SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 December 31, 2003
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: 0-18222
RICA FOODS, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Nevada | 87-0432572 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 1840 Coral Way, Suite 101, Miami, Fl | 33145 | |
| (Address of Registrant’s Principal Executive Offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (305) 858-9480
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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)
Yes ¨ No x
As of February [ ], 2004, the number of shares issued and outstanding of the Company’s common stock, par value $0.001 per share was 12,864,321.
| Page | ||||
| PART I – FINANCIAL INFORMATION | ||||
| ITEM 1. |
Financial Statements | |||
| Consolidated Balance Sheets as of December 31, 2003 (Unaudited) and September 30, 2003 | 3 | |||
| Consolidated Statements of Income for the three months ended December 31, 2003 and 2002 (Unaudited) | 4 | |||
| Consolidated Statements of Cash Flows for the three months ended December 31, 2003 and 2002 (Unaudited) | 5 | |||
| Notes to Unaudited Consolidated Financial Statements | 7 | |||
| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 | ||
| ITEM 3. |
Quantitative and Qualitative Disclosures About Market Risk | 22 | ||
| ITEM 4. |
Controls and Procedures | 24 | ||
| PART II – OTHER INFORMATION | ||||
| ITEM 1. |
Legal Proceedings | 24 | ||
| ITEM 2. |
Changes in Securities and Use of Proceeds | 24 | ||
| ITEM 3. |
Defaults upon Senior Securities | 24 | ||
| ITEM 4. |
Submissions of Submissions of Matters to a Vote of Security Holders | 24 | ||
| ITEM 5. |
Other Information | 25 | ||
| ITEM 6. |
Exhibits and Reports on Form 8-K | 26 | ||
2
| ITEM 1. | FINANCIAL STATEMENTS |
RICA FOODS, INC. AND SUBSIDIARIES
| December 31, 2003 |
September 30, 2003 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 10,349,771 | $ | 3,343,255 | ||||
| Short-term investments |
— | 2,469,301 | ||||||
| Notes and accounts receivable |
14,517,699 | 17,760,056 | ||||||
| Due from related parties |
— | 1,415,821 | ||||||
| Inventories |
14,693,283 | 14,132,819 | ||||||
| Deferred income taxes |
290,600 | 255,064 | ||||||
| Prepaid expenses |
503,280 | 742,984 | ||||||
| Total current assets |
40,354,633 | 40,119,300 | ||||||
| Property, plant and equipment |
36,712,242 | 36,782,594 | ||||||
| Long-term receivables-trade |
310,212 | 627,831 | ||||||
| Long-term investments |
3,596,345 | 3,784,470 | ||||||
| Other assets |
7,445,565 | 7,782,744 | ||||||
| Goodwill |
1,518,214 | 1,555,828 | ||||||
| Total assets |
$ | 89,937,211 | $ | 90,652,767 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 11,546,825 | $ | 17,195,317 | ||||
| Accrued expenses |
2,817,950 | 3,320,497 | ||||||
| Notes payable |
34,605,354 | 36,547,238 | ||||||
| Current portion of long-term debt |
5,339,279 | 3,978,580 | ||||||
| Due to stockholders |
7,913 | 51,872 | ||||||
| Total current liabilities |
54,317,321 | 61,093,504 | ||||||
| Long-term debt, net of current portion |
7,545,401 | 6,727,905 | ||||||
| Deferred income tax liability |
2,097,402 | 2,101,856 | ||||||
| Total liabilities |
63,960,124 | 69,923,265 | ||||||
| Minority interest |
1,336,445 | 1,336,445 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
12,865 | 12,865 | ||||||
| Preferred stock |
2,216,072 | 2,216,072 | ||||||
| Additional paid-in capital |
25,800,940 | 25,800,940 | ||||||
| Accumulated other comprehensive loss |
(15,992,890 | ) | (15,586,903 | ) | ||||
| Retained earnings |
12,887,049 | 12,723,806 | ||||||
| 24,924,036 | 25,166,780 | |||||||
| Less: |
||||||||
| Due from stockholders |
— | (5,490,329 | ) | |||||
| Treasury stock, at cost |
(283,394 | ) | (283,394 | ) | ||||
| Total stockholders’ equity |
24,640,642 | 19,393,057 | ||||||
| Total liabilities and stockholders’ equity |
$ | 89,937,211 | $ | 90,652,767 | ||||
The accompanying notes form an integral part of these consolidated financial statements.
