SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year ended October 30, 1999
Commission File Number 1-6071
RYMER FOODS INC.
(Exact Name of Registrant as Specified in its Charter)
Incorporated in the State of Delaware
IRS Employer Identification No. 36-1343930
4600 South Packers Avenue, Suite 400
Chicago, Illinois 60609
(773) 927-7777
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $0.04 par value Over the Counter Bulletin Board
Securities Registered Pursuant to Section 12(g) of the Act:
None
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; and (2) has been subject to
such filing requirement 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 knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Yes X No ____
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes X No ____
As of January 7, 2000, 4,300,000 shares of common stock were
outstanding, and the aggregate market value of the common shares held
by nonaffiliates on that date was approximately $1.8 million.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for 2000 Annual Meeting of Stockholders (Part III) (to
be filed with the Securities and Exchange Commission on or before
February 29, 2000). Certain exhibits are incorporated herein by
reference. The Index of Exhibits is on Page 25 of this document.
<PAGE>
PART I
Item 1. Business
The statements in this report that are forward looking are based upon
current expectations and actual results may vary. See "Cautionary
Statement" under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this report.
In accordance with the AICPA Statement of Position 90-7, Financial
Reporting by entities in Reorganization Under the Bankruptcy Code, the
Company adopted fresh-start reporting as of September 20, 1997. In
accordance with fresh-start accounting, the gain on discharge of debt
resulting from the bankruptcy proceedings was reflected on the
predecessor Company's financial statements for the period ended
September 20, 1997. In addition, the accumulated deficit of the
predecessor Company at September 20, 1997, was eliminated, and at
September 21, 1997, the reorganized Company's financial statements
reflected no beginning retained earnings or deficit. In addition, the
Company's capital structure was recast in conformity with its approved
Plan.
As a result of the Company adopting fresh-start accounting, reporting
for the year ended October 25, 1997 is accomplished by combining the
financial results for the one-month period ended October 25, 1997 and
those of the eleven-month period ended September 20, 1997. Because of
the application of fresh-start reporting, the financial statements for
the periods after reorganization are not comparable in any respect to
the financial statements for the periods prior to reorganization.
General
Rymer Foods Inc. (Rymer Foods or the Company) through its subsidiary,
Rymer Meat Inc. (Rymer Meat), is primarily engaged in the development
and production of frozen, pre-seasoned, portion controlled meat
entrees. The Company is engaged in the production of such products for
restaurants and other foodservice customers and retail sales. Rymer
Foods was incorporated under the laws of Delaware in 1969.
The Company announced on July 8, 1997, that it had received the
necessary approvals from its creditors and stockholders for
confirmation of a prepackaged plan of reorganization under Chapter 11
of the Bankruptcy Code (the Plan). Rymer Foods' operating subsidiary,
Rymer Meat, was not a party to the Bankruptcy proceedings. To
implement the Plan, on July 8, 1997 the Company commenced a voluntary
Chapter 11 case in the United States Bankruptcy Court for the Northern
District of Illinois (the Bankruptcy Court) and filed the Plan with the
Bankruptcy Court. The Plan was confirmed by the Bankruptcy Court on
August 21, 1997 and was consummated on October 6, 1997. Although the
consummation date was October 6, 1997, fresh-start reporting was
adopted on September 20, 1997. There were no fresh-start adjustments
during the period of September 21, 1997 to October 6, 1997.
Immediately following consummation of the Plan, Senior Noteholders and
certain creditors received 80% of the new common stock, existing
holders of common stock received 10% of the new common stock, and Rymer
senior management received 10% of the new common stock.
<PAGE>
The Company believes that consummation of the Plan strengthened its
capital structure and has thereby enhanced its ability to further
develop its businesses. Management believes that the Company's future
success is dependent in part upon continued expansion of the customer
base, on the containment of operating costs and on maintaining good
credit relationships with its lenders. However, there can be no
assurance of the success of these initiatives.
In 1999 the Company reported an income from continuing operations of
$33,000. The Company increased sales by $8.7 million or 28.8% and
gross profit by $2.4 million or 111.5% as compared to 1998 due to
expansion of the customer base and increased operational efficiencies.
In 1998 the Company reported a loss from continuing operations of $2.0
million.
On a combined basis for 1997 (the one-month period ended October 25,
and the eleven-month period ended September 20, the Company reported a
loss from continuing operations of $4.9 million.
