SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(MARK ONE)
     x     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED: June 26, 2004
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ___________________ TO ______________________

COMMISSION FILE NUMBER: 0-12800

CUISINE SOLUTIONS, INC.

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 270-2900

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per Share
(TITLE CLASS)

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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledefinitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_]

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the Common Stock on September 17, 2004 as reported on the NASDAQ/OTC Bulletin Board Market Quotation System, was approximately $2,929,000. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of September 17, 2004, there were 15,834,788 shares outstanding of the Registrant’s Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Parts of the following document are incorporated by reference in Part III and IV (Item 14) of this Form 10-K Report: the definitive Proxy Statement for Registrant’s 2004 Annual Meeting of Stockholders to be filed with the Security and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year to which this report relates.

     Exhibit Index is located on page 19.

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PART I

ITEM 1. BUSINESS

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

Cuisine Solutions produces and markets prepared foods to the Food Service Industry to include sales channels such as airlines, passenger trains, harbor cruise lines, retail, military, retail in-store delis and frozen food, national restaurant chains, and hotel banquets.

GENERAL

Cuisine Solutions has been providing high quality entrees to the Foodservice market for over thirteen years. The company is recognized in the market place as having the highest quality frozen food product line in the world.

Cuisine Solutions unique use of sous-vide processing allows Cuisine Solutions to produce high quality entrees and sauces for use in hotel banquets, restaurants, first class and business class meal service and retail frozen foods and prepared products for retail in-store delis.

The Cuisine Solutions strategy began in 1988 when as Vie de France, management recognized the growing trend and future demand for high quality prepared foods at value prices. In addition to quality, management also saw the growing need for prepared foods that reduced the use of chemical preservatives to enhance flavor and shelf life.

The special cooking process involved in the preparation of Cuisine Solutions’ products use chef developed recipes and only the finest quality ingredients. The cooking process involves slowly cooking the products for a longer period of time than most food companies and at lower cooking temperatures. This special process is a culmination of culinary art and food science in that it requires precise controls of the cooking process, and each precise control is applied to each individual recipe. This process involved a decade of research and development to produce the wide range of high quality products currently offered by Cuisine Solutions. This entire process is managed through computerized cooking equipment under the supervision of culinary professionals.

What does this mean to the market place? Today’s consumer trends are moving heavily towards fast food and convenience. What has suffered in the meantime is culinary quality and nutrition. The trend also includes an increased demand for high quality, unique ethnic recipes and diet recipes such as low carbohydrate products.

The Cuisine Solutions center of the plate proteins, sauces, pasta, and rice products enables foodservice providers requiring exceptional quality to purchase fully cooked, high quality products from Cuisine Solutions as an alternative to preparing products from scratch.

Cuisine Solutions’ products also enable foodservice providers to provide a wide range of products and eliminate the need for raw materials and logistics, especially for last minute events. Our products help reduce the labor required to prepare food products, increase food safety by reducing manual product handling, reduce yield losses, and provide consistent portion sizes.

In addition to the above benefits, Cuisine Solutions’ products do not require additional preservatives normally found in prepared foods due to our unique cooking process. This makes our products especially attractive to foodservice establishments, national restaurant chains, retailer of frozen and in-store deli prepared foods, and health care facilities, as well as large upscale event caterers.

Supported by the best and most experienced technical team in this cooking technology and enhanced by the collaboration of some of the best culinary chefs in the industry, Cuisine Solutions provides unique value to the market place with its quality consistent products. It gives the struggling, overworked, understaffed foodservice operators expanded menu lines, labor savings, flexibility, serving time reduction, reduced yield losses and increased food safety.

The Company has strategically positioned itself to be a high quality provider of prepared foods, with unique product capabilities at competitive market prices with three operating production facilities in Europe and in the USA.

Cuisine Solutions has a strong presence in both North America and Europe, having the unique capability to service targeted airlines to and from Europe.

A significant part of the Cuisine Solutions strategy is to locate production facilities in places where finished goods are in demand, as well as in countries that are the most efficient source of quality raw materials such as Norway for salmon, and Chile for salmon, white fish, and other seafood.

The Company maintains manufacturing facilities in the United States, Norway and France. A new facility with a Euro-Chilean partnership opened in Chile in August 2004.

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		Cuisine Solutions, US:
		Cuisine Solutions operates a thirty-nine thousand square feet manufacturing facility located in Alexandria, Virginia. The facility is U.S. Department of Agriculture (“USDA”) and Hazard Critical Control Point (“HACCP”) certified, and has the ability to produce the complete range of Cuisine Solutions products including a high volume enrobed pasta line.
		Cuisine Solutions France:
		Acquired by Cuisine Solutions in 1999, Cuisine Solutions France is strategically located a short drive North from Paris in Louviers, France. This fifteen thousand square feet HACCP certified facility produces a full range of traditional French recipes for the European foodservice market as well as the French retail market. The recently expanded facility can produce all of Cuisine Solutions products and has retail packaging capabilities. Cuisine Solutions France is the training area for many Cuisine Solutions Operations Managers since the facility has the most collective experience using the sous-vide process, and adheres to strict culinary discipline, a culture that is passed on to all of our facilities.
		Cuisine Solutions Norway:
		Cuisine Solutions operates a sixteen thousand square feet facility located on a fjord in Hjelmeland, Norway. The award winning facility produces fully cooked salmon in a variety of sizes and flavors. This HACCP certified facility uses only the highest quality Norwegian Salmon in its facility, and produces product that is shipped to North America, Europe and Scandinavia.
		Cuisine Solutions Chile:
		In June 2001 Cuisine Solutions entered into a joint venture agreement with a Euro-Chilean partnership that will build a processing facility in Chile to produce a wide range of seafood items. The sous-vide process works exceptionally well with seafood, and management believes that the proximity to the source of high quality, lower cost materials should provide Cuisine Solutions with a significant advantage in regard to both product quality and cost. The original agreement was terminated without any prejudice between the partners during the third quarter of fiscal year 2003 due to administrative difficulties. A new trade agreement was signed between the partners subsequent to the end of fiscal year 2003 whereby Cuisine Solutions has 10% ownership in Cuisine Solutions Chile and exclusive marketing right in the US and most of Europe. The facility started production in August 2004.

