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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended December 4, 2004

      OR

o 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: 0-7277

PIERRE FOODS, INC.

(Exact name of registrant as specified in its charter)

North Carolina
(State or other jurisdiction of incorporation or organization)

56-0945643
(I.R.S. Employer Identification No.)

9990 Princeton Road
Cincinnati, Ohio 45246
(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (513) 874-8741

(Former name or former address, 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 þ                                          No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

                                         Yes o                                          No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

     
Class   Outstanding at January 14, 2005
Class A Common Stock
   100,000

 

PIERRE FOODS, INC.

INDEX

         
    Page No.  
       
 
        
       
 
        
    3 - 4  
 
        
    5  
 
        
    6  
 
        
    7  
 
        
    8 - 9  
 
        
    10 - 21  
 
        
    22 - 28  
 
        
    29  
 
        
    30  
 
        
       
 
        
    31  
 
        
    31  
 
        
    32  
 
        
Exhibit 10.1
        
 
        
Exhibit 10.2
        
 
        
Exhibit 31.1
        
 
        
Exhibit 31.2
        
 
        
Exhibit 32
        
 EX-10.1
 EX-10.2
 EX-31.1
 EX-31.2
 EX-32

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

                   
    (Unaudited)          
    Successor Pierre       Predecessor Pierre  
    December 4, 2004     March 6, 2004  
ASSETS
                  
 
                  
CURRENT ASSETS:
                  
Cash and cash equivalents
   $ 2,143,507     $ 204,865  
Certificates of deposit
     —         1,240,000  
Accounts receivable, net
     29,337,895         25,641,608  
Inventories
     42,990,953         38,974,018  
Deferred income taxes
     4,580,670         3,569,766  
Prepaid expenses and other current assets (includes prepayments to related parties of $24,000 at March 6, 2004)
     3,161,729         3,236,867  
 
            
 
                  
Total current assets
     82,214,754         72,867,124  
 
            
 
                  
PROPERTY, PLANT AND EQUIPMENT, NET
     57,183,030         60,695,455  
 
            
 
                  
OTHER ASSETS:
                  
Other intangibles, net
     164,788,788         38,808,636  
Goodwill
     178,335,440         —  
Note receivable – related party
     —         993,247  
Deferred income taxes
     —         482,215  
Deferred loan origination fees, net
     8,583,273         1,627,601  
Other
     —         296,694  
 
            
 
                  
Total other assets
     351,707,501         42,208,393  
 
            
 
                  
Total Assets
   $ 491,105,285     $ 175,770,972  
 
            

See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

                   
    (Unaudited)          
    Successor Pierre       Predecessor Pierre  
    December 4, 2004     March 6, 2004  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                  
 
                  
CURRENT LIABILITIES:
                  
Current installments of long-term debt
   $ 282,037     $ 1,628,276  
Trade accounts payable
     8,911,912         7,170,004  
Accrued interest
     5,399,957         3,242,623  
Accrued payroll and payroll taxes
     5,512,313         5,745,950  
Accrued promotions
     3,113,331         3,064,769  
Income taxes payable
     —         39,248  
Accrued taxes (other than income and payroll)
     1,030,813         901,693  
Other accrued liabilities (includes related party liabilities of $4,503,219 at March 6, 2004)
     1,257,972         4,964,703  
 
            
 
                  
Total current liabilities
     25,508,335         26,757,266  
 
            
 
                  
LONG-TERM DEBT, less current installments
     267,471,180         142,065,760  
 
            
 
                  
DEFERRED INCOME TAXES
     40,961,532         —  
 
            
 
                  
OTHER LONG-TERM LIABILITIES
     10,523,216         327,411  
 
            
 
                  
SHAREHOLDERS’ EQUITY:
                  
Common stock – Class A, 100,000 shares authorized, issued and outstanding at December 4, 2004 and March 6, 2004
     150,023,000         29,438,172  
Retained deficit
     (3,381,978 )       (17,817,637 )
Note receivable – related party
     —         (5,000,000 )
 
            
 
                  
Total shareholders’ equity
     146,641,022         6,620,535  
 
            
 
                  
Total Liabilities and Shareholders’ Equity
   $ 491,105,285     $ 175,770,972  
 
            

