SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended December 31,
1996
Commission File Number 0-13963
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
(Exact name of registrant as specified in its charter)
NEW MEXICO 85-0054230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
811 South Platinum, Deming, New Mexico 88030
(505) 546-2769
Check whether the issuer (1) filed all reports required to be
filed by Section or 15(d) of the Exchange Act during the past 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
As of February 14, 1997, 13,776 shares of Common Stock of
Mimbres Valley Farmers Association, Inc. ("Farmers" or the
"Company") were outstanding.
Transitional small business disclosure format: Yes No X
<PAGE>
PART I
Item 1. Financial Statements
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
BALANCE SHEET
December 31, 1996 and June 30, 1996
ASSETS
CURRENT ASSETS: DEC 96 JUNE 96
Unaudited Audited
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<S> <C> <C>
Cash and equivalents $275,978 $293,163
Trade and related party
receivables net of allowance
for doubtful accounts of
$18,852 at December 31,
1996 and June 30, 1996 453,827 506,635
Inventories net of reserve
at December 31, 1996 for
obsolete inventory of $23,467 2,262,971 2,863,318
Prepaid expenses 132,171 89,799
Prepaid income taxes 316,010 249,801
TOTAL CURRENT ASSETS 3,440,957 4,002,716
Plant, Property and Equipment 5,316,502 5,314,627
Accumulated Depreciation 3,147,568 2,994,421
NET PROPERTY AND EQUIPMENT 2,168,934 2,320,206
OTHER NON-CURRENT ASSETS
Investment in supplier 68,051 68,051
Note receivable-supplier 59,667 59,667
Intangibles, net of
amortization 17,654 17,888
TOTAL OTHER NON-CURRENT
ASSETS 145,372 145,606
$5,755,263 $6,468,528
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
BALANCE SHEET
December 31, 1996 and June 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES DEC 96 JUNE 96
Unaudited Audited
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<S> <C> <C>
Accounts payable $1,172,292 $1,558,849
Accrued expenses 217,872 330,333
Current portion of long-term
debt 696,348 302,185
TOTAL CURRENT LIABILITIES 2,086,512 2,191,367
LONG-TERM DEBT AND CAPITAL
LEASES LESS CURRENT PORTION 1,624,439 1,926,477
DEFERRED INCOME TAXES 37,537 37,537
TOTAL LIABILITIES 3,748,488 4,155,381
STOCKHOLDERS' EQUITY
Common stock, $25 par-shares
authorized 500,000; 13,910
issued and 13,776 outstanding 347,749 347,749
Retained earnings 1,662,376 1,968,748
Treasury shares (3,350) (3,350)
TOTAL STOCKHOLDERS' EQUITY 2,006,775 2,313,147
$5,755,263 $6,468,528
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1996
UNAUDITED
Three Months Six Months
Ended
Dec. 31, 1996 Dec. 31, 1996
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<S> <C> <C>
NET SALES $5,082,330 $10,146,702
COST OF SALES 4,433,914 8,199,256
Gross profit 648,416 1,947,446
OPERATING EXPENSES 1,227,682 2,423,381
Operating loss (579,266) (475,935)
OTHER INCOME (EXPENSE)
Other income
Patronage rebates and commissions 54,849 91,659
Rent income 11,251 23,448
Interest income 2,654 3,379
Interest expense (57,796) (109,451)
Miscellaneous (17,417) 2,700
Loss before income taxes (585,723) (464,200)
INCOME TAXES BENEFIT 202,791 157,828
NET LOSS (382,932) (306,372)
RETAINED EARNINGS
Beginning of period 2,045,308 1,968,748
End of period 1,662,376 1,662,376
NET INCOME PER COMMON SHARE ($28) ($22)
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
STATEMENT OF CASH FLOWS
For the Six Months Ended December 31, 1996
UNAUDITED
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<S> <C>
OPERATING ACTIVITIES
Net loss ($306,371)
Adjustments to reconcile net loss to
net cash (used for) operating activities:
Depreciation and amortization 153,147
Reserve for obsolescent inventory 23,467
Decrease in trade and related party receivables 52,808
Decrease in inventories 576,880
Increase in prepaid expenses (42,372)
Increase in prepaid income taxes (66,209)
Decrease in accrued expenses (112,462)
Decrease in accounts payable (386,557)
Net cash used by operating activities (107,669)
INVESTING ACTIVITIES
Increase in property and equipment (1,641)
FINANCING ACTIVITIES
Proceeds from long term debt and capital leases 305,648
Repayment of long term debt and capital leases (213,524)
Net cash used for financing activities 92,124
DECREASE IN CASH EQUIVALENTS (17,185)
CASH AND EQUIVALENTS
Beginning of period 293,163
End of period $275,978
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
Notes to Financial Statements
UNAUDITED
1. Basis of Presentation
In the opinion of management, the accompanying unaudited
financial statements contain all adjustments necessary to
present fairly the financial position of Farmers, Inc. as of
December 31, 1996 and June 30, 1996 and the results of
operations and cash flows for the six months ended December
31, 1996.
