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 Quarter Ended March 31, 1996 Commission File Number 0-15584
Alpine Lace Brands, Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-2717823
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
111 Dunnell Road, Maplewood, New Jersey 07040
(Address of Principal Executive Offices)
(Registrant's telephone number, including area code): 201-378-8600
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 (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 _____
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: As of May 1, 1996, there
were 5,176,302 shares of Common Stock, $.01 par value outstanding.
<PAGE>
ALPINE LACE BRANDS, INC.
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996
(unaudited) and December 31, 1995 3
Consolidated Statements of Earnings for the Three
Months Ended March 31, 1996 and 1995 (unaudited) 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1996 and 1995 (unaudited) 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALPINE LACE BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 1996 December 31, 1995
(unaudited)
ASSETS (substantially pledged)
Cash and cash equivalents $ 113,579 $ 459,610
Accounts receivable, net of
allowance for bad debts 9,459,103 13,068,356
Inventories 6,078,977 6,213,256
Prepaid expenses and deposits 389,355 381,445
Advances to suppliers 300,000 300,000
Total current assets 16,341,014 20,422,667
Property, plant and equipment
Land, building and improvements 289,312 289,314
Equipment under capital lease 973,795 973,795
Leasehold improvements 106,176 106,176
Furniture, fixtures and equipment 2,513,887 2,389,337
3,883,170 3,758,622
Less accumulated depreciation and
amortization 1,533,658 1,422,968
2,349,512 2,335,654
OTHER ASSETS
Note Receivable - Mountain Farms, Inc. 1,675,948 1,675,948
Trademarks, tradenames and technology,
less accumulated amortization of
$903,731 in 1996 and $865,061 in
1995 1,517,570 1,556,240
Note receivable 12,188 16,035
Other 265,793 270,157
3,471,499 3,518,380
$ 22,162,025 $26,276,701
The accompanying notes are an integral part of these statements.
<PAGE>
ALPINE LACE BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 1996 December 31, 1995
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 6,515,280 $ 12,844,895
Accrued expenses 1,631,656 1,995,784
Income taxes 352,691 379,824
Current maturities of obligations
under capital leases 143,083 143,083
Total current liabilities 8,642,710 15,363,586
Long term obligations, less current
maturities
Long-term debt 7,060,949 5,325,945
Obligations under capital leases 373,876 409,561
Other long-term liability 41,181 82,362
7,476,006 5,817,868
Stockholders' equity
Preferred stock, par value
$.01 per share;
authorized 1,000,000 shares;
issued and outstanding 45,000 at
March 31, 1996 liquidation amount
$50.00 per share 2,250,000 2,250,000
Common stock, par value
$.01 per share;
authorized 10,000,000 shares;
issued and outstanding 5,176,302
at March 31, 1996 and 5,050,136
at December 31, 1995 50,563 50, 501
Additional paid-in capital 3,206,206 2,611,966
Retained earnings 536,540 182,780
6,043,309 5,095,247
$ 22,162,025 $ 26,276,701
The accompanying notes are an integral part of these statements.
<PAGE>
ALPINE LACE BRANDS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
Three Months Ended
March 31,
1996 1995
Net Sales $ 32,550,994 $ 32,446,320
Cost of goods sold 24,903,429 23,678,896
Gross profit 7,647,565 8,767,424
Operating expenses
Selling 5,781,395 6,348,954
Administrative 1,040,180 1,102,117
6,821,575 7,451,071
Operating profit 825,990 1,316,353
Other Income - 3,114
Interest expense - net 187,366 328,731
Earnings before income
taxes and extraordinary
item 638,624 990,736
Income taxes 242,677 66,379
Earnings before
extraordinary item 395,947 924,357
Extraordinary Item:
Gain from extinguishment
of debt, net of income taxes
of $7,451 - 103,760
Net earnings 395,947 1,028,117
Preferred stock dividends 42,188 -
Net earnings applicable to common
shareholders $ 353,759 $ 1,028,117
Earnings per share of common stock
Earnings before
extraordinary item $ .07 $ .18
Extraordinary item - .02
Net earnings per share of common stock $ .07 $ .20
Weighted average number of common and
common equivalent shares outstanding 5,334,813 5,195,932
The accompanying notes are an integral part of these statements.