See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

                   
    Predecessor Pierre       Successor Pierre  
    Thirteen Weeks   Thirteen Weeks
    Ended   Ended
    November 29, 2003     December 4, 2004  
 
            
 
REVENUES
   $ 93,824,930     $ 111,968,412  
 
            
 
                  
COSTS AND EXPENSES:
                  
Cost of goods sold (includes related party transactions totaling $1,383,924 for the thirteen weeks ended November 29, 2003)
     66,502,119         80,147,774  
Selling, general and administrative expenses (includes related party transactions totaling $7,814,502 for the thirteen weeks ended November 29, 2003)
     19,739,796         15,409,997  
Loss on disposition of property, plant and equipment, net
     22,253         —  
Depreciation and amortization
     1,165,673         8,145,886  
 
            
 
                  
Total costs and expenses
     87,429,841         103,703,657  
 
            
 
                  
OPERATING INCOME
     6,395,089         8,264,755  
 
            
 
                  
OTHER INCOME (EXPENSE):
                  
Interest expense
     (3,670,889 )       (5,202,314 )
Other income, net
     —         12,405  
 
            
 
                  
Other expense, net
     (3,670,889 )       (5,189,909 )
 
            
 
                  
INCOME BEFORE INCOME TAX PROVISION
     2,724,200         3,074,846  
 
                  
INCOME TAX PROVISION
     (955,872 )       (1,008,549 )
 
            
 
                  
NET INCOME
   $ 1,768,328     $ 2,066,297  
 
            
 
                  
NET INCOME PER COMMON SHARE – BASIC AND DILUTED
   $ 17.68     $ 20.66  
 
            
 
                  
WEIGHTED AVERAGE SHARES OUTSTANDING-BASIC AND DILUTED
     100,000         100,000  

See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

                           
            Predecessor Pierre       Successor Pierre  
    Predecessor Pierre     For the Period       For the Period  
    Thirty-Nine Weeks     March 7, 2004       July 1, 2004  
    Ended     Through       Through  
    November 29, 2003     June 30, 2004     December 4, 2004  
 
REVENUES
   $ 256,552,851     $ 115,548,564     $ 187,407,827  
 
                  
 
                          
COSTS AND EXPENSES:
                          
Cost of goods sold (includes related party transactions totaling $3,913,364 for the thirty-nine weeks ended November 29, 2003)
     180,931,201       87,025,521         139,580,046  
Selling, general and administrative expenses (includes related party transactions totaling $23,222,709 for the thirty-nine weeks ended November 29, 2003)
     58,801,353       26,446,857         24,964,958  
Loss on disposition of property, plant and equipment, net
     22,885       339,921         —  
Depreciation and amortization
     3,480,652       1,544,903         13,675,310  
 
                  
 
                          
Total costs and expenses
     243,236,091       115,357,202         178,220,314  
 
                  
 
                          
OPERATING INCOME
     13,316,760       191,362         9,187,513  
 
                  
 
                          
OTHER INCOME (EXPENSE):
                          
Interest expense
     (13,001,529 )     (6,537,519 )       (14,231,418 )
Other income, net
     —       1,784         12,405  
 
                  
 
                          
Other expense, net
     (13,001,529 )     (6,535,735 )       (14,219,013 )
 
                  
 
                          
INCOME (LOSS) BEFORE INCOME TAX (PROVISION) BENEFIT
     315,231       (6,344,373 )       (5,031,500 )
 
                          
INCOME TAX (PROVISION) BENEFIT
     (104,783 )     2,080,338         1,649,522  
 
                  
 
                          
NET INCOME (LOSS)
   $ 210,448     $ (4,264,035 )   $ (3,381,978 )
 
                  
 
                          
NET INCOME (LOSS) PER COMMON SHARE – BASIC AND DILUTED
   $ 2.10     $ (42.64 )   $ (33.82 )
 
                  
 
                          
WEIGHTED AVERAGE SHARES OUTSTANDING-BASIC AND DILUTED
     100,000       100,000         100,000  

See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE PERIOD FROM MARCH 6, 2004 THROUGH DECEMBER 4, 2004

                                 
    Common     Retained     Receivable     Total  
    Stock     Earnings     From     Shareholders’  
    Class A     (Deficit)     Shareholder     Equity  
PREDECESSOR PIERRE BALANCE AT MARCH 6, 2004
   $ 29,438,172     $ (17,817,637 )   $ (5,000,000 )     6,620,535  
Net loss
     —       (4,264,035 )     —       (4,264,035 )
Transaction with common shareholder
     (339,639 )     (10,324,276 )     —       (10,663,915 )
 
