Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
| (X) | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES | |
| EXCHANGE ACT OF 1934 |
For the quarterly period ended September 21, 2002
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 0-12800
CUISINE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 52-0948383 | |
| (State or other jurisdiction of | (IRS Employer Identification Number) | |
| incorporation or organization) |
85 S Bragg Street, Suite 600, Alexandria, VA 22312
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code) (703) 270-2900
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 October 25, 2002.
| Common Stock 0.01 par value | Number of Shares | |
| Class A | 15,824,588 | |
| Class B | None |
1
CUISINE SOLUTIONS, INC.
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. 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 the Company, all adjustments necessary for the fair presentation of the Company’s results of operations, financial position and changes therein for the periods presented have been included.
2
CUISINE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| Sep 21, | June 29, | |||||||||||
| 2002 | 2002 | |||||||||||
ASSETS |
||||||||||||
Current Assets |
||||||||||||
Cash and cash equivalents |
$ | 770,000 | $ | 1,958,000 | ||||||||
Accounts receivable, trade |
3,221,000 | 3,272,000 | ||||||||||
Inventory |
4,307,000 | 4,419,000 | ||||||||||
Prepaid expenses |
341,000 | 291,000 | ||||||||||
Current portion of notes receivable, related party |
5,000 | 5,000 | ||||||||||
Other current assets |
719,000 | 477,000 | ||||||||||
TOTAL CURRENT ASSETS |
9,363,000 | 10,422,000 | ||||||||||
Investments, noncurrent |
2,565,000 | 2,608,000 | ||||||||||
Fixed assets, net |
4,920,000 | 5,121,000 | ||||||||||
Note receivable, officer and related party, including accrued interest, less current portion |
8,000 | 38,000 | ||||||||||
Other assets |
8,000 | 8,000 | ||||||||||
TOTAL ASSETS |
$ | 16,864,000 | $ | 18,197,000 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||
Current liabilities |
||||||||||||
Current portion of long-term debt |
1,643,000 | 1,585,000 | ||||||||||
Accounts payable and accrued expenses |
2,629,000 | 2,811,000 | ||||||||||
Accrued payroll and related liabilities |
1,025,000 | 1,306,000 | ||||||||||
Total current liabilities |
5,297,000 | 5,702,000 | ||||||||||
Long-term debt, less current portion |
1,262,000 | 1,339,000 | ||||||||||
TOTAL LIABILITIES |
6,559,000 | 7,041,000 | ||||||||||
Stockholders’ equity |
||||||||||||
Common stock — $.01 par value, 20,000,000 shares authorized, |
||||||||||||
15,824,788 shares issued and 15,824,588 shares outstanding |
||||||||||||
at September 21, 2002 and June 29, 2002, respectively |
159,000 | 159,000 | ||||||||||
Class B Stock — $.01 par value, 175,000 shares authorized, |
||||||||||||
none issued |
— | — | ||||||||||
Additional paid-in capital |
26,284,000 | 26,284,000 | ||||||||||
Accumulated deficit |
(16,168,000 | ) | (15,394,000 | ) | ||||||||
Accumulated Other Comprehensive Income |
||||||||||||
Unrealized (loss) gain on debt and equity investments |
(33,000 | ) | 10,000 | |||||||||
Cumulative translation adjustment |
63,000 | 97,000 | ||||||||||
Treasury stock, at cost (0 shares at September 21, 2002 |
||||||||||||
and 0 shares at June 29, 2002 respectively) |
— | — | ||||||||||
TOTAL STOCKHOLDERS’ EQUITY |
10,305,000 | 11,156,000 | ||||||||||
TOTAL LIBILITIES AND STOCKHOLDERS’ EQUITY |
$ | 16,864,000 | $ | 18,197,000 | ||||||||
See accompanying notes to consolidated financial statements.
F-3
CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| First Quarter | ||||||||||
| Twelve Weeks Ended | ||||||||||
| Sep 21, | Sep 22, | |||||||||
| 2002 | 2001 | |||||||||
NET SALES |
$ | 6,423,000 | $ | 7,335,000 | ||||||
Cost of goods sold |
5,327,000 | 5,798,000 | ||||||||
GROSS MARGIN
|
1,096,000 | 1,537,000 | ||||||||
Selling and administration |
1,715,000 | 2,150,000 | ||||||||
Depreciation and amortization |
131,000 | 117,000 | ||||||||
LOSS FROM OPERATIONS |
(750,000 | ) | (730,000 | ) | ||||||
Nonoperating income (expense) |
||||||||||
Investment income |
35,000 | 35,000 | ||||||||
Interest expense |
(48,000 | ) | (35,000 | ) | ||||||
Loss in equity from investment in Brazil |
— | (120,000 | ) | |||||||
Other expense |
(11,000 | ) | (31,000 | ) | ||||||
TOTAL NON-OPERATING EXPENSE |
(24,000 | ) | (151,000 | ) | ||||||
Loss from operations before income tax |
(774,000 | ) | (881,000 | ) | ||||||
Provision for income tax benefit (expense) |
— | — | ||||||||
NET LOSS |
(774,000 | ) | (881,000 | ) | ||||||
Basic and diluted net loss per share: |
||||||||||
Net loss per common share |
($0.05 | ) | ($0.06 | ) | ||||||
Weighted average shares outstanding |
15,824,588 | 15,824,588 | ||||||||
See accompanying notes to consolidated financial statements.
