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 February 1, 1997
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 0316-0330
(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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of February 28, 1997: 10,670,892.
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC.
INDEX
PAGE
PART I. FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
Condensed consolidated balance sheets, February 1, 1997
(unaudited) and November 2, 1996..........................................3
Condensed consolidated statements of income (unaudited), for the
three months ended February 1, 1997 and the
three months ended January 27, 1996.......................................4
Condensed consolidated statements of cash flows (unaudited),
three months ended February 1,1997 and January 27,1996....................5
Notes to consolidated financial statements (unaudited)....................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..............................................13
ITEM 2. CHANGES IN SECURITIES..........................................13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............13
ITEM 5. OTHER INFORMATION..............................................13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............................13
EXHIBITS
Exhibit 11 - Statement Re: Computation of Per Share Earnings
Exhibit 27 - Financial Data Schedule (electronic copy only)
Exhibit 99 - Important Factors Regarding Forward-Looking Statements
2
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC.
Condensed Consolidated Balance Sheets
( In thousands except share data )
February 1, November 2,
1997 1996
----------- -----------
(unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $ 2,583 $ 3,809
Trade receivables, net 752 992
Inventory 106,262 107,203
Other 4,635 2,368
-------- --------
Total current assets 114,232 114,372
Property, improvements and equipment, net 24,926 24,457
Goodwill, net 19,592 19,018
Other assets 1,372 1,391
-------- --------
Total assets $160,122 $159,238
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ 19,900 $ 3,669
Current portion of long-term debt 1,600 0
Accounts payable 33,225 41,081
Accrued expenses and other liabilities 4,912 5,819
-------- --------
Total current liabilities 59,637 50,569
Long-term debt, less current portion 6,400 16,000
Other long-term liabilities 2,629 2,606
-------- --------
Total liabilities 68,666 69,175
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-10,670,892 in 1997 and 10,589,082 in
1996 106 106
Stock warrant outstanding 665 665
Additional paid in capital 69,961 69,709
Retained earnings 20,724 19,583
-------- --------
Total stockholders' equity 91,456 90,063
-------- --------
Total liabilities and stockholders' equity $160,122 $159,238
======== ========
Note: The balance sheet at November 2, 1996 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.
3
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC.
Condensed Consolidated Statements of Income (Unaudited)
(In thousands except per share data)
Three months ended
--------------------------
February 1, January 27,
1997 1996
----------- ----------
Net sales $71,479 $69,967
Cost of sales 51,070 51,105
------- -------
Gross profit 20,409 18,862
Selling, general and administrative expense 17,614 16,061
Amortization of intangibles 257 221
------- -------
Operating income 2,538 2,580
Interest expense 525 360
------- -------
Income before income taxes 2,013 2,220
Income taxes 872 940
------- -------
Net income $ 1,141 $ 1,280
======= =======
Net income per share $ 0.10 $0.12
Weighted average common and common
equivalent shares outstanding 10,975 10,969
See accompanying notes to consolidated financial statements.
4
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended
--------------------------
February 1, January 27,
1997 1996
----------- -----------
Operating Activities
Net income $ 1,141 $ 1,280
Adjustments to reconcile net income to net
Cash provided by (used in) operations:
Depreciation and amortization 1,175 915
Deferred income taxes 748 652
Changes in operating assets and liabilities (10,531) (7,542)
-------- --------
Net cash used in continuing operations (7,467) (4,695)
Net cash provided by discontinued operations -- 13,153
-------- --------
(7,467) 8,458
Investing activities
Purchases of property, improvements and equipment (1,387) (1,252)
Other (812) (176)
-------- --------
Net cash used in investing activities (2,199) (1,428)
Financing activities
Net borrowings under line of credit and term loan 24,231 (6,789)
Payments on long-term debt (16,000) --
Other 209 (41)
-------- --------
Net cash provided by (used in) financing activities 8,440 (6,830)
Net increase(decrease) in cash and cash equivalents $ (1,226) $ 200
======== ========
See accompanying notes to consolidated financial statements.
5
<PAGE>
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 on Form
10-K for the year ended November 2, 1996.