<PAGE>
ALPINE LACE BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities
Net earnings $ 395,947 $ 1,028,117
Ajustments to reconcile net earnings
to net cash used in operating activities:
Depreciation and amortization 149,360 130,662
Extraordinary gain from extinguishment
of debt, net of income taxes - (103,760)
Provision for losses on accounts
receivable 9,000 19,073
Change in assets and liabilities:
Decrease in accounts receivable 3,600,253 4,327,599
(Increase) Decrease in inventory 134,279 (1,118,832)
(Increase) Decrease in prepaid expenses (7,910) 148,680
Decrease in other assets 4,364 17,468
Decrease in notes receivable 3,847 3,451
Decrease in accounts payable (6,329,615) (4,198,433)
Decrease in accrued expenses (364,128) (547,423)
Increase (Decrease) in income taxes (27,133) 51,386
Decrease in other long-term liabilities (41,181) (123,542)
(2,868,864) (1,393,671)
Net cash used in operating activities $ (2,472,917) $ (365,554)
The accompanying notes are an integral part of these statements.
<PAGE>
ALPINE LACE BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
Three Months Ended
March 31,
1996 1995
Cash flows from investing activities:
Additions to property, plant and equipment $ (124,548) $ (60,718)
Payments for trademarks and trade names - (18,285)
Net cash used by investing activities (124,548) (79,003)
Cash flows from financing activities:
Net payments from obligation under capital lease (35,685) (47,259)
Net proceeds (payments) under long-term
obligations 1,735,005 (2,003,680)
Net proceeds from preferred stock issued - 2,115,000
Net proceeds from stock option exercises 594,302 13,500
Payment of dividends to preferred shareholders (42,188) -
Net cash provided by financing activities 2,251,434 77,561
Net (decrease) in cash and cash equivalents (346,031) (366,996)
Cash and cash equivalents at beginning of year 459,610 438,414
Cash and cash equivalents at end of quarter 113,579 $ 71,418
Supplemental disclosures of cash flow information:
Cash paid during the year for
Interest $ 192,667 $ 389,598
Income taxes $ 269,811 $ 15,346
The accompanying notes are an integral part of these statements.
<PAGE>
ALPINE LACE BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the financial
position of Alpine Lace Brands, Inc. as of March 31, 1996 and the results of its
operations and cash flows for the three months ended March 31, 1996 and 1995.
All material intercompany accounts and transactions have been eliminated.
Certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the year-end financial statements and notes thereto included in
the Company's Annual Report on Form 10-K filed with the Securities Exchange
Commission.
The accounting policies followed by the Company are set forth in the notes to
the Company's consolidated financial statements as set forth in its Annual
Report on Form 10-K.
2. The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the entire fiscal year.
3. Inventories are summarized as follows:
March 31, 1996 December 31, 1995
Cheese inventory $ 5,722,225 $ 5,880,513
Packaging supplies 356,752 332,743
$ 6,078,977 $ 6,213,256
4. Earnings per share of common stock was computed by dividing net earnings,
after deducting preferred dividend requirements, by the weighted average number
of common equivalent shares outstanding during the period, including the
incremental shares from the dilutive effect of warrants and stock options, if
applicable.
5. The Company's operations consist of two segments: (1) the branded cheese
business which develops, markets, converts, packages and distributes branded
cheeses; and (2) the Company's cheese and dairy products trading business.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
a. Results of Operations:
Comparison of the Company's first quarter (January 1,
1996 - March 31, 1996) of the current fiscal year ("1996") with the first
quarter (January 1, 1995 - March 31, 1995) of the last fiscal year ("1995").
Net sales for the quarter ending March 31, 1996 were $32,550,994 as compared to
$32,446,320 in the same period of 1995. The Company's Branded Division had
increased sales of $712,988 for the quarter ending March 31, 1996 going from
$25,343,584 in 1995 to $26,056,572 in the same period of 1996. Sales for the
Company's cheese and dairy products trading business decreased by 8.6% or
$608,314 to $6,494,422 from $7,102,736 for the comparative period of 1995.
As a percentage of sales, gross profit decreased to 23.5% in the first quarter
of 1996 from 27.0% in the comparable period of 1995. Gross profit decreased by
$1,119,859 in the quarter ending March 31, 1996 going from $8,767,424 in 1995 to
$7,647,565 in 1996. The decrease in both gross profit as a percent of sales and
total gross profit are the result of the higher cost to purchase cheese,
resulting from abnormally high commodity prices, partially offset by continuing
manufacturing efficiencies.
