<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended October 27, 1996
Commission File Number 0-22252
CATTLEMAN'S, INC.
(Exact name of registrant as specified in its charter)
______________
Delaware 38-3012740
(State or other jurisdiction (IRS. Employer
of incorporation or organization) Identification Number)
1825 Scott Street
Detroit, Michigan 48207
(Address of executive offices) (Zip Code)
Company's telephone number, including area code: (313) 833 - 2700
_______________
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 twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days.
YES __X__ NO _____
Indicate the number of share outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 21, 1996
----- --------------------------------
Common stock, $.001 per share 3,577,583
<PAGE> 2
Part 1: Financial Information
Cattleman's, Inc.
Item 1 Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
($ in Thousands)
OCTOBER 27, 1996 APRIL 28, 1996
<S> <C> <C>
ASSETS
Current Assets
Cash $ 824 $ 738
Accounts Receivable 5,446 4,700
Inventory - Finished Goods 3,642 4,798
Inventory - Supplies 175 202
Prepaids 801 580
Income Tax Refundable 56 334
Deferred Income Taxes 13 113
---------- ----------
Current Assets 10,957 11,464
Property, Plant & Equipment 11,589 11,038
Accumulated Depreciation (5,543) (4,984)
---------- ----------
Net 6,046 6,054
Other Assets
Goodwill 316 329
Loans receivable, officers 302 295
Other 226 226
---------- ----------
Other Assets 844 850
$ 17,847 $ 18,368
========== ==========
LIABILITIES
Accounts Payable $ 5,076 $ 4,220
Accrued Expenses 1,323 876
Current Portion, long-term debt 616 637
---------- ----------
Current Liabilities 7,015 5,733
Long-term Debt 5,297 7,416
Deferred Income Tax 118 181
---------- ----------
5,415 7,597
Total Liabilities 12,430 13,330
EQUITY
Capital 728 794
Retained Earnings 4,689 4,244
---------- ----------
5,417 5,038
$ 17,847 $ 18,368
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated statements.
<PAGE> 3
Cattleman's, Inc.
Item 1 Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
($ in thousands except per share data)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
OCTOBER 27, 1996 OCTOBER 29, 1995 OCTOBER 27, 1996 OCTOBER 29, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ 32,978 100.0% $ 32,161 100.0% $ 65,451 100.0% $ 65,264 100.0%
Cost of Goods Sold 31,094 94.3% 30,513 94.9% 62,105 94.9% 61,898 94.8%
Selling, General & Admin. 1,163 3.5% 1,155 3.6% 2,301 3.5% 2,264 3.5%
------------------- ------------------- ------------------- -------------------
Earnings From Operations 721 2.2% 493 1.5% 1,045 1.6% 1,102 1.7%
Interest 175 0.5% 132 0.4% 351 0.5% 287 0.4%
------------------- ------------------- ------------------- -------------------
Income Before Taxes 546 1.7% 361 1.1% 694 1.1% 815 1.2%
Income Tax 197 0.6% 130 0.4% 250 0.4% 293 0.4%
------------------- ------------------- ------------------- -------------------
Net Earnings $ 349 1.1% $ 231 0.7% $ 444 0.7% $ 522 0.8%
=================== =================== =================== ===================
Earnings Per Share $0.10 $0.07 $0.12 $0.16
========== ========== ========== ==========
Average Shares Outstanding 3,577,583 3,291,583 3,577,583 3,291,583
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated statements.
<PAGE> 4
Cattleman's, Inc.
Item 1 Financial Statements
Condensed Consolidated Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
($ in thousands except per share data)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
October 27, 1996 October 29, 1995 October 27, 1996 October 29, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ 32,978 100.0% $ 32,161 100.0% $ 65,451 100.0% $ 65,264 100.0%
Cost of Goods Sold 31,094 94.3% 30,513 94.9% 62,105 94.9% 61,898 94.8%
Selling, General & Admin. 1,163 3.5% 1,155 3.6% 2,301 3.5% 2,264 3.5%
Earnings From Operations 721 2.2% 493 1.5% 1,045 1.6% 1,102 1.7%
Interest 175 0.5% 132 0.4% 351 0.5% 287 0.4%
Income Before Taxes 546 1.7% 361 1.1% 694 1.1% 815 1.2%
Income Tax 197 0.6% 130 0.4% 250 0.4% 293 0.4%
Net Earnings $ 349 1.1% $ 231 0.7% $ 444 0.7% $ 522 0.8%
Earnings Per Share $0.10 $0.07 $0.12 $0.16
Average Shares Outstanding 3,577,583 3,291,583 3,577,583 3,291,583
</TABLE>
<PAGE> 5
Cattleman's, Inc.
