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 March 31, 1998
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 May 14, 1998, 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
March 31, 1998 and June 30, 1997
UNAUDITED
<TABLE>
ASSETS
<CAPTION>
MARCH 98 JUNE 97
Unaudited Audited
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 295,700 $ 414,538
Trade and related party
receivables net of
allowance for doubtful
accounts of $34,141 at
March 31, 1998 and
$36,168 at June 30, 1997 159,807 273,372
Inventories 1,270,676 1,871,922
Prepaid expenses 110,040 97,659
Income taxes receivable 0 23,950
Deferred income taxes 0 454,449
TOTAL CURRENT
ASSETS 1,836,223 3,135,890
NET PROPERTY
AND EQUIPMENT 1,855,008 2,040,264
OTHER NON-CURRENT
ASSETS
Investment in supplier 77,400 71,629
Notes receivable-supplier 59,667 59,667
TOTAL OTHER
NON-CURRENT ASSETS 137,067 131,296
TOTAL ASSETS 3,828,298 5,307,450
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
BALANCE SHEET
March 31, 1998 and June 30, 1997
UNAUDITED
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
MARCH 98 JUNE 97
Unaudited Audited
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 662,693 $ 1,205,396
Accrued expenses payable 118,118 219,070
Current portion of
long-term debt and
capital leases 128,888 249,509
TOTAL CURRENT
LIABILITIES 909,699 1,673,975
LONG-TERM DEBT AND
CAPITAL LEASES LESS
CURRENT PORTION 1,566,528 1,663,863
DEFERRED INCOME
TAXES 80,759 224,814
TOTAL NON-
CURRENT LIABILITIES 1,647,287 1,888,677
TOTAL LIABILITIES 2,556,986 3,562,652
STOCKHOLDERS'
EQUITY
Common stock, $25
par-shares authorized
500,000; 13,910 issued
and 13,776 outstanding 347,750 347,750
Retained earnings 926,912 1,400,398
Treasury shares (3,350) (3,350)
TOTAL STOCKHOLDERS
EQUITY 1,271,312 1,744,798
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY 3,828,298 5,307,450
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1997
<S> <C> <C>
NET SALES $ 3,762,943 $ 4,617,330
COST OF SALES 3,375,404 3,670,167
Gross profit 387,539 947,163
OPERATING
EXPENSES 846,638 1,112,481
Operating loss (459,099) (165,318)
OTHER INCOME (EXPENSE)
Patronage rebates
and commissions 73,226 75,831
Rent income 21,273 6,776
Interest income 104 179
Interest expense (40,970) (52,619)
Miscellaneous 2,086 22,000
Loss before income tax (403,380) (113,152)
INCOME TAX BENEFIT 0 38,471
NET LOSS (403,380) (74,681)
RETAINED EARNINGS
Beginning of the period 1,330,293 1,662,376
End of the period 926,913 1,587,695
NET LOSS PER
COMMON SHARE ($29) ($5)
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
March 31, 1997 March 31, 1997
<S> <C> <C>
NET SALES 12,016,177 14,764,032
COST OF SALES 9,821,518 11,869,423
Gross Profit 2,194,659 2,894,609
OPERATING EXPENSES 2,825,137 3,535,862
Operating loss (630,478) (641,253)
OTHER INCOME
(EXPENSE)
Patronage rebates and
commissions 190,348 167,490
Rent income 58,522 30,224
Interest income 2,808 3,558
Interest expense (152,782) (162,070)
Miscellaneous 58,098 24,700
Loss before income taxes (473,485) (577,352)
INCOME TAXES BENEFIT 0 196,300
NET LOSS (473,485) (381,052)
RETAINED EARNINGS
Beginning of the period 1,400,398 1,968,748
End of the period 926,913 1,587,695
NET LOSS PER
COMMON SHARE ($34) ($28)
</TABLE>
<PAGE>
MIMBRES VALLEY FARMERS ASSOCIATION, INC.
d.b.a. FARMERS, INC.
STATEMENT OF CASH FLOWS
For the Nine Months Ended March 31, 1998 and March 31, 1997
UNAUDITED
<TABLE>
<CAPTION>
MARCH 98 MARCH 97
<S> <C> <C>
OPERATING ACTIVITIES
Net loss (473,485) (381,052)
Adjustments to reconcile
net loss to net cash provided
by operating activities:
Depreciation and
amortization 226,806 227,189
Decrease in trade and
related party receivables 113,565 133,262
Decrease in inventories 601,246 643,934
Increase in prepaid
expense (12,382) (52,750)
Decrease in prepaid
income tax 334,344 104,477
Decrease in accrued
expense (100,952) (173,074)
Decrease in accounts
payable (542,703) (354,305)
Net cash provided
by operating activities 146,439 147,681
INVESTING ACTIVITIES
(Increase) Decrease in
property and equipment (41,550) 10,889
(Increase) Decrease in
investment in supplier (5,771)
FINANCING ACTIVITIES
Proceeds from long term
debt and capital leases 180,097 305,648
Repayment of long term
debt and capital leases (398,053) (576,711)
Net cash used for
financing activities (217,956) (271,063)
DECREASE IN CASH
EQUIVALENTS (118,838) (112,491)
CASH AND EQUIVALENTS
Beginning of period 414,538 293,163
End of period 295,700 180,672
</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 as of March 31, 1998 and June 30, 1997 and the results of operations
and cash flows for the nine-month periods ending March 31, 1998 and March 31,
1997.