Cuisine Solutions had been growing consistently since fiscal year 1998, until the events of September 11, 2001 negatively impacted the travel industry, which is a major source of the Company’s revenue, particularly the airlines and hotel and banquet sales channels. Since fiscal 2001, Cuisine Solutions has been able to successfully reduce administrative and other costs through the elimination of positions and certain expenses. The Company has focused it efforts on increasing sales in all of its channels as well as improving margins from improved procurement of raw materials and greater production and distribution efficiencies.

Cuisine Solutions currently distributes products through the following sales channels:

On Board Services: Airlines, Railroad and Cruise Lines; Foodservice: Hotel banquets, Convention Centers, Sport Stadiums and other Special Events such as the Superbowl, and the Olympics; Retail: Supermarket In-Store Deli, Premium frozen packaged foods; Military: Sales through distributors supplying the US military; Restaurant Chains: local & national.

The On Board Services (OBS) channel includes customers that provide transportation services to the general public and serve meals. With chef-created high quality fully cooked pasteurized products and the ability to make changes quickly and easily, Cuisine Solutions has become the preferred supplier to the world’s top airlines for their business and first class services. Airlines and On Board Service caterers also recognize the value of Cuisine Solutions’ global presence, which allows them to design high-class menus for the United States market from Europe and South America. The ability to create high quality meals in three continents gives Cuisine Solutions a strong competitive edge in the development of standardized quality meals for non-USA and USA airlines with flight routes departing from South America and Europe. Most US carriers are now working with Cuisine Solutions and the Company is developing commercial relations with large European and South American airlines and caterers. The Company is also the supplier of choice for national railroad companies in the US and France. Focused effort and services towards this market has allowed Cuisine Solutions to increase its market share. The On Board Services channel experienced consistent growth over the past years, until the negative impact of the September 11, 2001 terrorist attacks in the USA resulted in extremely limited business travel during the subsequent months, which had been a major source of Cuisine Solutions sales revenue via sales to the airlines and the hotel banquet industries. The airline industry continues to have financial troubles with at least one pending and several rumored potential bankruptcies, but the number of passengers traveling continues to increase as well as demand for Cuisine Solutions’ products. Cuisine Solutions’ reputation for high quality products and services along with its international presence has allowed the Company to rebound

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in this channel as the airline industry recovers. Cuisine Solutions will continue to seek to strengthen the business relationships with most of the major US airlines and passenger rail lines through providing continued value, service and flexible solutions depending upon the current demand in the industry. Cuisine Solutions won the coveted Mercury Award in February 2004, the most prestigious award for in-flight catering sponsored by the International Flight Catering Associations (IFCA) and the International Inflight Food Service Association (IFSA).

The Foodservice sales channel serves products to hotel banquets, hotel restaurants, sports stadiums, large special event caterers, and national restaurant chains. Cuisine Solutions’ products are attractive for foodservice operators who are often understaffed and overworked, as it improves both their revenue capability and their meal costs. Revenue capability for operators improves as Cuisine Solutions’ products and menu services enhance and enlarge food operators’ menu offerings, increases their table rotation through faster delivery of meals, and improves the quality, safety and consistency of their menu offerings. Cuisine Solutions products’ facilitate the offerings of special menu and promotions programs, which result in higher customer headcount and a higher average check per customer. The cost of meals is reduced for the food operator as Cuisine Solutions’ products and technical services reduce labor cost and yield losses, and lower utility and equipment use time. Cuisine Solutions’ products also offer a unique method of controlling portion costs and recipe execution. Pre-prepared entrees also offer additional savings in kitchen space, equipment, capital investment and leasehold improvement costs.

There are many prepared foodservice manufacturers in the industry, but most can be classified as large processors with mass production and lower quality associated with mass produced frozen foods. They operate large, heavily capitalized facilities, providing very little flexibility, variety and responsiveness to the market place. Smaller manufacturers can provide more flexibility and variety, but are limited in capacity, and do not have global expansion opportunities. Cuisine Solutions’ indirect competitors do not utilize sous-vide technology, as it involves significant R&D in addition to specialized equipment and equipment knowledge. In fiscal 2004, Cuisine Solutions achieved continued penetration into key national accounts, banquet centers and casinos. Many new Cuisine Solutions’ items are now on large hotel chain, resorts, casino, and banquet menus. The most positive trend for the Company has been with the low carbohydrate programs that are being implemented. Cuisine Solutions will continue its focus on national accounts in fiscal 2005 and also focus on improved distribution methods to ensure that requested products are available throughout the US and Europe. Customers in the Foodservice sales channel place a high value on the labor savings, quality, consistency and food safety associated with Cuisine Solutions’ products. Management believes this value increases in the current economic and political situation challenging today’s business environment.