NOTE 2. Acquisitions
On May 31, 1996, the Company acquired 31 retail stores and related
net operating assets from Big Bear Farm Stores, Inc. ("Big Bear"),
an agricultural specialty retailer, for approximately $5,650,000.
The transaction was accounted for as a purchase. The purchase
price was allocated based on fair value as follows:
Inventories $ 8,780,000
Accounts receivable and other assets 206,000
Leaseholds and equipment 517,000
Deferred income taxes 135,000
Goodwill 2,666,000
Accounts payable and accrued expenses (6,654,000)
-----------
$ 5,650,000
Big Bear's accounts and transactions are included in the
accompanying condensed consolidated financial statements from the
date of acquisition.
On November 27, 1996, the Board of Directors of the Company
approved, and the Company entered into, a merger agreement (the
Merger Agreement) with J.W. Childs Equity Partners, L.P. and two
of its affiliates (collectively, Childs) that provides for the
acquisition of the Company by Childs in a two-stage transaction.
The Merger Agreement provides that following the acquisition by
Childs of all of the Company shares held by affiliates of Butler
Capital Corporation (collectively, BCC), an affiliate of Childs
will merge with and into the Company, and Childs will acquire the
remaining shares of the Company held by public stockholders for
$14.25 per share in cash. The consummation of the merger is
subject to the availability of sufficient funds to consummate the
merger pursuant to commitments obtained by Childs from its
prospective lenders.
6
<PAGE>
Pursuant to an agreement executed contemporaneously with the
Merger Agreement between Childs and affiliates of BCC, the BCC
affiliates have sold 6,831,729 shares of the Company's common
stock to Childs for a cash consideration of $14.00 per share.
Certain members of management also sold 146,299 shares to Childs
for a cash consideration of $14.00 per share. The agreement also
provided that immediately following the conclusion of the stock
sale, the Company would prepay (without payment of any prepayment
premium) all of the Company's 7% convertible notes held by BCC
affiliates with a face amount of $16,000,000.
As of February 1, 1997, Childs owns 65.4% of the Company's
outstanding common stock. While the Merger Agreement is subject to
stockholder approval, Childs owns a sufficient number of shares of
Company common stock to adopt and approve the Merger.
The Company has filed a registration statement under the
Securities Act of 1933 to offer for sale $100 million of senior
notes. The proceeds of the offering will be principally used to
repay $36 million of debt incurred by Childs in purchasing the
65.4% ownership described above, and to pay $52 million of merger
consideration to acquire the remaining shares and stock options
held by public stockholders and certain members of management. The
remaining proceeds will principally be used to pay fees and
expenses including discounts and commissions in connection with
the note offering.
Pro forma condensed consolidated financial data presented below is
based on the historical financial statements of the Company
included in this Form 10-Q filing. The pro forma results of
operations give effect to: (i) the acquisition of 31 stores and
certain net operating assets from Big Bear by the Company; (ii)
the Acquisition of the Company by Childs; (iii) the note offering
described above; and (iv) the New Credit Facility and existing
debt repayment described in Note 5 as though these transactions
had occurred on October 29, 1995. The pro forma financial position
gives effect to: (i) the Acquisition of the Company by Childs;
(ii) the note offering; and (iii) the New Credit Facility and
existing debt repayment described in Note 5 as though these
transactions had occurred on February 2, 1997.
Pro forma adjustments to the historical financial statements are
based upon available data and certain assumptions that the Company
believes are reasonable. The pro forma condensed consolidated
financial data is not necessarily indicative of the Company's
financial position or results of operations that might have
occurred had the aforementioned transactions been completed as of
the date indicated above and do not purport to represent what the
Company's consolidated financial position or results of operations
might be for any future period or date.
The Acquisition will be accounted for using the purchase method of
accounting. The total purchase price will be allocated to the
tangible and intangible assets and the liabilities of the Company
based upon their respective fair values. The allocation of the
aggregate purchase price included in the pro forma condensed
consolidated financial data is preliminary. However, the Company
does not expect that the final allocation of the purchase price
will materially alter the following pro forma financial position
and results of operations.