3
RICA FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
| Three months ended December 31, |
||||||||
| 2003 |
2002 |
|||||||
| Sales |
$ | 33,347,710 | $ | 35,158,870 | ||||
| Cost of sales |
23,488,163 | 23,698,847 | ||||||
| Gross profit |
9,859,547 | 11,460,023 | ||||||
| Operating expenses: |
||||||||
| Selling |
4,653,820 | 5,057,332 | ||||||
| General and administrative |
3,337,211 | 3,350,398 | ||||||
| Total operating expenses |
7,991,031 | 8,407,730 | ||||||
| Income from operations |
1,868,516 | 3,052,293 | ||||||
| Other expenses (income): |
||||||||
| Interest expense |
1,204,601 | 1,153,303 | ||||||
| Interest income |
(441,648 | ) | (421,522 | ) | ||||
| Foreign exchange loss, net |
848,880 | 814,318 | ||||||
| Miscellaneous, net |
(46,968 | ) | (107,894 | ) | ||||
| Other expenses, net |
1,564,865 | 1,438,205 | ||||||
| Income before income taxes and minority interest |
303,651 | 1,614,088 | ||||||
| Provision for income tax expense |
97,273 | 504,161 | ||||||
| Income before minority interest |
206,378 | 1,109,927 | ||||||
| Minority interest |
15,290 | 18,138 | ||||||
| Net income |
191,088 | 1,091,789 | ||||||
| Preferred stock dividends |
27,843 | 36,252 | ||||||
| Net income applicable to common stockholders |
$ | 163,245 | $ | 1,055,537 | ||||
| Basic earnings per share |
$ | 0.01 | $ | 0.08 | ||||
| Diluted earnings per share |
$ | 0.01 | $ | 0.08 | ||||
| Basic weighted average number of common shares outstanding |
12,811,469 | 12,811,469 | ||||||
| Diluted weighted average number of common shares outstanding |
12,811,469 | 12,811,469 | ||||||
The accompanying notes form an integral part of these consolidated financial statements.
4
RICA FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three months ended December 31, 2003 and 2002
(Unaudited)
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 191,088 | $ | 1,091,789 | ||||
| Adjustments to reconcile net income to net cash provided (used) by operating activities: |
||||||||
| Depreciation and amortization |
1,036,193 | 1,193,273 | ||||||
| Production poultry |
924,747 | 866,705 | ||||||
| Allowance for inventory obsolescence |
40,831 | 9,769 | ||||||
| Derivative unrealized loss (gain) |
187,887 | (161,638 | ) | |||||
| Loss (gain) on sale of productive assets |
34,335 | (7,918 | ) | |||||
| Deferred income tax |
(46,154 | ) | 84,114 | |||||
| Provision for doubtful receivables |
71,923 | 27,649 | ||||||
| Amortization of deferred debt costs |
29,687 | 50,194 | ||||||
| Minority interest |
15,290 | 18,138 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Notes and accounts receivable |
3,186,477 | (2,394,725 | ) | |||||
| Inventories |
(1,525,548 | ) | 487,217 | |||||
| Prepaid expenses |
239,704 | 16,113 | ||||||
| Accounts payable |
(5,648,491 | ) | 2,119,374 | |||||
| Accrued expenses |
(502,547 | ) | (643,053 | ) | ||||
| Long-term receivables-trade |
306,141 | 157,410 | ||||||
| Net cash provided (used) by operating activities |
(1,458,437 | ) | 2,914,411 | |||||
| Cash flows from investing activities: |
||||||||
| Short-term investments |
2,469,301 | (1,177 | ) | |||||
| Long-term investments |
98,928 | (18,675 | ) | |||||
| Additions to property, plant and equipment |
(1,614,900 | ) | (682,453 | ) | ||||
| Proceeds from sales of productive assets |
58,004 | 31,021 | ||||||
| Change in other assets |
16,065 | (1,139,559 | ) | |||||
| Net cash provided (used) in investing activities |
1,027,398 | (1,810,843 | ) | |||||
| Cash flows from financing activities: |
||||||||
| Preferred stock cash dividends |
(43,133 | ) | (54,390 | ) | ||||
| Short-term financing: |
||||||||
| New loans |
11,950,879 | 6,107,133 | ||||||
| Payments |
(14,200,760 | ) | (3,478,828 | ) | ||||
(Continued on next page)
5
RICA FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three months ended December 31, 2003 and 2002
(Unaudited)
(Continued)
| 2003 |
2002 |
|||||||
| Long-term financing: |
||||||||
| New loans |
2,560,416 | — | ||||||
| Payments |
(236,393 | ) | (1,193,082 | ) | ||||
| Due from stockholders and related party |
6,862,191 | 67,274 | ||||||
| Net cash provided by financing activities |
6,893,200 | 1,448,107 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
544,355 | 361,039 | ||||||
| Increase in cash and cash equivalents |
7,006,516 | 2,912,714 | ||||||
| Cash and cash equivalents at beginning of period |
3,343,255 | 2,728,293 | ||||||
| Cash and cash equivalents at end of period |
$ | 10,349,771 | $ | 5,641,007 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid during period for: |
||||||||
| Interest |
$ | 1,201,147 | $ | 796,254 | ||||
| Income taxes |
$ | — | $ | 341,755 | ||||