Cuisine Solutions initiated its strategic involvement in the retail sales channel upon completion of the acquisition of the French subsidiary, Cuisine Solutions France, in December 1999. Cuisine Solutions France has been achieving considerable success with its retail partnership with French retailers in the packaged, premium private label category. Cuisine Solutions France has had consistent sales growth in the previous years in the retail channel. French consumers are demanding when it involves food quality. Cuisine Solutions believes that it offers better quality, consistency, cost reduction opportunities and higher food safety levels, as well as the culinary expertise to help the retailer enhance product selections and seasonal varieties. To evaluate retail opportunities in the US, Cuisine Solutions initiated a strategy to introduce its product line to US retailers via the in-store deli market. The marketing strategy enabled Cuisine Solutions to take advantage of the quality, consistency, cost and safety benefits provided to the Company’s Foodservice customers and initiate in-store deli programs in the US with minimal additional marketing investment. The deli program also recognized by retail frozen food executives which resulted in the first packaged product line sold in the US under the Cuisine Solutions Brand. The Company plans to continue these efforts as the retail market trends show increasing demand for high quality, value priced items that are simple to prepare in both the retail store and in the home of consumers. Awareness of the Cuisine Solution brand in retail is growing with the increasing number of products on shelves, particularly in the retail club, member-only warehouse, systems. Retail objectives for fiscal year 2005 include further penetration into the US in-store delis of targeted retailers as well as continued planned national roll-outs of premium frozen retail products into the US market.

Military sales to date have been primarily through distributors to the US armed forces with an emphasis on the US Navy. Military sales for the Navy continue to be managed via a broker/distributor. The Company has placed specific objectives for the broker and eliminated a commission compensation structure, invoicing the broker directly for all orders and placing the responsibility for inventory and accounts receivable management on the broker/distributor. The military channel showed some growth in fiscal 2004 due to increased sales to the Navy. However, Cuisine Solutions expects sales to significantly grow in this channel as the Army has selected two of the products for its field rations program. The program is scheduled to start in October of 2005. The Cuisine Solutions product line is ideal for situations that call for long shelf life, high quality, easy preparation and high levels of food safety.

National Restaurant Chain (NRC) sales, which represent most of the sales in what we refer to as “New Business” in our 2004 quarterly filings, have shown strong growth during the fiscal year. Like the foodservice channel, restaurant chains are constantly struggling to find experienced labor and to reduce costs. Cuisine Solutions has the ability to duplicate restaurant recipes and provide the chain with the consistency that it needs across its operations. Cuisine Solutions also can provide products to fill-out a restaurant chain’s menu. Often a chain specializes in a certain type of food, but it still must offer variety to the customers who do not want the specialties. Cuisine Solutions, with over 150 products, can provide products for these chains to choose from. Cuisine Solutions believes the consumer trend toward upscale casual restaurant chain dining will continue to increase in fiscal year 2005 and that Cuisine Solutions’ products are well-suited to meet the market demand.

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Cuisine Solutions, Inc. was incorporated in the State of Delaware in 1974. Its principal executive offices are located at 85 South Bragg Street, Suite 600, Alexandria, VA 22312 and its telephone number at that location is (703) 270-2900.

The Company desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Therefore, this report contains forward looking statements that are subject to risks and uncertainties, including, but not limited to, the reliance on key customers, fluctuations in operating results and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These risks could cause the Company’s actual results for 2004 and beyond to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company.

BACKGROUND

The Company commenced operations in 1972 as a wholesale producer of French bread for daily delivery to the Washington, DC area. The Company expanded its markets throughout the 1970s. In fiscal year 1979, the Company, then known as Vie de France Corporation, began offering its product through Company-owned retail bakeries where the products could be freshly baked throughout the day. During the 1980s, the Company expanded its frozen dough product line and developed processes to facilitate the baking of these products at the point-of-sale. As of May 1994, the Company owned and operated 31 retail units. The Company sold the Bakery Division and the Restaurant Division to Vie de France Bakery Yamazaki, Inc. in 1991 and 1994, respectively.

The Company began development of the Culinary Division business in 1987, in conjunction with research previously performed by Nouvelle Carte France, a related French company. As a result of the growth in the application of high quality frozen products in Europe, the Board authorized the establishment of the Vie de France Culinary Corporation for the express purpose of the research into and development of high quality frozen products for the U.S. market. This Company was formed in 1987, and was later merged into Vie de France Corporation. In 1989, construction began on a 30,000 square foot plant in Alexandria, Virginia designed to manufacture its sous-vide product line under the trade name Vie de France Culinary. The Culinary plant began operations in May 1990, and later expanded into a 39,000 square feet building. The Company constructed a manufacturing facility in Norway, and initiated production in August 1994. The primary focus of the Norwegian facility was to supply the Company with all salmon products.