Item 1 Financial Statements
Condensed Consolidated Statement of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
($ in Thousands) TWENTY-SIX WEEKS ENDED
OCTOBER 27, 1996 OCTOBER 29, 1995
<S> <C> <C>
CASH FLOW FROM OPERATIONS $ 2,851 $ 512
INVESTING ACTIVITIES
Capital Expenditures & Other (558) (257)
FINANCING ACTIVITIES
Net Repayments on debt (2,207) (964)
Change in Cash 86 (709)
Beginning Cash 738 1,148
----------------- ----------------
Ending Cash $ 824 $ 439
================= ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 351 $ 287
================= ================
Income Taxes $ 0 $ 293
================= ================
</TABLE>
The accompanying notes are an integral part of the consolidated statements.
<PAGE> 6
CATTLEMAN'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements of Cattleman's, Inc.
("Cattleman's") have been prepared in accordance with the instructions for Form
10-Q and are unaudited. The statements include all adjustments (consisting of
normal recurring accruals) which Cattleman's considers necessary for a fair
presentation of the interim periods. The accounting policies followed by the
Cattleman's and additional footnotes, are included in the Cattleman's fiscal
year 1996 annual report on Form 10-K.
This 10-Q is written with the presumption that the users of the interim
financial statements have read or have access to Cattleman's Form 10-K, which
contains the latest audited financial statements and notes thereto, together
with Management's Discussion and Analysis of Financial Condition and Results of
Operations as of April 28, 1996 and for the year then ended. Only material
changes in financial condition and results of operations are discussed in the
remainder of Part I.
Cattleman's interim operating results may be subject to substantial
fluctuations which do not necessarily occur or recur on a seasonal basis. Such
fluctuations are normally caused by competitive and other conditions in the
cattle and boxed beef markets over which Cattleman's has little or no control.
Therefore, the results of operations for the interim periods presented are not
necessarily indicative of the results to be attained for the full fiscal year.
2. COMMITMENTS AND CONTINGENCIES
Cattleman's is involved in various disputes incident to the ordinary course of
its business. In the opinion of management, any liability for which provision
has not been made relative to the various lawsuits, claims or administrative
proceedings pending against Cattleman's should not have a material adverse
effect on its financial position.
<PAGE> 7
CATTLEMAN'S, INC.
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations - Second Quarter - Fiscal 1997
COMPARISON OF THIRTEEN WEEKS ENDED OCTOBER 27, 1996 TO THIRTEEN WEEKS ENDED
OCTOBER 29, 1995
RESULTS OF OPERATIONS
Sales for the thirteen weeks ended October 27,1996 and October 29, 1995 were
$32,978,000 and $32,161,000 respectively. Sales increased $817,000 or 3.0%.
The sales increase resulted primarily from an increase in the sales price per
pound while gross tonnage of products sold remained relatively constant
compared to the same period in the prior year. Retail sales represented 15.4 %
of total sales for this period compared to 15.9 % for the same period of fiscal
1996.
Cost of Goods Sold for the thirteen weeks ended October 27,1996 and October 29,
1995 were $31,094,000 and $30,513,000 respectively, an increase of $581,000.
This represents 94.3 % and 94.9 % of sales for the respective periods. The
margin improvement resulted primarily from beneficial market conditions and
enhanced yields in the processing operation.
Selling, General and Administrative Expenses for the thirteen weeks ended
October 27,1996 and October 29, 1995 were $1,163,000 and $1,155,000,
respectively. These costs remained relatively equable.
Interest expense totaled $175,000 for the thirteen weeks ended October 27,
1996, up from $132,000 for the thirteen weeks ended October 29, 1995. The
increase resulted from a greater use of the revolving line of credit
throughout the period for slightly higher average accounts receivable levels
and from financing capital expenditures during Fiscal 1997. Additionally,
interest rates remained unchanged for the thirteen weeks ended October 27,
1996 compared to the thirteen weeks ended October 29, 1995.
Net Income for the thirteen weeks ended October 27, 1996 totaled $349,000
compared with net earnings of $231,000 for the thirteen weeks ended October 29,
1995. The $118,000 increase resulted primarily from improved margins in both
the processing and retail operations.
<PAGE> 8
COMPARISON OF TWENTY-SIX WEEKS ENDED OCTOBER 27, 1996 TO TWENTY-SIX WEEKS ENDED
OCTOBER 29, 1995
RESULTS OF OPERATIONS
Sales for the twenty-six weeks ended October 27,1996 and October 29, 1995 were
$65,451,000 and $65,264,000 respectively. Sales increased $187,000 or .3%.
The increase sales resulted primarily from an increase in the sales price per
pound offset by a decrease in gross tonnage of products sold compared to the
same period in the prior year. Retail sales represented 17.7 % of total sales
for this period compared to 17.5 % for the same period of fiscal 1996.
