UNITED STATES
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 June 30, 2004
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 August 16, 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 June 30, 2004 (Unaudited) and September 30, 2003 | 3 | |||
| Consolidated Statements of Operations for the three and nine months ended June 30, 2004 and 2003 (Unaudited) | 4 | |||
| Consolidated Statements of Cash Flows for the nine months ended June 30, 2004 and 2003 (Unaudited) | 5 | |||
| Notes to Unaudited Consolidated Financial Statements | 7 | |||
| ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | ||
| ITEM 3. |
Quantitative and Qualitative Disclosures About Market Risk | 26 | ||
| ITEM 4. |
Controls and Procedures | 28 | ||
| PART II – OTHER INFORMATION | ||||
| ITEM 1. |
Legal Proceedings | 28 | ||
| ITEM 2. |
Changes in Securities and Use of Proceeds | 28 | ||
| ITEM 3. |
Defaults upon Senior Securities | 28 | ||
| ITEM 4. |
Submissions of Submissions of Matters to a Vote of Security Holders | 28 | ||
| ITEM 5. |
Other Information | 28 | ||
| ITEM 6. |
Exhibits and Reports on Form 8-K | 30 | ||
2
| Item 1. | FINANCIAL STATEMENTS |
RICA FOODS, INC. AND SUBSIDIARIES
| June 30, 2004 |
September 30, 2003 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 490,720 | $ | 3,343,255 | ||||
| Short-term investments |
24,131 | 2,469,301 | ||||||
| Notes and accounts receivable |
15,969,593 | 17,760,056 | ||||||
| Due from related parties |
— | 1,415,821 | ||||||
| Inventories |
16,287,647 | 14,132,819 | ||||||
| Deferred income taxes |
359,268 | 255,064 | ||||||
| Prepaid expenses |
687,215 | 742,984 | ||||||
| Total current assets |
33,818,574 | 40,119,300 | ||||||
| Property, plant and equipment |
34,936,691 | 36,782,594 | ||||||
| Long-term receivables-trade |
308,629 | 627,831 | ||||||
| Long-term investments |
3,355,157 | 3,784,470 | ||||||
| Other assets |
7,076,968 | 7,782,744 | ||||||
| Goodwill |
1,452,357 | 1,555,828 | ||||||
| Total assets |
$ | 80,948,376 | $ | 90,652,767 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 8,072,582 | $ | 17,195,317 | ||||
| Accrued expenses |
3,305,294 | 3,320,497 | ||||||
| Notes payable |
9,929,855 | 36,547,238 | ||||||
| Current portion of long-term debt |
2,573,554 | 3,978,580 | ||||||
| Due to stockholders |
— | 51,872 | ||||||
| Total current liabilities |
23,881,285 | 61,093,504 | ||||||
| Long-term debt, net of current portion |
32,951,054 | 6,727,905 | ||||||
| Deferred income tax liability |
2,116,925 | 2,101,856 | ||||||
| Total liabilities |
58,949,264 | 69,923,265 | ||||||
| Minority interest |
894,913 | 1,336,445 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
12,865 | 12,865 | ||||||
| Preferred stock |
1,180,838 | 2,216,072 | ||||||
| Additional paid-in capital |
25,800,940 | 25,800,940 | ||||||
| Accumulated other comprehensive loss |
(15,942,708 | ) | (15,586,903 | ) | ||||
| Retained earnings |
10,335,658 | 12,723,806 | ||||||
| 21,387,593 | 25,166,780 | |||||||
| Less: |
||||||||
| Due from stockholders |
— | (5,490,329 | ) | |||||
| Treasury stock, at cost |
(283,394 | ) | (283,394 | ) | ||||
| Total stockholders’ equity |
21,104,199 | 19,393,057 | ||||||
| Total liabilities and stockholders’ equity |
$ | 80,948,376 | $ | 90,652,767 | ||||
The accompanying notes form an integral part of these consolidated financial statements
3
RICA FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
| Three months ended June 30, |
Nine months ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Sales |
$ | 34,918,168 | $ | 31,074,055 | $ | 101,533,791 | $ | 97,066,466 | ||||||||