During fiscal years 1991 through 1996, the Culinary Division successfully built its sales. The sales volume went from zero to over $2 million in fiscal year 1991, and by fiscal year 1996 to $16 million. During fiscal year 1997, the Company restructured its sales organization to develop a focused sales and marketing strategy. The Company embarked on strategic marketing campaigns to educate the market place to the advantages of sous-vide processing and increase awareness of the existence of the Company and its product line. During this first year of the strategic marketing effort and re-organization, fiscal year 1997 sales declined to about $14 million. In fiscal year 1998 the Company continued its reorganization while sales remained steady at $14 million, and in fiscal year 1999, sales increased to over $20 million, an increase of approximately 48%.

In 1998, the Company entered into a joint venture to construct a manufacturing facility in Brasilia, Brazil to service airlines in the Mercusor markets, our European retail customers that have a strong presence in Brazil, and to provide low cost poultry and beef product exports to the European markets. The Brazilian facility established regular operations at the beginning of fiscal year 2002. Towards the end of fiscal year 2002, the Company filed a civil lawsuit in the Federal District Court of Brasilia against the controlling partner in the joint venture, Cuisine Solutions do Brasil Ltda, as a result of the Brazilian partner’s failure to disclose financial information and operating results of Cuisine Solutions do Brasil Ltda to Cuisine Solutions Inc. according to both the joint venture agreement and Brazilian law. Due to the continued lack of cooperation from the Brazilian partner, the inability to obtain any financial disclosures and the joint venture partners termination of Cuisine Solutions Inc. business activity in Brazil, Cuisine Solutions, Inc wrote off 100% of its investment in Brazil in fiscal year 2002.

In 1999, the Company acquired the French company, Nouvelle Carte, to supply airline customers in Europe as well as supply global foodservice and retail customers. During fiscal year 2000, sales increased to $36 million, an increase of 30.2% over fiscal 1999. Fiscal year 2001 sales slightly increased over $36 million while fiscal year 2002 sales decreased by 21% to $29 million due to the economic downturn during fiscal year 2002 precipitated largely by the terrorist attacks in the USA on September 11, 2001 and the subsequent negative impact on the travel industry. Fiscal year 2003 sales decreased by 3% to $28 million primarily due to the decreased revenue of the Military, the On Board Services and the Foodservice channel in the USA.

Fiscal year 2004 sales finished above pre-September 11, 2001 levels of $36,721,000. The Company had growth in all five Cuisine Solutions channels and believes that the prospects for growth in fiscal year 2005 are positive for all five channels. Fiscal year 2005 will also bring a new source of salmon and other white fish raw material from a new sous-vide plant in Chile that opened in August 2004 whereby Cuisine Solutions has 10% ownership and exclusive marketing rights for the sous-vide products in the US and most of Europe.

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PRODUCTS

The Company develops, produces and markets chef-created fully cooked, fully prepared entrees and sauces. The products are high quality items without the high-end price since they can be produced in large volumes. The product line consists of items not usually available to our customers such as Osso Buco, Chilean Sea Bass, Beef Wellington, Lamb Shanks and Stuffed Pork Chops as well as staple items such as plain and stuffed chicken breasts. The Company also offers a large line of sauces as well as enrobed pasta and rice products. The precise cooking process of sous-vide allows the Company to prepare a perfect duck breast, rack of lamb or veal chop. The combination of the unique cooking process, the internal culinary expertise and international distribution has been critical to the Company’s strategy to date.

The sous-vide cooking process involves preparing a product with the required spices, vacuum sealing the product, and cooking the product under water for precise times at precise temperatures. This precision in time and temperature allows the Company to produce the exact specification on any protein item produced. The process is controlled by computerized systems, and each item is exact every time. The cooking process also provides an eighteen-month shelf life on most protein items without the need for any food additives or preservatives. The product has enormous application with health conscience retailers and health care organizations due to the omission of additives in our products.

The Company packages its products in two ways, Foodservice packs and Retail carton packs. Most Foodservice pack products are vacuum-sealed and frozen in either single or multi-serving packaging and then case-packed. Single-pack items provide maximum customer flexibility, while multi-serving packs provide additional efficiency and economy for large-scale preparations. The US and French facility packages retail cartons for the frozen and refrigerated retail sales area for retail supermarkets.

DISTRIBUTION

The majority of Company sales are frozen products shipped throughout the US and Europe. Cuisine Solutions Norway has in the past provided much of the salmon products globally while France and the USA produce non-salmon products for Europe and the US respectively. All products are shipped frozen except for some retail sales in France, which are refrigerated. The French retail sales are all final sales, and the retailer bears the risk for any unsold product. The French facility maintains one additional third party warehouse for storage, while the US facility maintained four third party outside warehouses at the end of fiscal year 2004. Most of the warehouses were created to support the Foodservice sales requirements for short lead times and product availability. The Company can quickly and easily add or subtract additional outside warehouses when and where it is deemed necessary.

The Company sells one hundred percent of its product through its own sales personnel located in either France or the US. These sales can be to distributors who, in turn, sell our products to end-users. Norway does not have a sales force. Norwegian products are sold to either France or the US as inter-company sales, or sold by the sales team to ship directly from Norway to customers located in Europe. This will be the same for the Chilean operation. US sales are mostly to US markets, and French sales to European markets.

