<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1995
--------------
Commission File Number 0-4485
------
WESTERN BEEF, INC.
- - - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3266114
- - - - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization.) Identification No.)
47-05 Metropolitan Avenue, Ridgewood, New York 11385
- - - - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (718)417-3770
-------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 12 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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
5,463,317 SHARES OF COMMON STOCK, $.05 PAR VALUE AS OF MAY 5, 1995
<PAGE>
INDEX
WESTERN BEEF, INC. AND SUBSIDIARIES
PAGE
----
PART I-FINANCIAL INFORMATION
Item 1. Financial statements.
Condensed consolidated balance sheets as of
March 31, 1995 and December 30, 1994. 2
Condensed consolidated statements of income
and retained earnings for the thirteen weeks
ended March 31, 1995 and April 1, 1994. 3
Condensed consolidated statements of cash
flows for the thirteen weeks ended
March 31, 1995 and April 1, 1994. 4
Note to the condensed consolidated financial
statements. 5
Item 2. Management's discussion and analysis of
financial condition and results of operations. 6
PART II-OTHER INFORMATION 7
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 8
<PAGE>
WESTERN BEEF,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
<TABLE>
<CAPTION>
March 31, DECEMBER 30,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,744 $ 4,311
Accounts receivable, net of allowance for
doubtful accounts ($272 and $142) 7,181 6,907
Inventories 13,967 13,339
Prepaid expenses and other current assets 2,254 2,390
Deferred income taxes 896 907
--------- ---------
Total current assets 28,042 27,854
Property, plant and equipment, net of
accumulated depreciation and amortization
($15,026 and $14,437) 26,959 25,276
Deferred income taxes 200 176
Other assets 921 887
--------- ---------
Total assets $ 56,122 $ 54,193
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,520 $ 1,563
Current portion of obligations under
capital leases 103 101
Accounts payable 13,471 12,597
Accrued expenses and other liabilities 1,896 1,482
Income taxes payable 391 --
--------- ---------
Total current liabilities 17,381 15,743
Long-term debt, net of current portion 5,300 5,779
Obligations under capital leases, net of
current portion 1,418 1,445
--------- ---------
Total liabilities 24,099 22,967
--------- ---------
Shareholders' equity:
Preferred stock, $.05 par value-shares
authorized 2,000; none issued -- --
Common stock, $0.05 par value;
15,000,000 shares authorized;
5,463,317 shares issued and outstanding 273 273
Capital in excess of par value 11,516 11,516
Retained earnings 20,234 19,437
--------- ---------
Total shareholders'equity 32,023 31,226
--------- ---------
Total liabilities and shareholders'equity $ 56,122 $ 54,193
--------- ---------
--------- ---------
</TABLE>
See accompanying note to condensed consolidated financial statements.
-2-
<PAGE>
WESTERN BEEF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks
Ended
-----------------------------
March 31, 1995 April 1, 1994
-------------- -------------
<S> <C> <C>
Net sales $ 67,574 $ 71,088
Cost of sales 52,048 54,412
--------- ---------
Gross profit on sales 15,526 16,676
--------- ---------
Operating expenses:
Rent expense-affiliates 698 596
Interest expense 195 183
Selling, general and administrative
expenses 13,119 14,460
--------- ---------
Total operating expenses 14,012 15,239
--------- ---------
Income before income taxes 1,514 1,437
Provision for income taxes 717 625
--------- ---------
Net income 797 812
Retained earnings
-beginning of period 19,437 14,664
--------- ---------
Retained earnings
-end of period $ 20,234 $ 15,476
--------- ---------
--------- ---------
Weighted average number of
common shares outstanding 5,463 $ 5,463
--------- ---------
--------- ---------
Earnings per common share $ .15 $ .15
--------- ---------
--------- ---------
</TABLE>
See accompanying note to condensed consolidated financial statements
-3-
<PAGE>
WESTERN BEEF, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Thirteen Weeks
Ended
----------------------------------
March 31, 1995 April 1, 1994
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 797 $ 812
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 596 679
Deferred income tax benefit (13) --
Provision for losses on accounts receivable 130 100
(Increase) decrease in assets:
Accounts receivable (404) 477
Inventories (628) (866)
Prepaid expenses and other current assets 136 107
Prepaid income taxes -- (54)
Other assets (34) 12
(Decrease) increase in liabilities:
Accounts payable 874 (777)
Accrued expenses and other liabilities 414 799
Income taxes payable 391 --
Net cash provided by operating
activities 2,259 1,289
------- --------
Cash flows from investing activities:
Capital expenditures (2,279) (633)
------- --------
Net cash used in investing activities (2,279) (633)
------- --------
Cash flows from financing activities:
Net repayments under line of credit agreement -- (200)
Payments on long-term debt and capital leases (547) (267)
Payment of loans from affiliates and shareholders -- (349)
Net cash used in financing activities (547) (816)
------- --------
Net decrease in cash and cash equivalents (567) (160)
Cash and cash equivalents, beginning of period 4,311 1,080
------- --------
Cash and cash equivalents, end of period $ 3,744 $ 920
------- --------
------- --------
Cash paid during the thirteen weeks for:
Interest $ 195 $ 183
Income taxes $ 320 $ 680
</TABLE>
See accompanying note to condensed consolidated financial statements
-4-
<PAGE>
WESTERN BEEF, INC. AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
(1) Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the thirteen weeks ended
March 31, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 29, 1995. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 30, 1994.