| Cost of sales |
27,712,975 | 22,453,524 | 76,055,935 | 68,119,170 | ||||||||||||
| Gross profit |
7,205,193 | 8,620,531 | 25,477,856 | 28,947,296 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling |
4,665,541 | 4,734,795 | 13,999,354 | 14,535,475 | ||||||||||||
| General and administrative |
2,272,567 | 3,122,909 | 8,745,679 | 9,835,303 | ||||||||||||
| Total operating expenses |
6,938,108 | 7,857,704 | 22,745,033 | 24,370,778 | ||||||||||||
| Income from operations |
267,085 | 762,827 | 2,732,823 | 4,576,518 | ||||||||||||
| Other expenses (income): |
||||||||||||||||
| Interest expense |
1,040,602 | 1,042,255 | 3,235,338 | 3,268,528 | ||||||||||||
| Interest income |
(48,877 | ) | (387,373 | ) | (602,926 | ) | (1,186,714 | ) | ||||||||
| Foreign exchange loss, net |
575,794 | 657,508 | 2,084,280 | 2,191,300 | ||||||||||||
| Provision for contingencies |
— | — | 416,380 | — | ||||||||||||
| Miscellaneous, net |
(90,086 | ) | (322,093 | ) | (153,736 | ) | (453,995 | ) | ||||||||
| Other expenses, net |
1,477,433 | 990,297 | 4,979,336 | 3,819,119 | ||||||||||||
| Income (loss) before income taxes and minority interest |
(1,210,348 | ) | (227,470 | ) | (2,246,513 | ) | 757,399 | |||||||||
| Provision (benefit) for income tax |
110,864 | (144,423 | ) | 38,490 | 423,536 | |||||||||||
| Income (loss) before minority interest |
(1,321,212 | ) | (83,047 | ) | (2,285,003 | ) | 333,863 | |||||||||
| Minority interest |
9,240 | 16,966 | 37,622 | 52,812 | ||||||||||||
| Net income (loss) |
(1,330,452 | ) | (100,013 | ) | (2,322,625 | ) | 281,051 | |||||||||
| Preferred stock dividends |
14,546 | 34,794 | 65,522 | 102,161 | ||||||||||||
| Net income (loss) applicable to common stockholders |
$ | (1,344,998 | ) | $ | (134,807 | ) | $ | (2,388,147 | ) | $ | 178,890 | |||||
| Basic earnings (loss) per share |
$ | (0.10 | ) | $ | (0.01 | ) | $ | (0.19 | ) | $ | 0.01 | |||||
| Diluted earnings (loss) per share |
$ | (0.10 | ) | $ | (0.01 | ) | $ | (0.19 | ) | $ | 0.01 | |||||
| Basic weighted average number of common shares outstanding |
12,811,469 | 12,811,469 | 12,811,469 | 12,811,469 | ||||||||||||
| Diluted weighted average number of common shares outstanding |
12,811,469 | 12,811,469 | 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 nine months ended June 30, 2004 and 2003
(Unaudited)
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | (2,322,625 | ) | $ | 281,051 | |||
| Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: |
||||||||
| Depreciation and amortization |
3,260,362 | 3,482,206 | ||||||
| Production poultry |
2,704,515 | 2,597,239 | ||||||
| Allowance for inventory obsolescence |
298,533 | 72,922 | ||||||
| Derivative unrealized loss (gain) |
213,900 | (458,304 | ) | |||||
| Gain on sale of productive assets |
5,788 | (39,405 | ) | |||||
| Deferred income tax |
(108,153 | ) | 67,633 | |||||
| Provision for doubtful receivables |
187,106 | 230,403 | ||||||
| Amortization of deferred debt costs |
100,036 | 158,488 | ||||||
| Minority interest |
37,622 | 52,812 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Notes and accounts receivable |
1,735,437 | (1,243,700 | ) | |||||
| Inventories |
(5,150,285 | ) | (4,486,830 | ) | ||||
| Prepaid expenses |
55,769 | (30,875 | ) | |||||
| Accounts payable |
(9,123,328 | ) | 7,401,418 | |||||
| Accrued expenses |
(15,202 | ) | 353,414 | |||||
| Long-term receivables-trade |
286,991 | (16,422 | ) | |||||
| Net cash provided (used) by operating activities |
(7,833,534 | ) | 8,422,050 | |||||
| Cash flows from investing activities: |
||||||||
| Short-term investments |
2,445,170 | 147,430 | ||||||