RAW MATERIAL STATUS

The Company historically purchased its raw materials from a number of different suppliers at spot market prices except for US poultry, which is purchased by contract. The practice of spot market purchasing and bidding out to suppliers does not allow the Company to take advantage of annual low prices in certain commodity markets, nor does it allow the Company to develop strategic partnerships with suppliers. Since systems now provide forecast capabilities and the related material requirements, the Company engages in a more strategic approach to procurement and has developed strategic purchasing programs. During fiscal year 2004, the prices of many raw materials increased significantly. The greatest impact was in the poultry market where raw material prices increased significantly, to record highs. This, in turn, lowered Cuisine Solution margins as we could not quickly increase our prices. Poultry raw material prices are expected to return from record highs to lower levels in fiscal year 2005. However, there were many negative raw material reports during fiscal year 2004 that caused large fluctuations in supply and demand such as reports of mad cow disease, bird flu, and toxins in farm raised salmon. Cost of raw materials is Cuisine Solutions’ largest cost, and therefore, management is participating directly in the procurement process in fiscal 2005.

PATENTS AND TRADEMARKS AND OTHER ITEMS IMPORTANT TO OPERATING SEGMENTS

The Company believes that its Cuisine Solutions, Inc. and Vie de France Corporation trademarks are important to its business success. Accordingly, it takes the necessary steps to protect them. During fiscal year 1998 the Company assured the protection of such marks by transferring the ownership of all trademarks it owns to Cuisine Solutions, Inc. in addition to maintaining the Vie de France Corporation trademark. The Company and Vie de France Bakery Yamazaki, Inc. entered into a Trademark and Service Mark License Agreement in 1991 and, in conjunction with the sale of the Restaurant Division, amended and restated this agreement. In 1997, the Company secured the use of a packaging trademark called MicroRoast™ and MicroRoti™ to be used in the U.S. and European market, respectively. This new packaging is designed for use in microwave ovens and imparts a roasted quality to our value-added entrees.

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During fiscal year 2002, the Company secured in Europe and in the USA the service trade mark “Your Culinary Partner” and “Votre Partenaire Culinaire” which is being used in our global advertising campaign. The Company has many other trademarks that it believes requires protection. For example, in fiscal 2004 Cuisine Solutions trademarked “Enrobed” to protect our new enrobed pasta line of products. Cuisine Solutions continually reviews the trademarks to determine whether there is value in paying the fees associated with maintaining marks.

CUSTOMER DEPENDENCY

The Company’s largest customers in fiscal year 2003 were two airline distributors that bought product from the Company based upon related demand from airline customers. One of those companies declared bankruptcy in Cuisine Solutions’ second quarter of fiscal 2004 and Cuisine Solutions was required to write-off approximately $295,000 of bad debts during that quarter. Management made the decision in the first quarter of fiscal year 2004 to reduce its dependency on that distributor and the loss was significantly lower than it would have been during fiscal year 2004. Cuisine Solutions has had a large proportion of its business with travel related customers. In FY 2004, Cuisine Solutions continued a concerted effort to diversify into retail, national restaurant chains, and the US military. Growth in those areas continues to reduce the Company’s dependency on the travel industry. Management believes that Cuisine Solutions’ revenue will continue to grow in the non-travel related channels. Management believes that the growth in the military channel in fiscal 2005 will produce a strong hedge for the Company in the event of a terror related incident to the travel industry. However, there is still risk for the Company as much of our planned growth for fiscal year 2005 includes growth in the travel related channels.

The Foodservice and national restaurant chain channels consist of a wide base of hotel banquet and convention centers in a decentralized purchase decision environment and management believes that no single customer can have a material impact on the total Company revenues. Retail has a smaller base of customers that create most of the demand for the packaged food lines. The largest of the retail customer’s purchase decisions are also decentralized and so the loss of a single customer should not have a material impact. Cuisine Solutions’ decision to diversify the US military sales to include the Army in fiscal year 2004 was made to both grow the channel and reduce dependency on the Navy.

SEASONALITY

The seasonality of the hotel banquet industry, in which sales demand typically peaks in September through December, and March through June, no longer has a major impact on the total Company due to growing sales of the other sales channels. However Cuisine Solutions retail product channel demand has had some seasonal impact as the demand decreases for fully cooked products during summer grilling season.

COMPETITION

The Company considers itself to be a leader in the sous-vide product line within the food service industry in the US. At present, limited competition exists within the US frozen wholesale component of this product line. Other firms exist in France within the retail and refrigerated components of the sous-vide prepared foods. As such, the Company primarily competes for sales against food service providers in the frozen and raw segment, rather than against other sous-vide suppliers. The Company offers value-added products, but must offer these products in a price range that makes it economically advantageous for its users to convert from other methods of food preparation.

The Company believes its products can successfully compete against these other methods in price, product performance and convenience. The Company also offers implementation and menu development services, as well as equipment to its customers as another means of building sales. The Company depends upon its product development, marketing, and menu items as a means of maintaining its leadership position within the sous-vide industry.

RESEARCH & DEVELOPMENT

The Company invested $261,000, $240,000, and $395,000 in research and development activities in fiscal years 2004, 2003 and 2002, respectively. The Company maintains a staff of experienced culinary and food science professionals in order to provide the marketplace with innovative products on a continuous basis. The international staffing in the US and in France provides the Company with the latest in culinary trends on both sides of the Atlantic. The French facility provides a source of dedicated culinary professionals since the French culinary training is known for its dedication to the art of perfection with regard to food preparation.