-5-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
For the thirteen weeks ended March 31, 1995, Western Beef, Inc., ("the Company")
achieved net income of $797,000 or $0.15 per share on net sales of $67,574,000,
as compared to net income of $812,000, or $0.15 per share on net sales of
$71,088,000 for the thirteen weeks ended April 1, 1994. Cost of sales, as a
percentage of net sales, increased to 77% from 76.5% with a resultant decrease
in the gross profit percentage to 23% from 23.5%.
The decrease in sales, cost of sales and gross profits are mainly attributable
to the decline in same store sales for the thirteen weeks ended March 31, 1995
as compared with the corresponding period in 1994. The Easter holiday which was
celebrated in the first quarter of 1994 and which will be celebrated in the
second quarter of 1995, accounted for almost 25% of the decline in sales. The
balance of the decline results from competition from other supermarket chains.
Selling, general and administrative expenses, including rent expense -
affiliates, and interest expense, as a percentage of sales decreased to 20.7%
for the thirteen weeks ended March 31, 1995 from 21.4% for the similar period in
1994 principally as a result of greater labor efficiency and lower insurance and
utility costs. The success of the cost reduction and efficiency plans
implemented during the past ten months is the principal reason for the decline.
Although pre-tax income for the thirteen weeks ended March 31, 1995 was greater
than that for the thirteen weeks ended April 1, 1994, net income was lower as a
result of the termination of the Federal Targeted Jobs Credit program at the end
of 1994.
Liquidity and Capital Resources:
Cash flows from operations were $2,259,000 for the thirteen weeks ended March
31, 1995 as compared to $1,289,000 for the comparable period of 1994. The
increases in accounts receivable and inventory were more than offset by
increases in accounts payable, accrued expenses and taxes payable. Cash flow
from operations plus cash on hand were sufficient to pay for capital
expenditures and long-term debt requirements.
Most of the capital expenditures incurred were made in connection with the three
new stores under construction. These stores are expected to be open by the end
of June 1995. The Company believes that cash on hand and its $3,000,000 bank
line of credit which expires on June 30, 1995 and which is expected to be
renewed by the bank, will be sufficient to meet its operational needs and to
fund the remaining costs to open the new stores. The Company also has several
financial institutions that would be available to refinance new store equipment,
usually over a five year period.
-6-
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company has various outstanding litigation matters which it
considers to be in the ordinary course of business. In the opinion
of management, the outcome of these litigation matters will not
materially, adversely affect the Company's financial position.
In April 1991 in New York Supreme Court, Putnam County, an action
was commenced against the Company to prevent a scheduled foreclosure
of certain collateral held by the Company as security for its loan
to one of the plaintiffs in the original principal amount of $85,000
of which approximately $65,000 was outstanding. Thereafter, in a
complaint served in March 1992, plaintiffs interposed three causes
of action on behalf of themselves and a previously unnamed
plaintiff, C.B. Foods, Inc., which was owned by the plaintiffs and
was a customer of the Company's wholesale business, seeking (1) a
declaration that the loan had been repaid; (2) compensatory damages
of $30,000,000 and exemplary damages of $10,000,000 for fraud
allegedly committed by the Company; and (3) compensatory damages of
$2,000,000 and exemplary damages of $10,000,000 for abuse of process
allegedly committed by the Company. In its answer, the Company
denied liability and all material allegations of the complaint.
Following a motion by the Company, the court ordered plaintiffs'
third cause of action for abuse of process dismissed for failure to
state a claim and ordered all claims of C.B. Foods, Inc. struck from
the complaint on the ground that it was not a party to the action.
Plaintiffs have appealed the court's order. By order made on the
record on January 19, 1994, the court dismissed the complaint for
plaintiff's disobedience of prior court orders and their failure to
prosecute their claims. Plaintiffs have moved to modify the January
19, 1994 order. If they are not successful, an appeal is
anticipated, which the Company would vigorously defend. The Company
believes the resolution of this matter will not adversely affect its
financial position.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security holders.
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
The registrant has not filed a report on Form 8-K during the quarter
just ended.
-7-
<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.
WESTERN BEEF, INC.
By: /s/Robert C. Ludlow
--------------------
Robert C. Ludlow
Treasurer and Chief Financial
Officer
(Principal Financial and
Accounting Officer)
DATE: May 9, 1995
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE WESTERN
BEEF, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995
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> DEC-29-1995
<PERIOD-START> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 3,744
<SECURITIES> 0
<RECEIVABLES> 7453
<ALLOWANCES> 272
<INVENTORY> 13967
<CURRENT-ASSETS> 28042
<PP&E> 41985
<DEPRECIATION> 15026
<TOTAL-ASSETS> 56122
<CURRENT-LIABILITIES> 17381
<BONDS> 6718
<COMMON> 273
0
0
<OTHER-SE> 31750
<TOTAL-LIABILITY-AND-EQUITY> 56122
<SALES> 67574
<TOTAL-REVENUES> 67574
<CGS> 52048
<TOTAL-COSTS> 52048
<OTHER-EXPENSES> 13817
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 195
<INCOME-PRETAX> 1514
<INCOME-TAX> 717
<INCOME-CONTINUING> 797
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 797
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
