,683
<OTHER-EXPENSES> (60)
<LOSS-PROVISION> 33
<INTEREST-EXPENSE> 330
<INCOME-PRETAX> 4,264
<INCOME-TAX> 1,544
<INCOME-CONTINUING> 2,720
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,720
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