7
<PAGE>
Pro Forma Financial
Position as of
February 1, 1997
-------------------
(In thousands)
Total current assets $ 119,509
Property, improvements and equipment, net 24,926
Goodwill 85,565
Other assets 7,126
---------
Total assets $ 237,126
=========
Current liabilities $ 58,928
Long-term debt 107,698
Other long-term liabilities 1,331
Stockholders' equity 69,169
---------
Total liabilities and stockholders' equity $ 237,126
=========
Pro Forma Results of
Operations for the
Three Months Ended
---------------------------
February 1, January 27,
1997 1996
----------- -----------
(In thousands, except per share data)
Net sales $71,479 $77,050
Operating income 2,195 2,631
Net loss (837) (489)
Net loss per share ($0.08) ($0.04)
NOTE 3. 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 February 1, 1997 and January
27, 1996 was $56,469 and $455,956, respectively, and $33,866 at
November 2, 1996.
NOTE 4. 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 5. New Credit Facility
On December 23, 1996, the Company entered into a New Credit
Facility with a bank which consists of an $8.0 million, five-year
term loan facility, which was fully funded, and a $30.0 million
revolving credit facility under which $19.9 million was drawn as
of February 1, 1997. The amounts funded and drawn under the New
Credit Facility were used, in part, to repay outstanding
borrowings under the
8
<PAGE>
Company's prior line of credit agreement and to prepay (without
payment of any prepayment premium) all of the Company's 7%
convertible notes outstanding in the amount of $16.0 million.
The New Credit Facility will mature on December 31, 2001. Borrows
under the New Credit Facility will bear interest at rates based
upon prime or the Eurodollar date plus a margin. At February 1,
1997, the interest rate on the New Term Loan was 7.89% and the
interest rate on the New Revolving Credit Facility was 8.20%.
The term loan must be repaid in ten installments of $0.8 million
beginning June 30, 1997, plus annual prepayments based on the
Company's excess cash flow, as defined.
The New Credit Facility agreement contains covenants which require
the Company to maintain a minimum, consolidated net worth;
earnings before taxes, interest, depreciation and amortization
(EBITDA), ratio of EBITDA to cash interest payable, and ratio of
debt to EBITDA. The covenants also restrict, among other things,
the payment of dividends, incurrence of debt, and disposition of
assets.
The New Credit Facility is secured by substantially all of the
assets of the Company.
9
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC
Certain statements in this Report may 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
First Quarter of Fiscal 1997 Compared to First Quarter of Fiscal 1996
Sales for the first quarter of fiscal 1997 were $71.5 million, an
increase of $1.5 million, or 2.2%, as compared to total sales for first
quarter of fiscal 1996 of $70.0 million. This increase was due to sales
attributable to one new store opened during the first quarter of fiscal
1997, eleven new stores opened during the second, third and fourth
quarter of fiscal 1996, and thirty-one stores acquired during fiscal
1996 and partially offset by a comparable store sales decrease of
11.9%. The decrease in comparable store sales was primarily the result
of mild winter weather conditions in the Northeast where the majority
of the comparable stores are located and the elimination of two
promotional events run during the first quarter of fiscal 1996.
Gross profit for the first quarter of fiscal 1997 was $20.4 million, an
increase of $1.5 million or 8.2%, as compared to $18.9 million for the
first quarter of fiscal 1996. Gross profit as a percentage of sales was
28.6% for the first quarter of fiscal 1997, as compared to 27.0% for
the first quarter of fiscal 1996. The increase in gross profit
percentage was primarily the result of the elimination of two
promotional events run during the first quarter of 1996 at a reduced
gross margin.
Selling, general and administrative (SGA) expenses for the first
quarter of fiscal 1997 were $17.6 million, an increase of $1.6 million,
or 9.7%, as compared to the first quarter of fiscal 1996, due primarily
to stores opened during the last three quarters of fiscal 1996, and
stores acquired during fiscal 1996, partially offset by a decrease in
comparable store expenses. SGA expenses as a percentage of sales
increased to 24.6% for the first quarter of fiscal 1997 as compared to
23.0% for the first quarter of fiscal 1996, due primarily to
proportionately higher levels of SGA expense in stores opened and
acquired during fiscal 1996.