F-4
CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Year to date | ||||||||||||
| Twelve weeks ended | ||||||||||||
| Sep 21, | Sep 22, | |||||||||||
| 2002 | 2001 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||
Net Loss |
$ | (774,000 | ) | $ | (881,000 | ) | ||||||
Adjustments to reconcile net loss to |
||||||||||||
net cash (used in ) provided by operating activities |
||||||||||||
Depreciation and amortization |
250,000 | 263,000 | ||||||||||
Loss in equity from investment in Brazil |
— | 120,000 | ||||||||||
Change in cumulative translation adjustment |
(34,000 | ) | 386,000 | |||||||||
Changes in assets and liabilities: |
||||||||||||
Decrease in accounts receivable trade, net |
51,000 | 774,000 | ||||||||||
Decrease (Increase) in inventory |
112,000 | (1,002,000 | ) | |||||||||
(Increase) Decrease in prepaid expenses |
(50,000 | ) | 8,000 | |||||||||
Decrease in notes receivable, related party |
30,000 | 389,000 | ||||||||||
Increase in other assets |
(242,000 | ) | (226,000 | ) | ||||||||
(Decrease) Increase in accounts payable and accrued expenses |
(182,000 | ) | 176,000 | |||||||||
(Decrease) Increase in accrued payroll and related liabilities |
(281,000 | ) | 211,000 | |||||||||
Increase in other accrued taxes |
— | 6,000 | ||||||||||
Net cash (used) provided by operating activities |
(1,120,000 | ) | 224,000 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||
Increase in investment in Brazil |
— | (53,000 | ) | |||||||||
Capital expenditures |
(49,000 | ) | (569,000 | ) | ||||||||
Net cash used by investing activities |
(49,000 | ) | (622,000 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||
Additions to debt |
77,000 | 217,000 | ||||||||||
Reductions of debt |
(96,000 | ) | — | |||||||||
Net cash (used) provided by financing activities |
(19,000 | ) | 217,000 | |||||||||
Net decrease |
(1,188,000 | ) | (181,000 | ) | ||||||||
Cash and cash equivalents, beginning of period |
1,958,000 | 773,000 | ||||||||||
CASH and CASH EQUIVALENTS, END OF PERIOD |
$ | 770,000 | $ | 592,000 | ||||||||
See accompanying notes to consolidated financial statements
F-5
Cuisine Solutions, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Retained | Unrealized Gains | |||||||||||||||||||||||||||||
| Additional | Earnings | Cumulative | (Losses) on Debt | Total | ||||||||||||||||||||||||||
| Common | Paid-In | (Accumulated | Translation | and Equity | Treasury | Stockholders’ | ||||||||||||||||||||||||
| Stock | Capital | Deficit) | Adjustment | Investments | Stock | Equity | ||||||||||||||||||||||||
Balance, June 29, 2002 |
$ | 159,000 | $ | 26,284,000 | $ | (15,394,000 | ) | $ | 97,000 | $ | 10,000 | $ | — | $ | 11,156,000 | |||||||||||||||
First quarter 2003 net loss |
(774,000 | ) | (774,000 | ) | ||||||||||||||||||||||||||
Other Comprehensive Income |
||||||||||||||||||||||||||||||
Unrealized loss on debt |
— | — | ||||||||||||||||||||||||||||
and equity investments |
(43,000 | ) | (43,000 | ) | ||||||||||||||||||||||||||
Translation adjustment |
— | (34,000 | ) | (34,000 | ) | |||||||||||||||||||||||||
Other Comprehensive Income/(Loss) |
(77,000 | ) | ||||||||||||||||||||||||||||
Comprehensive Income/(Loss) |
(851,000 | ) | ||||||||||||||||||||||||||||
Balance, September 21, 2002 |
$ | 159,000 | $ | 26,284,000 | $ | (16,168,000 | ) | $ | 63,000 | $ | (33,000 | ) | $ | — | $ | 10,305,000 | ||||||||||||||
| Retained | Unrealized Gains | |||||||||||||||||||||||||||||
| Additional | Earnings | Cumulative | (Losses) on Debt | Total | ||||||||||||||||||||||||||
| Common | Paid-In | (Accumulated | Translation | and Equity | Treasury | Stockholders’ | ||||||||||||||||||||||||
| Stock | Capital | Deficit) | Adjustment | Investments | Stock | Equity | ||||||||||||||||||||||||
Balance, June 30, 2001 |
$ | 157,000 | $ | 28,333,000 | $ | (9,367,000 | ) | $ | (455,000 | ) | $ | (107,000 | ) | $ | (2,047,000 | ) | $ | 16,514,000 | ||||||||||||
First quarter 2002 net loss |
(881,000 | ) | (881,000 | ) | ||||||||||||||||||||||||||
Other Comprehensive Income |
||||||||||||||||||||||||||||||
Unrealized gain on debt and |
— | — | ||||||||||||||||||||||||||||
equity investments |
112,000 | 112,000 | ||||||||||||||||||||||||||||
Translation adjustment |
— | |||||||||||||||||||||||||||||