<PAGE>
PAGE 1 OF 17
INDEX TO EXHIBITS - PAGE 14 OF 17
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 200549
_____________
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 27, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-24902
CENTRAL TRACTOR FARM & COUNTRY, INC.
- - -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 42-1425562
- - -------------------------------------- ---------------------------------
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer No.)
3915 Delaware Avenue, Des Moines, Iowa 50316-0330
- - -------------------------------------- ---------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (515) 266-3101
Not Applicable
- - -------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
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 ______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 7, 1996: 10,589,082.
<PAGE>
PAGE 2 OF 17
CENTRAL TRACTOR FARM & COUNTRY, INC.
INDEX
PART I. FINANCIAL STATEMENTS PAGE
----
ITEM 1. FINANCIAL STATEMENTS
Condensed consolidated balance sheets, April 27, 1996
(unaudited) and October 28, 1995..........................................3
Condensed consolidated statements of income (unaudited), for the
six months and three months ended April 27, 1996 and the six months and
three months ended April 29, 1995.........................................4
Condensed consolidated statements of cash flows (unaudited),
six months ended April 27, 1996 and April 29,1995.........................5
Notes to consolidated financial statements (unaudited)....................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS........................................................8
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...................................................12
ITEM 2. CHANGES IN SECURITIES...............................................12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.....................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS....................................................12
ITEM 5. OTHER INFORMATION...................................................12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................12
INDEX TO EXHIBITS............................................................14
Exhibit 11 - Statement Re: Computation of Per
Share Earnings.................................................15
Echibit 99 - Important Factors Regarding Forward-Looking Statements......16
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC. PAGE 3 OF 17
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
APRIL 27, OCTOBER 28,
1996 1995
----------- -----------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 4,547 $ 3,094
TRADE RECEIVABLES, NET 1,337 883
INVENTORY 102,103 93,874
OTHER 1,913 1,383
NET ASSETS OF DISCONTINUED OPERATIONS 0 13,520
-------- --------
TOTAL CURRENT ASSETS 109,900 112,754
PROPERTY, IMPROVEMENTS AND EQUIPMENT, NET 20,207 18,227
GOODWILL, NET 16,669 16,930
OTHER ASSETS 1,868 2,066
-------- --------
TOTAL ASSETS $148,644 $149,977
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
NOTE PAYABLE TO BANK $ 3,178 $ 6,789
ACCOUNTS PAYABLE 38,316 39,150
ACCRUED EXPENSES AND OTHER LIABILITIES 4,832 4,319
-------- --------
TOTAL CURRENT LIABILITIES 46,326 50,258
LONG-TERM DEBT, LESS CURRENT PORTION 16,000 16,000
OTHER LONG-TERM LIABILITIES 2,035 2,442
-------- --------
TOTAL LIABILITIES 64,361 68,700
STOCKHOLDERS' EQUITY:
PREFERRED STOCK,$.01 PAR VALUE: AUTHORIZED
SHARES-5,000,000; NONE ISSUED AND OUTSTANDING -- --
COMMON STOCK, $.01 PAR VALUE: AUTHORIZED
SHARES-45,000,000; ISSUED AND OUTSTANDING
SHARES-10,589,082 IN 1996, 10,576,676 IN 1995 106 106
STOCK WARRANT OUTSTANDING 665 665
ADDITIONAL PAID IN CAPITAL 69,709 69,667
RETAINED EARNINGS 13,803 10,839
-------- --------
TOTAL STOCKHOLDERS' EQUITY 84,283 81,277
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $148,644 $149,977
-------- --------
-------- --------
</TABLE>
NOTE: THE BALANCE SHEET AT OCTOBER 28, 1995 HAS BEEN DERIVED FROM THE
AUDITED FINANCIAL STATEMENTS AT THAT DATE BUT DOES NOT INCLUDE ALL
OF THE INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC. PAGE 4 OF 17
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 27, APRIL 29, APRIL 27, APRIL 29,
--------------------- ---------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $62,989 $59,347 $132,956 $121,183
COST OF SALES 43,744 41,133 94,849 85,607
------- ------- -------- --------