Operating income for the first quarter of fiscal 1997 was $2.5 million,
a decrease of $0.1 million, or 2.2%, as compared to $2.6 million for
the first quarter of fiscal 1996. Operating income as a percentage of
sales decreased to 3.6% for the first quarter of fiscal 1997 from 3.7%
for the first quarter of fiscal 1996. The decrease was the result of
the factors affecting sales, gross profit and SGA as discussed above.
Interest expense for the first quarter of fiscal 1997 was $0.5 million,
an increase of $0.1 million as compared to $0.4 million for the first
quarter of fiscal 1996 primarily due to higher working capital
requirements.
Income taxes for the first quarter of fiscal 1997 were $0.9 million, a
decrease of $0.1 million as compared to the first quarter of fiscal
1996. Income tax as a percentage of pretax earnings was 43.3% in 1997,
compared to 42.3% in 1996. This increase is primarily due to the effect
of a proportionately higher amount of non-deductible goodwill
amortization.
Net income for the first quarter of fiscal 1997 was $1.1 million, or
$0.10 per share, as compared to $1.3 million or $0.12 per share for the
first quarter of fiscal 1996.
10
<PAGE>
Liquidity and Capital Resources
On November 27, 1996, the Board of Directors of the Company approved,
and the Company entered into, a merger agreement (the "Merger
Agreement") with J.W. Childs Equity Partners, L.P. and two of its
affiliates (collectively, "Childs") that provides for the acquisition
of the Company by Childs in a two-stage transaction (the
"Acquisition"). The Merger agreement provides that following the
acquisition by Childs of all of the Company shares held by affiliates
of Butler Capital Corporation (collectively, "BCC"), an affiliate of
Childs will merge with and into the Company, and Childs will acquire
the remaining shares of the Company held by public stockholders (other
than those who perfect dissenters' appraisal rights) for $14.25 per
share in cash (the "Merger"). Certain members of management have agreed
to exchange their equity securities in the Company (valued on the basis
of $14.00 per common share) for equity securities of one of the Childs
affiliates and, in some cases, cash in connection with the consummation
of the Merger. The consummation of the Merger is subject to the
satisfaction of certain conditions including, among other things the
availability of sufficient funds to consummate the Merger.
Pursuant to an agreement executed contemporaneously with the Merger
agreement between Childs and BCC, which owned 64.5% of the Company's
outstanding common stock, BCC sold 1,048,214 shares of the Company's
common stock (representing 9.9% of the outstanding shares) to Childs
for a cash consideration of $14.00 per share, and agreed to sell their
remaining shares to Childs for $14.00 per share in cash. The agreement
also provided that BCC would agree, immediately following the
conclusion of the stock sale, to the prepayment by the Company (without
payment of any prepayment premium) of the Company's 7% convertible
notes with a face amount of $16 million. In connection with the
purchase of the balance of BCC's shares, certain members of management
agreed to sell 146,299 shares to Childs for a cash consideration of
$14.00 per share (together with the purchases from BCC, the "Securities
Purchase"). The second purchase of BCC shares and prepayment were
consummated on December 23, 1996 and the purchase of management shares
was consummated on January 2, 1997.
On December 23, 1996, the Company entered into a credit facility
consisting of an $8.0 million, five year term facility, which has been
fully funded, and a $30.0 million revolving credit facility, under
which $19.9 million was outstanding as of February 1, 1997. The credit
facility will mature on December 31, 2001 and borrowings will bear
interest rates based upon prime or Eurodollar rates plus an applicable
margin.
On February 1, 1997, the Company had working capital of $54.6 million,
which was a $9.2 million decrease over working capital of $63.8 million
on November 2, 1996. This decrease resulted primarily from the
prepayment of the $16.0 million 7% convertible notes in connection with
the Securities Purchase being funded with borrowings under the credit
facility.
Net cash used by continuing operations increased from $4.7 million for
the first three months of fiscal 1996 to $7.5 million for the first
three months of fiscal 1997. This increase resulted primarily from a
larger decrease in accounts payable in the first three months of 1997
as compared to 1996. 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 $1.4 million and
$1.3 million for the three months of fiscal 1997 and 1996,
respectively.