REGULATIONS

The Company is subject to various Federal, state and local laws affecting its business, including health, sanitation and safety regulations. The U.S. plant operates under USDA supervision over the handling and labeling of its products. The Company believes its operations comply in all material respects with applicable laws and regulations. In addition to USDA standards, all subsidiary facilities are HACCP certified.

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The Company’s production facilities in Norway and France meet European Community standards and regulations. The Norwegian products, along with certain raw materials, are subject to import regulations.

EMPLOYEES

The Company employs approximately 230 people including full-time and part-time workers and corporate staff.

GEOGRAPHIC SALES

The Company’s sales are primarily focused in the United States with sales in the U.S. representing 58.9%, 56.4% and 63.2% of total sales for fiscal years 2004, 2003 and 2002, respectively.

ITEM 2. PROPERTIES

The Company owns the French facility and property, and leases its US office and its USA and Norwegian manufacturing facilities. The French facility is located in Louviers, France and is approximately 15,000 square feet. The U.S. plant, located in Alexandria, Virginia, is approximately 39,000 square feet. The Norway plant, located in Hjelmeland, Norway, is approximately 16,000 square feet. The Company’s Norway plant is structured as a twenty-year capital lease whereby the Company will own the facility at the end of the lease term on August 31, 2014. These facilities are not fully utilized and are suitable for current operations and are expected to meet the product demand for fiscal year 2005. The Company owns substantially all of the equipment used in its facilities. Lease commitments and future minimum lease payments are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 11 to the Consolidated Financial Statements, which is included in this Form 10-K.

ITEM 3. LEGAL PROCEEDINGS

During fiscal 1999, the Company became a partner in a limited liability company, Cuisine Solutions do Brasil Ltda, with a Brazilian partner, Sanoli Indsutria E Commercio Alimentacao Ltda, which has built a manufacturing facility and is marketing product in the Mercusor market. Cuisine Solutions Inc. owns 39% of this Brazilian joint venture. The Company contributed technology to the partnership in lieu of a cash contribution. The Company performed management services to assist with the design and construction of the manufacturing facility as well as ongoing management service for operations, research and development, marketing and administrative support.

The Company’s investment in Cuisine Solutions do Brasil Ltda consisted of advances, Accounts Receivables for services performed and a loan in the amount of $763,000 that was granted to the Joint Venture Partner during fiscal year 2001. The loan bears interest at the London Interbank Offered Rate (“LIBOR”) plus spread accepted by the Central Bank of Brazil at the time of repayment. The loan was to be repaid within one year and was in default at June 28, 2003.

At the end of fiscal year 2002, the Company filed a civil lawsuit in the Federal District Court of Brasilia against the controlling partner in the joint venture, as a result of the Brazilian partner’s failure to disclose financial information and operating results of Cuisine Solutions do Brasil Ltda to Cuisine Solutions Inc. according to both the joint venture agreement and Brazilian law. The Company seeks full recovery of the amounts owed by Cuisine Solutions do Brasil Ltda, including the loan of $763,000, and management and administrative fees of $895,000 according to the joint venture agreement. The managing directors of Cuisine Solutions do Brasil Ltda, Jose Sanchez Aguayo and Rodrigo Sanchez, were named as nominal defendants in the lawsuit. Due to the current stage of the filed lawsuit, management cannot predict the outcome of this lawsuit.

There are no other material pending legal proceedings, other than ordinary, routine litigation incidental to the Company’s business, to which the Company is a party or to which any of its property is subject. Management does not believe that any amounts it may be required to pay by reason thereof will have a material effect on the Company’s financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS COMMON STOCK

The Company’s capital stock is divided into two classes: Common Stock and Class B Stock. The Class B Stock, which is reserved for issuance to employees under stock options plans, is identical in all respects to the Common Stock except that the holders thereof have no voting rights unless otherwise required by law. The Company’s Common Stock is traded in the over-the-counter (OTC) market under the symbol CUIS. The following table sets forth for the quarters indicated the high and low sales prices per share as reported on the OTC Bulletin Board:

As of September 17, 2004 there were approximately 578 holders of record of the Company’s Common Stock.

No dividends were paid during fiscal year 2004, 2003 and 2002.

The information required under this Item 5 about equity compensation plans is shown in the Proxy Statement for its annual meeting for fiscal 2004 to be filed with the Securities and Exchange Commission under Regulation 14A, under the caption “Executive Compensation” and such information is incorporated herein by reference

On November 30, 1998, the Company was notified by NASDAQ that its common stock no longer met the minimum $1.00 bid requirement to be included in the NASDAQ National Market and was delisted. The Company’s common stock currently trades on the OTC Bulletin Board.

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ITEM 6. SELECTED FINANCIAL DATA

FIVE YEAR SUMMARY
(in thousands, except per share amounts)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING ESTIMATES

A summary of the Company’s significant accounting policies is included in Note 1 to the Consolidated Financial Statements, included in this report. Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company’s operating results and financial condition.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Judgments and assessments of uncertainties are required in applying the Company’s accounting policies in many areas.

Recent Accounting Pronouncements

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities”. FIN No. 46 addresses the requirements for business enterprises to consolidate related entities in which they are determined to be primary economic beneficiary as a result of their variable economic interests. Currently the Company has no variable interest entities, and therefore the adoption FIN No. 46 did not have a material impact on the Company’s financial statements.