GROSS PROFIT 19,245 18,214 38,107 35,576
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE 15,656 14,051 31,717 28,375
AMORTIZATION OF INTANGIBLES 221 216 442 430
------- ------- -------- --------
OPERATING INCOME 3,368 3,947 5,948 6,771
INTEREST EXPENSE 484 432 844 713
------- ------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 2,884 3,515 5,104 6,058
INCOME TAXES 1,200 1,394 2,140 2,464
------- ------- -------- --------
INCOME FROM CONTINUING OPERATIONS 1,684 2,121 2,964 3,594
INCOME FROM DISCONTINUED OPERATIONS,
NET OF INCOME TAXES OF $ 268 FOR THE SIX
MONTHS ENDED AND $255 FOR THE THREE
MONTHS ENDED 0 467 0 466
------- ------- -------- --------
------- ------- -------- --------
NET INCOME $ 1,684 $ 2,588 $ 2,964 $ 4,060
------- ------- -------- --------
------- ------- -------- --------
PER SHARE:
INCOME FROM CONTINUING OPERATIONS $ 0.15 $ 0.19 $ 0.27 $ 0.32
INCOME(LOSS) FROM DISCONTINUED OPERATIONS 0.00 0.04 0.00 0.04
NET INCOME 0.15 0.23 0.27 0.37
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 11,006 11,062 10,988 11,070
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC. PAGE 5 OF 17
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
SIX MONTH ENDED
-------------------------
APRIL 27, APRIL 29,
1996 1995
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
INCOME FROM CONTINUING OPERATIONS $ 2,964 $ 3,594
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY (USED IN) OPERATIONS:
DEPRECIATION AND AMORTIZATION 1,893 1,603
CHANGES IN OPERATING ASSETS AND LIABILITIES (9,866) (9,695)
------- -------
NET CASH USED IN CONTINUING OPERATIONS (5,009) (4,498)
NET CASH PROVIDED IN DISCONTINUED OPERATIONS 13,520 1,973
------- -------
8,511 (2,525)
INVESTING ACTIVITIES
PURCHASES OF PROPERTY, IMPROVEMENTS AND EQUIPMENT (3,410) (3,701)
OTHER (23) (114)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (3,433) (3,815)
FINANCING ACTIVITIES
RECEIVABLE FROM SALE OF COMMON STOCK 0 6,703
NET BORROWINGS UNDER LINE OF CREDIT (3,611) 1,869
PAYMENTS ON LONG-TERM DEBT (17) (304)
OTHER 3 (92)
------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (3,625) 8,176
NET INCREASE IN CASH AND CADH EQUIVALENTS $ 1,453 $ 1,836
------- -------
------- -------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
PAGE 6 OF 17
CENTRAL TRACTOR FARM & COUNTRY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. PRESENTATION OF FINANCIAL INFORMATION
The condensed unaudited consolidated financial statements
have been prepared by the Company in accordance with generally
accepted accounting principles for interim financial information
and with the instructions for the Securities and Exchange
Commission's Form 10-Q and Article 10 of Regulation S-X, and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
The condensed unaudited consolidated financial statements
include the accounts of the Company and its subsidiaries. All
material intercompany items and transactions have been eliminated
in the consolidation. In the preparation of the condensed unaudited
financial statements, all adjustments (consisting of normal
recurring accruals) have been made which are, in the opinion of
management, necessary for the fair and consistent presentation of
such financial statements.The operating results for the interim
periods are not necessarily indicative of the results that may be
expected for the year.
It is suggested that the condensed unaudited consolidated
financial statements contained herein be read in conjunction with
the statements and notes in the Company's Annual Report to
Shareholders which is incorporated by reference in the Company's
Annual Report on Form 10-K for the year ended October 28, 1995.
NOTE 2. DEFERRED CATALOG COSTS
The direct cost of printing and mailing the Company's annual
mail order catalog is deferred and amortized against mail order
revenues over the year the catalog is in use. The amount of
unamortized deferred catalog costs at April 27, 1996 and April 29,
1995 was $229,792 and $309,494, respectively, and $48,490 at
October 28, 1995.
<PAGE>
PAGE 7 OF 17
NOTE 3. EARNINGS PER SHARE
Per share earnings are based on the weighted average number
of shares of common stock and common stock equivalents outstanding.
The dilutive effect of outstanding stock options and the stock
warrant were determined based upon the Treasury Stock Method. Fully
diluted earnings per share did not vary significantly from earnings
per share as presented.