                        
 
                                
PREDECESSOR PIERRE BALANCE AT JUNE 30, 2004
     29,098,533       (32,405,948 )     (5,000,000 )     (8,307,415 )
PURCHASE ACCOUNTING ADJUSTMENT
     (29,098,533 )     32,405,948       5,000,000       8,307,415  
 
                                
SUCCESSOR PIERRE INITIAL PURCHASE ALLOCATION
     145,577,253       —       —       145,577,253  
Additional purchase allocation
     4,445,747                       4,445,747  
Net loss
     —       (3,381,978 )     —       (3,381,978 )
 
                        
 
                                
SUCCESSOR PIERRE BALANCE AT DECEMBER 4, 2004
   $ 150,023,000     $ (3,381,978 )   $ —     $ 146,641,022  
 
                        

See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

                           
            Predecessor Pierre       Successor Pierre  
    Predecessor Pierre     For the Period       For the Period  
    Thirty-Nine Weeks     March 7, 2004       July 1, 2004  
    Ended     Through       Through  
    November 29, 2003     June 30, 2004     December 4, 2004  
CASH FLOWS FROM OPERATING ACTIVITIES
                          
 
                          
Net income (loss)
   $ 210,448     $ (4,264,035 )   $ (3,381,978 )
 
                  
 
                          
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                          
Depreciation and amortization
     3,480,652       1,544,903         13,675,310  
Amortization of deferred loan origination fees
     594,879       716,478         569,092  
Change in deferred income taxes
     —       (675,222 )       (864,803 )
Write-off of deferred loan origination fees
     1,233,530       —         4,283,122  
Loss on disposition of property, plant and equipment, net
     22,885       339,921         —  
Decrease in other assets
     53,574       296,694         —  
Increase (decrease) in other long-term liabilities
     (271,880 )     (94,477 )       205,615  
Changes in operating assets and liabilities:
                          
Receivables
     (425,974 )     5,660,719         (9,357,006 )
Inventories
     (5,389,658 )     (4,911,529 )       2,915,543  
Refundable income taxes, prepaid expenses and other current assets
     1,368,562       (455,532 )       (1,774,836 )
Trade accounts payable and other accrued liabilities
     5,181,418       2,227,855         2,556,338  
 
                  
 
                          
Total adjustments
     5,847,988       4,649,810         12,208,375  
 
                  
 
                          
Net cash provided by operating activities
     6,058,436       385,775         8,826,397  
 
                  
 
                          
CASH FLOWS FROM INVESTING ACTIVITIES
                          
 
                          
Proceeds from sales of property, plant and equipment
     77,400       —         —  
Capital expenditures
     (8,613,505 )     (2,084,160 )       (1,746,791 )
 
                  
 
                          
Net cash used in investing activities
     (8,536,105 )     (2,084,160 )       (1,746,791 )
 
                  

See accompanying notes to unaudited consolidated financial statements.

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            Predecessor Pierre       Successor Pierre  
    Predecessor Pierre     For the Period       For the Period
    Thirty-Nine Weeks     March 7, 2004       July 1, 2004
    Ended     Through       Through
    November 29, 2003     June 30, 2004       December 4, 2004
CASH FLOWS FROM FINANCING ACTIVITIES
                          
 
                          
Repayment of revolving credit agreement with former lender
   $ (15,085,146 )   $ —     $ —  
Borrowings (repayments) of revolving credit agreement
     9,986,655       7,712,901         (18,492,886 )
Borrowings under equipment term loan subline
     5,000,000       —         —  
Borrowings under real estate term loan subline
     5,000,000       —         —  
Principal payments on long-term debt
     (359,134 )     (673,526 )       (11,101,957 )
Loan origination fees
     (663,356 )     (3,371,999 )       (9,152,366 )
Payoff of Old Notes
     —       —         (115,000,000 )
Issuance of New Notes
     —       —         125,000,000  
Borrowings under new term loan
     —       —         150,000,000  
Repayment of debt in conjunction with the Acquisition
     —       —         (29,048,031 )
Termination of certificate of deposit
     —       —         1,262,245  
Return of capital to parent