In April 2003, FASB issued SFAS 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS 149 is generally effective for derivative instruments, including derivative instruments embedded in certain contracts, entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. Currently the Company has no derivative instruments, and therefore the adoption of SFAS 149 did not have a material impact on the Company’s financial position or results of operations.

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In May 2003, FASB issued SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities (or assets in certain circumstances) in statements of financial position. SFAS 150 also requires disclosures about alternative ways of settling the instruments and the capital structure of entities all of whose shares are mandatory redeemable. SFAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Currently the Company has no financial instruments with characteristics of both liabilities and equity, and therefore the adoption of SFAS 150 did not have a material impact on the Company’s financial position or results of operations.

Impairment of Long-Lived Assets

Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of”, requires management to make judgments regarding the future operating and disposition plans for underperforming assets, and estimates of expected realizable values for assets to be sold. The application of SFAS No. 144 has affected the amounts and timing of charges to operating results in recent years. Long-lived assets are assessed for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, or whenever management has committed to a plan to dispose of the assets. Assets to be held and used affected by such an impairment loss are depreciated or amortized at their new carrying amount over the remaining estimated useful life; assets to be sold or otherwise disposed of are not subject to further depreciation or amortization. Management determines the depreciable lives based on estimates of the period over which the assets will be of economic benefit to the Company and management periodically reviews the remaining depreciable lives based upon actual experience and expected future utilization.

Allowance for Doubtful Accounts

Trade receivables are reported in the consolidated balance sheets net of the allowance for doubtful accounts. Generally, the Company considers receivables past due 30 days subsequent to the billing date. The Company performs ongoing credit evaluations of its customers and generally extends credit without requiring collateral. The Company maintains an allowance for doubtful accounts, which is determined based on historical experience and management’s expectations of future losses. Generally, losses have historically been within management’s expectations. As of June 26, 2004 and June 28, 2003, the Company maintained an allowance for doubtful accounts of approximately $68,000 and $62,000, respectively.

Inventory Reserves

Inventories are valued at the lower of cost, determined by the first-in, first-out method, or market. Included in inventory costs are raw materials, labor and manufacturing overhead. Management evaluates inventory levels on a regular basis and establishes reserves to reflect inventory at its estimated realizable value.

Valuation Allowance

The Company accounts for corporate income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes”, which requires and asset and liability approach. This approach results in the recognition of deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary timing differences between the book carrying amounts and the tax basis of assets and liabilities. Future tax benefits are subject to a valuation allowance to the extent of the likelihood that the deferred tax assets may not be realized. The Company has fully reserved its deferred tax asset as a result of recurring losses and current projections of future operating results.

RESULTS OF OPERATIONS

NET SALES

Net sales by region for fiscal year 2004 and 2003 are as follows (Norway inter-company sales are eliminated):

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Fiscal year 2004 revenue of $36,721,000 reflects a consolidated sales increase of 32.0% from fiscal year 2003 revenue of $27,812,000. Revenue for fiscal year 2002 was $28,616,000. The increase in sales in FY 2004 was attributable to a 37.9% increase in US sales and a 25.3% increase in sales from France compared to fiscal year 2003. All five sales channels in the US grew in revenue in fiscal year 2004 as well as all three sales channels in France. Norway operations had a 17.0% increase in non-intercompany sales, however, its gross sales in US dollars decreased by 3.6% while gross sales in Norwegian Kroner decreased by 6.5%. Approximately 68.8% of the sales from Cuisine Solutions Norway are inter-company sales to the USA and French entities, and eliminated during the financial consolidation process.

The Company’s sales of high-quality foods are sold to airlines, retail supermarkets, hotel and convention center restaurants and banquets, passenger rail lines and harbor cruise lines restaurants, restaurant chains, and the US military. In fiscal year 2004 US sales accounted for 58.9% of total revenue compared to 56.4 % of total revenue in fiscal year 2003, while France and Norway accounted for 37.3% and 3.8 % in fiscal year 2004 and 39.3% and 4.3%, and 31.0% and 2.3% in fiscal 2003 and 2002 respectively after eliminating inter-company sales. Norway produces product for both France and the US and total Norwegian salmon production accounted for approximately 7.7% of total Company sales in fiscal year 2004 as compared to 11.0% and 8.4% in fiscal year 2003 and 2002 respectively.

Net sales by sales channel for fiscal year 2004 and 2003 are as follows:

The Company’s net sales increased by 32.0% to $36,721,000 in fiscal year 2004 as compared to $27,812,000 in fiscal 2003 and from $28,616,000 in fiscal 2002 due to the improved economy and the successful implementation of new Cuisine Solutions sales strategies resulting in higher demand and sales of the products. The current year sales increases were in all Cuisine Solutions sales channels and were driven by the improving economy, particularly in the US, and greater consumer demand for upscale fully cooked products. Fiscal year 2004 On Board Services and Foodservices sales increased by 22.3% and 21.9%, respectively. Military sales increased by 15.9% while the Retail channel and restaurant chains channel sales grew by 55.1% and 114.2% respectively during fiscal 2004.

Cuisine Solutions USA’s fiscal year 2004 and 2003 sales by sales channel are as follows:

Net sales grew by 37.8% in the US in fiscal year 2004 as compared to fiscal year 2003. Net Sales increased by more than 15% in each of the five sales channels in the US in fiscal year 2004 as compared to fiscal year 2003. This is primarily due to increased product demand resulting from a more diversified sales focus on each of the channels and the improvement in the US economy.