The accounting policies followed by Farmers are set forth in Note 1 to the
financial statements in the 1997 Farmers Annual Report filed on Form 10-KSB.
The results of operations for the nine-month period ended March 31, 1998 is
not necessarily indicative of the results to be expected for the full year.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
The company filed its federal income tax return for the year ending June
30,1997 in the first quarter. The Company received a tax refund of $309,795.
The Company has used these funds to reduce short term bank debt and trade
payables.
Working capital ratios have improved from 1.87 at June 30, 1997 to 2.02 at
March 31, 1998.
The company is continuing to review inventory products and categories at all
stores to improve product margins and movement.
Results of Operations
Sales from all stores were consistent with the previous quarter. Gross
margins year to date, however, decreased from 19.5% in the fourth quarter of
FYE 97 and from 22% in the previous quarter to 18.3% in the current quarter.
The decrease was due to increased price competition.
The company is continuing its conversion to a new computer system to
ultimately connect all stores, provide timely and accurate information, and
reduce operating costs.
Other income and expense is consistent with the previous quarter.
On April 13, 1998, the Company relocated the hardware store from its 2300
Highway 70/80 location to its original location adjacent to the supermarket.
The hardware store at the Highway 70/80 location failed to make an operating
profit despite adjustments to inventory, personnel costs, and other factors.
As a result of the relocation of the hardware store, the company believes,
but has no assurance, that savings will result from
adjustments to personnel costs, occupancy expense and carrying costs
associated with the reduction in its total hardware inventory items,
and that the
store will return to profitability. The Company will continue to monitor
the operations of the hardware store at the Mall location.
The company expects to incur certain costs associated with the relocation of
its hardware store. The costs include: loss from discounting of discontinued
products, costs of moving, and continuing lease expense.
Farmers is obligated under its lease on the vacant hardware store building at
the Highway 70/80 location until the year 2002. The rent is approximately
$110,000 per year payable monthly. Farmers is attempting to lease the
building. The Company may have to substantially discount its lease to
encourage potential renters.
Future results from 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.
(a) Exhibits
See the Index to Exhibits which is incorporated herein by reference.
(b) Reports on Form 8-K
The following report on Form 8-K was filed during the quarter.
Date of Report Items Reported Financial Statements
filed
April 17, 1998 Item 4 None
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 15, 1998
MIMBRES VALLEY FARMERS
ASSOCIATION, INC.
By /s/ Garry S. Carter
Garry S. Carter
Chief Executive Officer and
General Manager
(Duly Authorized Representative)
By /s/ C. Diane Carter
C. Diane Carter
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
3(i) Articles of Incorporation (aa)
3(ii) Bylaws (aa)
27 Financial Date Schedule *
(aa) Incorporated by reference to the Company's registration Statement on
Form S-1
dated 1985 (Registration No. 33- )
* Filed Herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE MARCH
31, 1998 UNAUDITED FINANCIAL STATEMENTS INCLUDED IN ITEM 1 TO FORM 10-QSB
TO
WHICH THIS SCHEDULE IS ATTACHED AND IS QUALIFIED IN ITE ENTIRETY BY
REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 295,700
<SECURITIES> 0
<RECEIVABLES> 193,948
<ALLOWANCES> 34,141
<INVENTORY> 1,207,676
<CURRENT-ASSETS> 1,836,223
<PP&E> 1,855,008
<DEPRECIATION> 226,806
<TOTAL-ASSETS> 3,828,298
<CURRENT-LIABILITIES> 909,699
<BONDS> 1,566,528
0
0
<COMMON> 347,750
<OTHER-SE> 926,912
<TOTAL-LIABILITY-AND-EQUITY> 3,828,298
<SALES> 12,016,177
<TOTAL-REVENUES> 12,325,953
<CGS> 9,821,518
<TOTAL-COSTS> 12,646,655
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 152,782
<INCOME-PRETAX> (473,485)
<INCOME-TAX> 0
<INCOME-CONTINUING> (473,485)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (473,485)
<EPS-PRIMARY> (34)
<EPS-DILUTED> (34)
</TABLE>