NOTE 4. DISCONTINUED OPERATIONS
During the first quarter of fiscal 1996, the Company
completed the sale of its wholly owned subsidiary, Herschel
Corporation (Herschel), a manufacturer and wholesale distributor of
equipment parts for use in the agricultural industry. Herschel has
been reported as a discontinued segment of the business;
accordingly, its net assets and operating results have been
segregated in the consolidated financial statements.
Net sales of Herschel Corporation were $12.9 million for
the six months and $8.5 million for the three months ended April
29, 1995 and have been excluded from net sales in the condensed
statements of income for those periods.
NOTE 5. SUBSEQUENT EVENT
Effective May 31, 1996 the Company purchased the net
operating assets of Big Bear Farm Stores, Inc. ("Big Bear"), a
privately held retail chain based in St. Cloud, Minnesota, for
approximately $5,000,000. The transaction will be accounted for as
a purchase. Proforma results of operations assuming the acquisition
had taken place as of October 29, 1995 would not be materially
different from actual results for the three and six month periods
ending April 27,1996.
<PAGE>
PAGE 8 OF 17
CENTRAL TRACTOR FARM & COUNTRY, INC
Certain statements in this Report contain "forward-looking" information
(as defined in the Private Securities Litigation Reform Act of 1995).
All forward-looking statements involve uncertainty, and actual future
results and trends may differ materially depending on a variety of
factors. For a discussion identifying some important factors that could
cause actual results or trends to differ materially from those
anticipated in the forward-looking statements contained herein, please
see Exhibit 99 to this Report.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
SECOND QUARTER OF FISCAL 1996 COMPARED TO SECOND QUARTER OF FISCAL 1995
Sales for the second quarter or fiscal 1996 were $63.0 million, an
increase of $3.7 million, or 6.2%, as compared to total sales for first
quarter of fiscal 1995 of $59.3 million. The increase was due to the
opening of six new stores during fiscal 1996 and the five new stores
opened during the third and fourth quarters of fiscal 1995. Comparable
store sales decreased $2.5 million, or 4.6%, for the second quarter. The
decrease in comparable store sales was primarily due to the unseasonably
cool early spring weather conditions which resulted in decreased sales
of spring seasonal products, as well as a more competitive environment
in some markets.
Gross profit for the second quarter of fiscal 1996 was $19.2
million, an increase of $1.0 million or 5.5%, as compared to $18.2
million for the second quarter of fiscal 1995. Gross profit as a
percentage of sales was 30.6% for fiscal 1996, as compared to 30.7% for
fiscal 1995. The slight decrease in gross profit percentage was
primarily the result of a lower gross margin on clothing and pet supply
product lines.
Selling, general and administrative (SGA) expenses for the second
quarter of fiscal 1996 was $15.7 million, an increase of $1.6 million,
or 11.4%, as compared to the second quarter of fiscal 1995, due
primarily to costs related to new store openings. SGA expenses as a
percentage of sales increased to 24.9% in fiscal 1996 as compared to
23.7% in fiscal 1995.
Operating income for the second quarter of fiscal 1996 was $3.4
million, a decrease of $0.5 million, or 12.8%, as compared to $3.9
million for the second quarter of fiscal 1995. Operating income as a
percentage of sales decreased to 5.3% in fiscal 1996 from 6.7% in fiscal
1995. The decrease was the result of the increase in SGA expenses
discussed above.
<PAGE>
PAGE 9 OF 17
Interest expense for the second quarter of fiscal 1996 was $0.5
million, an increase of $0.1 million as compared to $0.4 million for the
second quarter of fiscal 1995.
Income taxes for the second quarter of fiscal 1995 were $1.2
million, a decrease of $0.2 million as compared to the second quarter of
fiscal 1995. Income tax as a percentage of pretax earnings was 41.6% in
1996, compared to 39.7% in 1995. This increase is primarily due to the
effect of a proportionately lower amount of non-deductible goodwill
amortization and a reduction of a prior year over-accrual in fiscal
1995, as compared to fiscal 1996.
Net income from continuing operations for the second quarter of fiscal
1996 was $1.7 million, or $0.15 per share, as compared to $2.1 million
or $0.19 per share in fiscal 1995.
During the first quarter of fiscal 1996, the Company completed the
sale of its wholly owned subsidiary, Herschel Corporation (Herschel).