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Cuisine Solutions France’s fiscal year 2004 and 2003 sales by sales channel are as follows:

Net sales grew by 25.3% in the France in fiscal year 2004 as compared to fiscal year 2003. Net Sales increased by more than 23% in each of the three sales channels in the France in fiscal year 2004 as compared to fiscal year 2003. This is primarily due to increased product demand.

Cuisine Solutions Norway’s fiscal year 2004 and 2003 sales by sales channel are as follows (excluding inter-company sales):

Direct sales for the Norwegian facility grew by 17.1% primarily as a result of increased demand for salmon products to new airline customers. Food Service sales declined in Norway in fiscal 2004 as a result of more direct sales of the Norwegian products by the French operation, as well as a decrease in demand resulting from magazine articles describing potential health risks from consuming farm raised salmon.

GROSS MARGIN

Gross margin increased 60.5% in fiscal year 2004 compared to fiscal year 2003. Gross margin as a percent of sales increased to 21.6% for fiscal 2004 compared to 17.8% in fiscal 2003, and 16.4% in fiscal 2002. Gross margin increased due to significantly higher sales accompanied by lower overhead cost in relation to those sales. Cuisine Solutions has strategically built other sales channels over the past few years to include military and retail accounts and meals for passenger rail lines, and has seen consistent results in its French subsidiary. Gross margin as a percentage of sales should continue to increase as sales continue to increase as more fixed costs are being absorbed.

A comparison of net sales, gross margin percentages and net losses from operations for fiscal year 2004, 2003 and 2002 follows:

Net loss for fiscal year 2004 was reduced by $3,088,000 or 75.5% from $4,092,000 in fiscal year 2003 to $1,004,000 in fiscal year 2004. Net loss in fiscal 2002 was $6,027,000. This reduction in loss is due primarily to a slight reduction in selling and administrative expenses to $8,665,000 in fiscal 2004 from $8,757,000 and $8,702,000 in Fiscal 2003 and 2002 respectively while increasing sales significantly due to greater product demand.

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Net income (loss) by regions are as follows:

Cuisine Solutions US reduced its net loss in fiscal year 2004 by $2,797,000 or 80.0% from $3,498,000 in fiscal year 2003 to $701,000 in fiscal year 2004. This reduction is due primarily to a 10% reduction in selling and administration expenses and a 74.8% increase in gross margin. US losses in fiscal year 2002 were $6,092,000.

Cuisine Solutions France had its fifth consecutive profitable year since the acquisition by Cuisine Solutions in 1999, increasing profits in fiscal year 2004 by $219,000, or 157.6%, from fiscal year 2003. Profits in France in fiscal year 2003 and 2002 were $139,000 and $85,000 respectively. In spite of the lackluster economy during the last three years in Europe, the French subsidiary reported profitable results and double-digit growth in the Foodservice channel in France. Management credits both the thirty-five hour work week rule and its impact on labor cost in France for the increase in demand for the Foodservice channel as well as aggressive cost control for the delivery of a positive net income in France.

Cuisine Solutions Norway recorded a loss of$661,000 in fiscal year 2004 compared to a loss of $733,000 for fiscal year 2003 and a loss of $19,000 in fiscal year 2002. The loss was due to the decreased demand of the Norway product line after the economic slowdown and concerns raised about farm raised salmon; consequently fixed overhead costs were spread over smaller production quantities, which resulted in higher cost of sales and lower net results. The Company placed the Norwegian operations under the management of Cuisine Solutions France to implement initiatives to improve operating results and liquidity of the subsidiary. Subsequent to June 26, 2004, management began a process of evaluating the continued operation of the Norway facility. Although a formal plan to discontinue operations in Norway has not been discussed and approved by the Board of Directors, management has taken certain actions to facilitate such a plan. In September, 2004 the Company curtailed production and gave employees notice of termination as required by local law. A formal decision to discontinue operations is expected to be made in October, 2004. However, there can be no assurance that such an action will be approved.

SELLING AND ADMINISTRATION EXPENSES

Selling and administration costs as a percentage of sales were 23.6% in fiscal 2004, 31.5% in fiscal 2003, 30.4% in fiscal 2002. The percentage decrease in selling and general administrative expenses from fiscal 2004 versus fiscal 2003 is a result of cost of continued cost cutting by management and the significant increase in sales. Selling and administration costs in fiscal 2004 also included a $295,000 write-off resulting from the bankruptcy of one of our airline distributors.

DEPRECIATION AND AMORTIZATION

The fiscal year 2004 depreciation and amortization expense decreased by $55,000 over fiscal year 2003 to $952,000 as a result of an increased amount of machinery and equipment becoming fully depreciated during 2004. The portions of depreciation and amortization expense that are included in the cost of goods sold are $783,000 and $750,000 in fiscal year 2004 and 2003, respectively.

NON-OPERATING INCOME AND EXPENSE

The Company held long term investments of $1,114,000 and $1,331,000 at June 26, 2004 and June 28, 2003 respectively. Management maintains these funds in a trust account with the majority of the funds invested in government securities. The Company realized a gain of $3,000 and $67,000 on the sale of investments during fiscal year 20