As a percentage of sales, selling and administrative expenses decreased from
23.0% in the first quarter of 1995 to 21.0% in the comparable period of 1996.
Selling and administrative expenses decreased from $7,451,071 in the first
quarter of 1995 to $6,821,575 in the same period of 1996. The major contributors
to this decrease were from advertising and reduced freight and warehousing.
The Company's operating profit decreased by $490,363 from $1,316,353 in the
first quarter of 1995 to $825,990 in the comparable period of 1996. Operating
profit as a percent of net sales decreased to 2.5% in the first quarter of 1996
compared to 4.1% in the first quarter of 1995 due to the lower gross profit,
partially offset by lower selling and administrative expenses previously
discussed.
Net interest expense in the first quarter of 1996 was $187,366, a decrease of
$141,365 from the comparable period of 1995, as a result of the company's
decreased use of its working capital credit line and lower interest rates.
The Company's income tax provision for the first quarter of 1996 was 38.0% or
$242,677. The Company's effective tax rate of 6.7% or $66,379 in the first
quarter of 1995 included the utilization of net operating loss carry-forwards
generated in prior years.
The Company's net earnings for the quarter ending March 31, 1996 were $395,947
compared to $1,028,117 for the same period of 1995 for the reasons discussed
above.
<PAGE>
b. Financial Condition:
The major sources of cash for the quarter ending March
31, 1996 came from decreased accounts receivable, stock option exercises and
first quarter net earnings. The major uses of cash for the quarter ending March
31, 1996 were to fund decreases in accounts payable. As of May 1, 1996, the
Company had approximately $4,100,000 available on its revolving credit facility
and $ 3,500,000 available on its equipment credit facility. Of the amount
available under the revolving credit facility, the bank has agreed that the
Company may use up to $1 million to fund the Company's recently announced plans
to repurchase shares of its common stock. The actual number of shares purchased,
the time of purchase and the prices at which they will be purchased will be
dependent on future market conditions, but it is expected that purchases
initially will not exceed 150,000 shares.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits.
Exhibit 11 Computation of Earnings per Share of Common Stock
b. Form 8-K Reports.
There were no current reports on Form 8-K filed by the registrant
during the quarter ended March 31, 1996.
<PAGE>
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.
ALPINE LACE BRANDS, INC.
By: /s/ Carl T. Wolf
Carl T. Wolf, President and Chairman of the Board
(Principal Executive Officer)
Dated: May 8, 1996
By: /s/ Arthur Karmel
Arthur Karmel, Vice President - Finance (Chief Accounting Officer)
Dated: May 8, 1996
<PAGE>
Exhibit 11.
ALPINE LACE BRANDS, INC.
Computation of Earnings Per Share of Common Stock
Three Months Ended
March 31,
1996 1995
Net earnings for the Period $ 395,947 $ 1,028,117
Preferred Stock Dividends 42,188 -
Net Earnings for Computation
of Earnings Per Share (1) 353,759(A) 1,028,117(A)
Weighted Average Number
of Common Shares Outstanding:
Weighted Average Number of Issued and
Outstanding Common Shares (2) 5,176,302 5,015,419
Incremental Shares Attributable to
Assumed Exercise of Stock Options
and Warrants (3) 158,511 180,513
Weighted Average Number of Common
Shares (2) + (3) 5,334,813(B) 5,195,932(B)
Earnings Per Common and Common
Equivalent Share $.07(A)/(B) $.20(A)/(B)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 113,579
<SECURITIES> 0
<RECEIVABLES> 9,490,789
<ALLOWANCES> 31,686
<INVENTORY> 6,078,977
<CURRENT-ASSETS> 16,341,014
<PP&E> 3,883,170
<DEPRECIATION> 1,533,658
<TOTAL-ASSETS> 22,162,025
<CURRENT-LIABILITIES> 8,642,710
<BONDS> 7,476,006
0
2,250,000
<COMMON> 50,563
<OTHER-SE> 3,742,746
<TOTAL-LIABILITY-AND-EQUITY> 22,162,025
<SALES> 32,550,994
<TOTAL-REVENUES> 32,550,994
<CGS> 24,903,429
<TOTAL-COSTS> 31,725,004
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 187,366
<INCOME-PRETAX> 638,624
<INCOME-TAX> 242,677
<INCOME-CONTINUING> 395,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 395,947
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