Herschel has been reported as a discontinued segment of the business.
Sales of Herschel for the second quarter of fiscal 1995 were $8.5
million. Income from discontinued operations for the second quarter of
fiscal 1995 was $0.5 million or $0.04 per share.
SIX MONTHS ENDED APRIL 27, 1996 COMPARED TO SIX MONTHS ENDED APRIL 29, 1995
Sales for the six months ended April 27, 1996 were $133.0 million,
an increase of $11.8 million, or 9.7%, as compared to total sales for
the six months ended April 29, 1995 of $121.2 million. The increase was
due to the opening of six new stores. Comparable store sales decreased
$1.2 million, or 1.1% for the six months ended April 27, 1996. The
decrease in comparable store sales was primarily due to the unseasonably
cool early spring weather conditions during the second quarter, which
reduced the sales of spring seasonal products, as well as a more
competitive environment in some markets.
Gross profit for the six months ended April 27, 1996 was $38.1
million, an increase of $2.5 million, or 7.0%, as compared to $35.6
million for the six months ended April 29, 1995. Gross profit as a
percentage of sales was 28.7% for fiscal 1996, as compared to 29.4% for
fiscal 1995. The decrease in gross profit percentage was primarily the
result of increased sales in lower gross margin seasonal items, such as
snowblowers and heating equipment during the first quarter, and a lower
gross margin on clothing and pet product lines in the second quarter.
SGA expenses for the six months ended April 27, 1996 was $31.7
million, an increase of $3.3 million, or 11.6%, as compared to the six
months ended April 29, 1995, due primarily to support the sales growth
and costs related to new store openings. SGA expenses as a percentage of
sales increased to 23.9% in fiscal 1996 as compared to 23.4% in fiscal
1995.
<PAGE>
PAGE 10 OF 17
Operating income for the six months ended April 27, 1996 was $5.9
million, a decrease of $0.9 million, or 13.2%, as compared to $6.8
million for the six months ended April 29, 1995. Operating income as a
percentage of sales decreased to 4.5% in fiscal 1996 from 5.6% in fiscal
1995. The decrease was the result of lower gross margins and higher SGA
expenses as discussed above.
Interest expense for the six months ended April 27, 1996 was $0.8
million, an increase of $0.1 million as compared to $0.7 million for the
six months ended April 29, 1995.
Income taxes for the six months ended April 27, 1996 were $2.1
million, a decrease of $0.4 million as compared to the six months ended
April 29, 1995. Income tax as a percentage of pretax earnings was 41.9%
in 1996, compared to 40.7% in 1995. This increase is primarily due to
the effect of a proportionately lower amount of non-deductible goodwill
amortization and a reduction of a prior year over-accrual in fiscal
1995, as compared to fiscal 1996.
Net income from continuing operations for the six months ended
April 27, 1996 was $3.0 million or $0.27 per share, as compared to $3.6
million or $0.32 per share in fiscal 1995.
During the first quarter of fiscal 1996, the Company completed the
sale of its wholly owned subsidiary, Herschel Corporation (Herschel).
Herschel has been reported as a discontinued segment of the business.
Sales of Herschel for the six months ended April 29, 1995 were $12.9
million. Income from discontinued operations for the six months ended
April 29, 1995 was $0.5 million or $0.04 per share.
ACQUISITION OF BIG BEAR
As discussed in Note 5 in the Notes to Consolidated Financial
Statements, the Company completed the acquisition of the net operating
assets of Big Bear on May 31, 1996. Big Bear currently operates
forty-two retail stores located primarily in Iowa and Minnesota. The
Company currently plans to continue to operate thirty-one stores. These
thirty-one stores will be converted to Central Tractor stores over
approximately the next twelve months. The stores will remain open for
business during the conversion process. The Big Bear Stores average
approximately 10,000 to 12,000 square feet and fit into the Company's
small store prototype. The total net investment in these stores,
including acquisition cost, additional capital investment and working
capital needs and conversion costs is expected to be approximately
$12,000,000.
<PAGE>
PAGE 11 OF 17
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in continuing operations increased from $4.5 million
for the first six months of fiscal 1995 to $5.0 million for the first
six months of fiscal 1996. This increase resulted primarily from the
decrease in income from continuing operations. The Company
received $13.5 million in cash as a result of the sale of Herschel
Corporation in the first quarter of fiscal 1996. The Company's capital
expenditures were $3.4 million and $3.7 million for the six months of
fiscal 1996 and 1995, respectively.