Products, Markets and Distribution
The Company's principal products are frozen, pre-seasoned, portion
controlled meat entrees. Major beef products include commercial and
choice cut steaks. The Company also produces other meat products such
as specialty ground and breaded products and certain cooked products
(e.g., pot roast, meat loaf). The Company engages in the development
and production of proprietary "signature" recipes for chain restaurant
customers. The Company also offers its customers services such as menu
planning, new product development and other marketing services, such as
handling and cooking procedures. These programs, products and services
are custom-designed for each chain restaurant customer.
The markets served by the Company include family-style restaurant
chains and foodservice distributors. Products are primarily sold
through the Company's own marketing staff, as well as through
independent brokers and foodservice distributors.
Raw Materials
The Company's primary raw material is beef which is available in
adequate supply. The Company is not dependent upon any one source for
its primary raw material.
The Company has agreements with certain of its suppliers to purchase
raw materials. These agreements extend 1999 purchase commitments for
up to one year and specify the price and quantity of materials to be
purchased. The aggregate commitment for future purchases as of October
30, 1999 was approximately $1.8 million.
<PAGE>
Customers
No customer represented 10% or more of the Company's sales in 1999 or
1998.
The Company believes that it has satisfactory ongoing relationships
with its current customers. There can be no assurances, however, that
such relationships can be preserved, especially if the Company's
financial condition and results of operation do not improve.
Trademarks, Patents and Research Activities
Rymer Meat sells and markets its products under the "Rymer" trademark
label. The Company considers this trademark important in its marketing
efforts.
Research and development expenses are charged to operations as
incurred. Expenditures for the three fiscal years ending October 30,
1999, October 31, 1998, and October 25, 1997 were not material as
compared to other operational expenses.
Competitive Conditions
The Company's business is highly competitive, with a substantial number
of competitors. A large number of companies process and sell meat
products to the foodservice industry. Every year new companies are
formed and enter the meat industry, some becoming sizeable competitors
in a short period of time.
Some of the competitors in the Company's markets are larger than the
Company and have greater resources. The Company believes that in the
markets it serves it provides its customers with a broader line
of quality products and services than many of its competitors.
Competition in the markets served by the Company is based primarily on
quality, service and price. Management believes that the Company's
primary bases for competing are its reputation for quality, service,
broad menu of products, willingness to develop proprietary recipes for
specific customers and competitive pricing.
Environmental Matters
The Company believes that it is in compliance with all applicable
federal, state and local provisions regulating the discharge of
materials into the environment, or otherwise relating to the protection
of the environment. No significant costs were incurred by the Company
to comply with environmental regulations during the three fiscal years
ended October 30, 1999, October 31, 1998, and October 25, 1997. The
Company has not received notice of, and is not aware of any claims
arising under any federal or state environmental laws.
Employees
At October 30, 1999, Rymer Foods had approximately 200 employees, of
whom approximately 165 were covered by union contracts. The Company
currently enjoys stable relations with its employees.
<PAGE>
Seasonality
The quarterly results of the Company are affected by seasonal factors.
Sales are usually lower in the fall and winter primarily due to
consumers' dining preferences.
Item 2. Properties
At October 30, 1999, the principal physical property of Rymer Foods
consisted of the following:
Footage Ownership Expiration Facility Use
------- --------- ---------- ------------
Chicago, Illinois 123,000 Leased Month to Offices/Production/
Month Warehouse
Niles, Illinois 2,000 Leased January 31, Sales Office
2000
The Chicago facility is considered suitable and adequate to meet the
needs of the Company. The long term lease for the Chicago meat
processing facility expired in July 1996. A new lease has not been
finalized. Management expects to lease on a month-to-month basis for
the time being. See Note 7 to the Consolidated Financial Statements
for a summary of the Company's rental expense for leased facilities and
for production and office equipment.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's common stock currently trades under the symbol RFDS.
On January 7, 2000, the Company's stock price closed at $0.47 per
share.
The following table sets forth, for the fiscal quarters indicated, the
high and low sales prices of the Common Stock. As of January 7, 2000,
there were approximately 300 holders of record of Common Stock.
High Low
----- -----
1999
First Quarter $ 0.47 $ 0.09
Second Quarter 0.50 0.19
Third Quarter 1.87 0.28
Fourth Quarter 1.28 0.66
1998
First Quarter $ 1.38 $ 1.00
Second Quarter 1.25 0.75
Third Quarter 0.75 0.25
Fourth Quarter 0.81 0.34
Dividends
No dividends have been paid on the Common Stock since prior to 1983.
