RICA FOODS INC - 10-Q Quarterly Report

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 March 31, 2005

¨	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.)

Wachovia Financial Center

200 South Biscayne Boulevard, Suite 4530 Miami, FL

33131

(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 May 13, 2005, the number of shares issued and outstanding of the Company’s common stock, par value $0.001 per share was 12,864,321.

INDEX


		Page
	PART I – FINANCIAL INFORMATION

ITEM 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2005 (Unaudited) and September 30, 2004	3
	Consolidated Statements of Operations for the three and six months ended March 31, 2005 and 2004 (Unaudited)	4
	Consolidated Statements of Cash Flows for the six months ended March 31, 2005 and 2004 (Unaudited)	5
	Notes to Unaudited Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35
ITEM 4.	Controls and Procedures	36

	PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings	37
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
ITEM 3.	Defaults upon Senior Securities	37
ITEM 4.	Submissions of Matters to a Vote of Security Holders	37
ITEM 5.	Other Information	38
ITEM 6.	Exhibits	38

Item 1. FINANCIAL STATEMENTS

RICA FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets


	March 31, 2005			September 30, 2004
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,454,340		$	1,618,689
Short-term investments		267,445			25,840
Notes and accounts receivable		10,190,673			11,706,487
Inventories		13,340,506			15,008,770
Deferred income taxes		446,264			395,955
Prepaid expenses		686,942			870,984

Total current assets		27,386,170			29,626,725

Property, plant and equipment		38,305,105			35,022,854
Long-term receivables-trade		—			4,688,843
Long-term investments		2,644,649			2,982,605
Other assets		7,200,384			6,862,838
Goodwill		1,356,766			1,418,957

Total assets	$	76,893,074		$	80,602,822

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	10,167,112		$	8,864,384
Accrued expenses		2,668,218			3,128,835
Notes payable		8,331,450			9,886,130
Current portion of long-term debt		3,173,378			2,077,827
Due to stockholders		—			53,350

Total current liabilities		24,340,158			24,010,526

Long-term debt, net of current portion		29,782,356			34,676,984
Due to related party		—			297,181
Deferred income tax liability		1,874,835			1,960,045

Total liabilities		55,997,349			60,944,736

Stockholders’ equity:
Common stock - 20,000,000 shares authorized; 12,864,321 issued; 12,811,469 outstanding		12,865			12,865
Preferred stock - Class C: 20,000 issued and outstanding; 336,345 issued held in treasury		1,742,623			1,180,867
Additional paid-in capital		25,910,995			25,800,940
Accumulated other comprehensive loss		(16,535,482	)		(15,587,269	)
Retained earnings - unappropriated		10,640,675			6,474,537
Retained earnings - appropriated		1,017,588			3,107,930

		22,789,264			20,989,870

Less:
Treasury preferred stock Pipasa – Class C: 336,345 held in treasury preferred stock		(1,610,145	)		(1,048,390	)
Treasury common stock, at cost – 52,852 held in treasury		(283,394	)		(283,394	)

Total stockholders’ equity		20,895,725			19,658,086

Total liabilities and stockholders’ equity	$	76,893,074		$	80,602,822

The accompanying notes form an integral part of these consolidated financial statements.

RICA FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)


	Three months ended March 31,						Six months ended March 31,
	2005			2004			2005			2004
Sales	$	37,795,764		$	33,267,913		$	78,722,699		$	66,615,623
Cost of sales		26,828,620			24,854,797			56,193,519			48,342,960

Gross profit		10,967,144			8,413,116			22,529,180			18,272,663

Operating expenses:
Selling		5,919,682			4,679,993			11,292,794			9,333,813
General and administrative		2,361,828			3,135,901			4,879,803			6,473,112
Provision for contingencies		—			416,380			—			416,380

Total operating expenses		8,281,510			8,232,274			16,172,597			16,223,305

Income from operations		2,685,634			180,842			6,356,583			2,049,358
Other expenses (income):
Interest expense		1,250,936			990,135			2,602,126			2,194,736
Interest income		(71,003	)		(112,401	)		(159,905	)		(554,049	)
Foreign exchange loss, net		416,537			659,606			850,918			1,508,486
Miscellaneous, net		(24,613	)		(16,682	)		10,800			(63,650	)

Other expenses, net		1,571,857			1,520,658			3,303,939			3,085,523

Income (loss) before income taxes and minority interest		1,113,777			(1,339,816	)		3,052,644			(1,036,165	)
Provision (benefit) for income tax		437,140			(169,647	)		973,245			(72,374	)

Income (loss) before minority interest		676,637			(1,170,169	)		2,079,399			(963,791	)
Minority interest		—			13,092			—			28,382

Net income (loss)		676,637			(1,183,261	)		2,079,399			(992,173	)
Preferred stock dividends		1,807			23,133			3,600			50,976

Net income (loss) applicable to common stockholders	$	674,830		$	(1,206,394	)	$	2,075,799		$	(1,043,149	)

Basic earnings (loss) per share	$	0.05		$	(0.09	)	$	0.16		$	(0.08	)

Diluted earnings (loss) per share	$	0.05		$	(0.09	)	$	0.16		$	(0.08	)

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		12,941,469			12,811,469			12,931,469			12,811,469

The accompanying notes form an integral part of these consolidated financial statements.

RICA FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended March 31, 2005 and 2004

(Unaudited)


	2005			2004
Cash flows from operating activities:
Net income (loss)	$	2,079,399		$	(992,173	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization		2,281,542			2,154,029
Production poultry		2,102,648			1,845,524
Allowance for inventory obsolescence		81,289			161,473
Derivative unrealized loss (gain)		8,400			(265,638	)
Gain on sale of productive assets		—			(27,642	)
Issuance of Stock Options		97,200			—
Deferred income tax		(180,785	)		(181,223	)
Provision for doubtful receivables		130,834			142,137
Amortization of deferred debt costs		11,443			36,745
Minority interest		—			28,382
Changes in operating assets and liabilities:
Notes and accounts receivable		766,289			3,061,067
Inventories		(515,673	)		(3,009,714	)
Prepaid expenses		186,671			34,542
Accounts payable		320,516			(9,366,594	)
Accrued expenses		(460,617	)		81,988
Long-term receivables-trade		—			364,039

Net cash provided (used) by operating activities		6,909,156

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