On April 27, 1996, the Company had working capital of $63.6
million, which was a $1.1 million increase over working capital of $62.5
million on October 28, 1995.
The Company believes that its cash flow from operations, borrowings
pursuant to a $25 million bank credit agreement and trade credit will be
sufficient to fund the Company's operations, store expansion plans and
the Big Bear acquisition and additional investment requirements.
<PAGE>
PAGE 12 OF 17
CENTRAL TRACTOR FARM & COUNTRY, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS None
ITEM 2. CHANGES IN SECURITIES None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF None
SECURITY HOLDERS
ITEM 5. OTHER INFORMATION None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS - See Index to Exhibits included elsewhere herein.
(b) FORM 8-K - No reports on Form 8-K were filed during the
second quarter of fiscal 1996.
<PAGE>
PAGE 13 OF 17
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: June 7, 1996 Central Tractor Farm & Country, Inc.
Dean Longnecker
/s/ Dean Longnecker
------------------------------------------
Dean Longnecker
Executive Vice President, Finance and
Chief Financial Officer
<PAGE>
PAGE 14 OF 17
CENTRAL TRACTOR FARM & COUNTRY, INC.
INDEX TO EXHIBITS
Page
----
EXHIBIT 11 Statement Re: Computation of Per
Share Earnings................................................15
EXHIBIT 99 Important Factors Regarding Forward-Looking Statements........16
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC. PAGE 15 OF 17
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
EXHIBIT 11
<TABLE>
<CAPTION>
THREE MONTH ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
APRIL 27, APRIL 29, APRIL 27, APRIL 29,
1996 1995 1996 1995
---------- ---------- ---------- ----------
( IN THOUSANDS EXCEPT PER ( IN THOUSANDS EXCEPT PER
SHARE DATA ) SHARE DATA )
<S> <C> <C> <C> <C>
PRIMARY
WEIGHTED AVERAGE SHARES OUTSTANDING 10,589 10,577 10,583 10,577
NET EFFECT OF DILUTIVE STOCK OPTIONS AND
STOCK WARRANT - BASED ON TREASURY STOCK
METHOD 417 485 405 493
---------- ---------- ---------- ----------
TOTAL 11,006 11,062 10,988 11,070
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME $ 1,684 2,588 $ 2,964 4,060
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
PER SHARE AMOUNT $ 0.15 0.23 $ 0.27 0.37
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
FULLY DILUTED
WEIGHTED AVERAGE SHARES OUTSTANDING 10,589 10,577 10,583 10,577
NET EFFECT OF DILUTIVE STOCK OPTIONS AND
STOCK WARRANT - BASED ON TREASURY STOCK
METHOD 411 485 405 493
ASSUMED CONVERSION OF 7% CONVERTIBLE NOTES 826 826 826 826
---------- ---------- ---------- ----------
TOTAL 11,826 11,888 11,814 11,896
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME $ 1,684 2,588 $ 2,964 4,060
ADD 7% CONVERTIBLE NOTE INTEREST, NET OF
INCOME TAX EFFECT 168 168 336 336
---------- ---------- ---------- ----------
TOTAL NET INCOME $ 1,852 2,756 $ 3,300 4,396
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
PER SHARE AMOUNT $ 0.16(A) 0.23(A) $ 0.28(A) 0.37(A)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
(A) FULLY DILUTED EARNINGS PER SHARE ARE NOT PRESENTED AS THE AFFECT OF THE
ASSUMED CONVERSION OF THE 7% CONVERTIBLE NOTES IS ANTIDILUTIVE OR LESS THAN
3% DILUTIVE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 27, 1996 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE SIX MONTHS ENDED
APRIL 27, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-START> OCT-29-1995
<PERIOD-END> APR-27-1996
<CASH> 4,547
<SECURITIES> 0
<RECEIVABLES> 1,337
<ALLOWANCES> 0
<INVENTORY> 102,103
<CURRENT-ASSETS> 109,900
<PP&E> 34,604
<DEPRECIATION> 14,398
<TOTAL-ASSETS> 148,644
<CURRENT-LIABILITIES> 46,326
<BONDS> 16,822
0
0
<COMMON> 106
<OTHER-SE> 84,177
<TOTAL-LIABILITY-AND-EQUITY> 148,644
<SALES> 132,956
<TOTAL-REVENUES> 132,956
<CGS> 94,849
<TOTAL-COSTS> 94,849
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 844
<INCOME-PRETAX> 5,104
<INCOME-TAX> 2,140
<INCOME-CONTINUING> 2,964
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,964
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.28
</TABLE>
<PAGE>
PAGE 16 OF 17
EXHIBIT 99
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
The following factors, among others, could cause the Company's actual
results and performance to differ materially from those contained in forward-
looking statements made in this report and presented elsewhere by or on behalf
of the Company from time to time.