Cost of Goods Sold for the twenty-six weeks ended October 27,1996 and October
29, 1995 were $62,105,000 and $61,898,000 respectively, an increase of
$207,000. This represents 94.9 % and 94.8 % of sales for the respective
periods. The margin decrease resulted primarily from unfavorable market
conditions offset by enhanced yields in the processing operation.
Selling, General and Administrative Expenses for the twenty-six weeks ended
October 27,1996 and October 29, 1995 were $2,301,000 and $2,264,000,
respectively. These costs remained relatively equable.
Interest expense totaled $351,000 for the twenty-six weeks ended October 27,
1996, up from $287,000 for the twenty-six weeks ended October 29, 1995. The
increase resulted from a greater use of the revolving line of credit
throughout the period for slightly higher average accounts receivable levels
and from financing capital expenditures during Fiscal 1997. Additionally,
interest rates remained unchanged for the twenty-six weeks ended October 27,
1996 compared to the twenty-six weeks ended October 29, 1995.
Net Income for the twenty-six weeks ended October 27, 1996 totaled $444,000
compared with net earnings of $522,000 for the twenty-six weeks ended October
29, 1995. The $78,000 slippage resulted primarily from slightly lower margins
in processing and retail operations.
<PAGE> 9
FINANCIAL CONDITION
Cash Provided From Operations for the twenty-six weeks ended October 27, 1996,
totaled $2,851,000. This was generated mainly from net income before
depreciation ($1.0 million), seasonal decreases in inventory ($1.2 million),
increases in accounts payable and accrued liabilities ($1.3 million) and
decreases in net tax assets ($.3 million). These were offset by increases in
accounts receivable ($.75 million) and increases in prepaids ($.22 million).
Cash provided from operations in the twenty-six weeks ended October 29, 1995
totaled $.51 million which was used, primarily, to reduce the long-term debt.
Investing Activity for the twenty-six weeks ending October 27, 1996 and October
29, 1995 was $558,000 and $257,000 respectively. Funds were used primarily for
improvements to and equipment in the processing plant.
Financing Activity During October 1996, Cattleman's obtained new financing with
a financial institution. The long term financing provided $2.4 million and
lowered Cattleman's cost of funds. During the twenty-six weeks ended October
27, 1996 Cattleman's repaid $1,440,000 of long-term debt and re-paid 945,000 on
the revolving line of credit simultaneous to the new bank financing.
<PAGE> 10
PART II. Other Information
CATTLEMAN'S, INC.
ITEM 1. LEGAL PROCEEDINGS
None material
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
In late September, early October, 1996, there was an apparent
outbreak of Legionnaires' Disease in the Farmington/Farmington Hills area. In a
press statement issued by the Oakland County Health Department on November 8,
1996, Oakland County indicated that they found Legionella bacteria in the water
cooling condenser located on top of Cattleman's retail facility located in
Farmington, Michigan. There were thirty reported cases and four reported
fatalities, Cattleman's is cooperating with the County to take all actions
necessary to clean its water tower condenser.
Cattleman's is currently investigating the County's investigative procedures
and findings in this regard. Cattleman's believes that there was no negligence
on it's part and Cattleman's believes that it has adequate insurance to cover
any lawsuits which might arise. The effect on sales is unknown.
Cattleman's intends to buy back shares of Cattleman's stock in upcoming
quarters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
None
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10 - Q for the
thirteen weeks ended October 27, 1996 to be signed on its behalf by the
undersigned thereunto duly authorized.
CATTLEMAN's, INC.
DATE: November 11, 1996 /s/ Markus Rohtbart
-------------------------------------
Markus Rohtbart
Chairman of the Board & Treasurer
/s/ Matthew G. Martin
-------------------------------------
Matthew G. Martin
Chief Operating Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-28-1996
<PERIOD-START> APR-29-1996
<PERIOD-END> OCT-27-1996
<CASH> 824
<SECURITIES> 0
<RECEIVABLES> 5,446
<ALLOWANCES> 0
<INVENTORY> 3,817
<CURRENT-ASSETS> 10,957
<PP&E> 11,589
<DEPRECIATION> 5,543
<TOTAL-ASSETS> 17,847
<CURRENT-LIABILITIES> 7,015
<BONDS> 5,415
0
0
<COMMON> 3,577
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,847
<SALES> 65,451
<TOTAL-REVENUES> 65,451
<CGS> 62,105
<TOTAL-COSTS> 62,105
<OTHER-EXPENSES> 2,301
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 351
<INCOME-PRETAX> 694
<INCOME-TAX> 250
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 444
<EPS-PRIMARY> .12
<EPS-DILUTED> 0
</TABLE>