The accounting policies followed by Farmers, Inc. are set
forth in Note 1 to the financial statements in the 1996
Farmers, Inc. Annual Report filed on Form 10-K.
The results of operations for the three-month and six-month
periods ended December 31, 1996 are not necessarily indicative
of the results to be expected for the full year.
2. Lawsuit Settlement
In December, a $50,500 personal injury lawsuit was settled
with a grocery store customer. Management is of the opinion
that no further liability will result from this claim.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Financial Condition
Farmer's resources, in the opinion of management, are
adequate. However, due to an operating loss resulting from
decreased profit margins, the Company is experiencing some
accumulation in its trade payables.
The Company is currently reviewing its short term cash
requirements. It is anticipated that a $300,000 tax refund,
expected to be received in the third quarter, will provide the
company an infusion of additional working capital. In
addition, the Company is continuing to evaluate and then
reduce or eliminate any unprofitable retail categories.
Results of Operations
Sales are consistent with the previous quarter.
The gross profit percentage compared to the previous quarter
decreased due to Management's continued decision to liquidate
certain retail inventory categories. The liquidation caused
profit margins to narrow in the second quarter. It is the
opinion of Management that the gross profit will stabilize as
the various produce lines are adjusted to meet the needs of
area customers.
Management is continuing to review each of its retail
categories. Those that are not profitable and do not meet the
Board's financial criteria will be eliminated if profit
margins cannot be returned to their historical levels of
profitability.
The decrease in the gross profit margin has resulted in an
operating loss for the six months now ended. Management is
reviewing all operating departments in an effort to contain
and reduce operating expenses.
Other income and expense are consistent with the prior quarter
with the exception of a lawsuit settlement recorded at
$50,500. The settlement was the result of a claim for a
personal injury sustained in the Company's grocery store.
There are no additional liabilities expected to result from
this claim.
Future results of operations may differ from the opinions
expressed by Management in the above Management Discussion and
Analysis.
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K.
(3)(i) & (ii) Articles of Incorporation and Bylaws of Mimbres
Valley Farmers Association, Inc., as currently in effect, were
filed as an exhibit to the Company's registration statement filed
in 1985 and are incorporated herein by reference.
(27) The Financial Data Schedule is included in Part I of
this Form 10-QSB.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: February 14, 1997.
MIMBRES VALLEY FARMERS ASSOCIATION,
INC.
By: Douglas Tharp
Douglas Tharp
Vice-President and Director
By: Daniel Gonzales
Daniel Gonzales, General Manager,
Financial and Accounting Officer
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE DECEMBER 31, 1996 UNAUDITED FINANCIAL STATEMENTS INCLUDED AS
ITEM 1 TO THIS FORM 10-QSB TO WHICH THIS SCHEDULE IS ATTACHED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 275,978
<SECURITIES> 0
<RECEIVABLES> 472,679
<ALLOWANCES> 18,852
<INVENTORY> 2,262,971
<CURRENT-ASSETS> 3,440,957
<PP&E> 5,316,502
<DEPRECIATION> 3,147,568
<TOTAL-ASSETS> 5,755,263
<CURRENT-LIABILITIES> 2,086,512
<BONDS> 1,624,439
0
0
<COMMON> 347,749
<OTHER-SE> 1,662,376
<TOTAL-LIABILITY-AND-EQUITY> 5,755,263
<SALES> 5,082,330
<TOTAL-REVENUES> 5,151,084
<CGS> 4,433,914
<TOTAL-COSTS> 4,433,914
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 18,852
<INTEREST-EXPENSE> 57,796
<INCOME-PRETAX> (585,723)
<INCOME-TAX> 202,791
<INCOME-CONTINUING> (382,932)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (382,932)
<EPS-PRIMARY> (28)
<EPS-DILUTED> (28)
</TABLE>