ABILITY TO ACHIEVE FUTURE GROWTH
The Company's ability to profitably open stores in accordance with its
expansion plan and to increase the financial performance of its existing stores
will be a significant factor in achieving future growth. The Company's ability
to profitably open stores will depend, in part, on matters not completely within
the Company's control including, among other things, locating and obtaining
store sites that meet the Company's economic, demographic, competitive and
financial criteria, and the availability of capital on acceptable terms.
Further, increases in comparable store sales will depend, in part, on the
soundness and successful execution of the Company's merchandising strategy.
SEASONALITY
The Company is an agricultural specialty retailer, and consequently its
sales fluctuate with the seasonal needs of the agricultural community. The
Company responds to this seasonality by attempting to manage inventory levels
(and the associated working capital requirements) to meet expected demand, and
by varying to a degree its use of part-time employees. Historically, the
Company's sales and operating income have been highest in the second and third
quarters of each fiscal year due to the farming industry's planting season and
the sale of seasonal products.
WEATHER, BUSINESS CONDITIONS AND GOVERNMENT POLICY
Unseasonable weather and excessive rain, drought, or early or late frosts
may affect the Company's sales and operating income. In addition, the Company's
sales volume and income from operations depend significantly upon expectations
and economic conditions relevant to consumer spending and the farm economy.
Government policy can also influence the level of farming activity and have a
material adverse effect upon the Company's farm-related sales.
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PAGE 17 OF 17
REGIONAL ECONOMY
The majority of the Company's existing stores are located in the
Northeastern United Sates and the Company's expansion plan includes locating
stores in Midwestern and Southeastern United States. As a result, the Company's
sales and profitability are largely dependent on the general strength of the
economy in these regions.
COMPETITION
The Company faces competition primarily from other chain and single-store
agricultural specialty retailers, and from mass merchandisers. Some of these
competitors have substantially greater financial and other resources than the
Company.
Currently, most of the Company's stores do not compete directly in the
markets of other agricultural specialty retail chains. However, the Company's
expansion plans will likely result in new stores being located in markets
currently serviced by one or more of these chains, and there can be no assurance
that these chains, certain of which have announced expansion plans, will not
expand into the Company's markets.
In addition, the Company competes in over half of its markets with mass
merchandisers. The Company believes that its merchandise mix and level of
customer service currently successfully differentiate it from mass
merchandisers, and that as a result the Company has to date not been
significantly impacted by competition from mass merchandisers. However, in the
past certain mass merchandisers have modified their product mix and marketing
strategies in an effort apparently intended to permit them to compete more
effectively in the Company's markets, and it is likely that these effort will
continue by these and other mass merchandisers.
ENVIRONMENTAL MATTERS
The Company was formed in 1935 as a tractor salvage yard marketing used
tractor parts and continues to conduct tractor salvage operation in connection
with its current marketing of used tractor parts. Tractor salvage operations
require the disposal of used oil and other petroleum products as well as other
environmentally sensitive material, and the manufacture of metal products
requires the use and disposal of a number of environmentally sensitive
materials. Moreover, since the Company has from time to time acquired, disposed
of and leased various sites, the Company's familiarity with the detail of past
operations at certain sites is necessarily limited. Although the Company
believes that it has conducted its operations in conformity with applicable
environmental laws or regulations, there can be no assurance that the Company
has not in the past violated applicable environmental laws or regulations, which
violations could result in remediation or other liabilities, or the past use or
disposal of environmentally sensitive material in conformity with then existing
environmental laws and regulations will not result under current or future
environmental laws in remediation or other liabilities.