The Company anticipates that its principal uses of cash following the
Acquisition will be working capital requirements, debt service
requirements and capital expenditures, as well as expenditures relating
to acquisitions. Based upon current and anticipated levels of
operations, the Company believes that its cash flow from operations,
together with amounts available under the new revolving credit
facility, will be adequate to meet its anticipated requirements in the
foreseeable future for working capital, capital expenditures and
interest payments. The Company expects that if it were to pursue a
significant acquisition, it would arrange prior to the acquisition any
additional debt or equity financing required to fund the acquisition.
No discussions with respect to any significant acquisition are ongoing.
11
<PAGE>
Seasonality
Unlike many specialty retailers, the Company has historically generated
positive operating income in each of its four fiscal quarters. However,
because the Company is an agricultural specialty retailer, its sales
necessarily 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 its use of
part-time employees. Historically, the Company's sales and operating
income have been highest in the third quarter of each fiscal year due
to the farming industry's planting season and the sale of seasonal
products. Working capital needs are highest during the second quarter.
The Company expects these trends to continue for the foreseeable
future.
12
<PAGE>
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 SECURITY HOLDERS None
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 - The following reports on Form 8K were filed during the first
quarter of fiscal 1997:
1. Date of Report: November 27, 1996
Items Reported: Merger agreement with J.W. Childs Equity Partners, L.P.
2. Date of Report: December 23, 1996
Items Reported: Change in Control of Registrant
3. Date of Report: December 23, 1996 (amendment)
Items Reported: Change in Control of Registrant
4. Date of Report: November 2, 1996
Items Reported: Consolidated financial statements for fiscal year ended
November 2, 1996, and the related Management's
Discussion and Analysis of Financial Condition and
Results of Operations.
13
<PAGE>
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: March 18, 1997 Central Tractor Farm & Country, Inc.
/s/ Dean Longnecker
Dean Longnecker
Executive Vice President, Finance and Chief
Financial Officer
14
<PAGE>
CENTRAL TRACTOR FARM & COUNTRY, INC.
INDEX TO EXHIBITS
EXHIBIT 11 Statement Re: Computation of Per Share Earnings
EXHIBIT 27 Financial Data Schedule (electronic copy only)
EXHIBIT 99 Important Factors Regarding Forward-Looking Statements
15
CENTRAL TRACTOR FARM & COUNTRY, INC.
Statement Re: Computation of Per Share Earnings
Exhibit 11
Three months ended
-------------------------------
February 1, January 27,
1997 1996
------------ -----------
(In thousands except per share data)
Primary
Weighted average shares outstanding 10,617 10,576
Net effect of dilutive stock options and stock
warrant - based on treasury stock method 358 393
------- -------
Total 10,975 10,969
======= =======
Net income $ 1,141 1,280
======= =======
Per share amount $ 0.10 0.12
======= =======
Fully Diluted
Weighted average shares outstanding 10,617 10,576
Net effect of dilutive stock options and stock
warrant - based on treasury stock method 358 393
Assumed conversion of 7% Convertible Notes
during period outstanding 454 826
------- -------
Total 11,429 11,795
======= =======
Net income $ 1,141 1,280
Add 7% Convertible Note interest, net of
income tax effect 92 168
------- -------
Total net income $ 1,233 1,448
======= =======
Per share amount $ 0.11 (A) 0.12 (A)
======= =======
(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>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated unaudited financial statements of Central Tractor Farm &
Country, Inc. at and for the three months ended February 1, 1997 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> NOV-01-1997
<PERIOD-START> NOV-03-1996
<PERIOD-END> FEB-01-1997
<CASH> 2,583
<SECURITIES> 0
<RECEIVABLES> 752
<ALLOWANCES> 0
<INVENTORY> 106,262
<CURRENT-ASSETS> 114,232
<PP&E> 41,880
<DEPRECIATION> 16,954
<TOTAL-ASSETS> 160,122
<CURRENT-LIABILITIES> 59,637
<BONDS> 7,698
0
0
<COMMON> 106
<OTHER-SE> 91,350
<TOTAL-LIABILITY-AND-EQUITY> 160,122
<SALES> 71,479
<TOTAL-REVENUES> 71,479
<CGS> 51,070
<TOTAL-COSTS> 51,070
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 525
<INCOME-PRETAX> 2,013
<INCOME-TAX> 872
<INCOME-CONTINUING> 1,141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,141
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
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 and Business Conditions
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.
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.