The ability of Rymer Foods to pay dividends on the Common Stock is
substantially limited by its bank credit agreements. The Company does
not anticipate that it will be able to pay any dividend on the Common
Stock in the foreseeable future.
<PAGE>
<TABLE>
Item 6. Selected Financial Data
(in thousands, except per share data)
Reorganized Company Predecessor Company
-------------------------- ------------------------------
Twelve Twelve One Eleven
Month Month Month Month Fiscal Fiscal
Period Period Period Period Year Year
Ended Ended Ended Ended Ended Ended
Oct. 30, Oct. 31, Oct. 25, Sept. 20, Oct. 26, Oct. 28,
1999 1998 1997 1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Results from continuing
operations:
Net sales $38,914 $30,203 $ 2,796 $ 31,095 $ 44,329 $ 79,920
(Loss) income from
continuing operations
before extraordinary
item 33 (2,017) (113) (4,828) (7,144) (29,620)
(Loss) income from
discontinued operations - - - - (167) 290
(Loss) gain on
dispositions of
discontinued operations - - - (566) (1,853) -
Extraordinary gain on
discharge of debt - - - 25,603 - -
------ ------ ------ ------- ------- -------
Net income (loss) 33 (2,017) (113) 20,209 (9,164) (29,330)
Working capital (deficit) 5,291 1,474 2,472 (22,623) (18,202) (10,524)
Total assets 8,788 6,880 8,266 9,070 10,563 26,074
Long-term liabilities 3,633 126 130 1,097 806 842
Stockholders'
equity (deficit) 2,937 2,893 4,910 5,023 (15,616) (6,858)
Basic per share common
stock data:
Income(loss) from
continuing operations $ 0.01 $ (0.47) $ (0.03) * * *
Net Income(loss) $ 0.01 $ (0.47) $ (0.03) * * *
See Notes 2 and 3 to the Consolidated Financial Statements for information regarding
the Company's Restructuring and discontinued operations.
* Earnings per share amount as it relates to the predecessor company is not
meaningful due to the reorganization.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Cautionary Statement
The statements in this Form 10-K, included in this Management's
Discussion and Analysis, that are forward looking are based upon
current expectations and actual results may differ materially.
Therefore, the inclusion of such forward looking information should not
be regarded as a representation by the Company that the objectives or
plans of the Company will be achieved. Such statements include, but
are not limited to, the Company's expectations regarding the operations
and financial condition of the Company. Forward looking statements
contained in this Form 10-K included in this Management's Discussion
and Analysis, involve numerous risks and uncertainties that could cause
actual results to differ materially including, but not limited to, the
effect of changing economic conditions, business conditions and growth
in the meat industry, the Company's ability to maintain its lending
arrangements, or if necessary, access external sources of capital,
implementing current restructuring plans and accurately forecasting
capital expenditures. In addition, the Company's future results of
operations and financial condition may be adversely impacted by various
factors including, primarily, the level of the Company's sales.
Certain of these factors are described in the description of the
Company's business, operations and financial condition contained in
this Form 10-K. Assumptions relating to budgeting, marketing, product
development and other management decisions are subjective in many
respects and thus susceptible to interpretations and periodic revisions
based on actual experience and business developments, the impact of
which may cause the Company to alter its marketing, capital expenditure
or other budgets, which may in turn affect the Company's financial
position and results of operations.
General
The Company's consolidated results from continuing operations are
generated by its Meat processing operation.
In accordance with the AICPA Statement of Position 90-7, Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code, the
Company adopted fresh-start reporting as of September 20, 1997. In
accordance with fresh-start accounting, the gain on discharge of debt
resulting from the bankruptcy proceedings was reflected on the
predecessor Company's financial statements for the period ended
September 20, 1997. In addition, the accumulated deficit of the
predecessor Company at September 20, 1997, was eliminated, and at
September 21, 1997, the reorganized Company's financial statements
reflected no beginning retained earnings or deficit. In addition, the
Company's capital structure was recast in conformity with its approved
Plan.
<PAGE>
As a result of the Company's adoption of fresh-start accounting,
reporting for the year ended October 25, 1997 is accomplished by
combining the financial results for the one-month period ended October
25, 1997 and those of the eleven-month period ended September 20, 1997.
Because of the application of fresh-start reporting, the financial
statements for the periods after reorganization are not necessarily
comparable to the financial statements for the periods prior to
reorganization.
The Company announced on July 8, 1997, that it had received the
necessary approvals from its creditors and stockholders for
confirmation of a prepackaged plan of reorganization under Chapter 11
of the Bankruptcy Code (the Plan). Rymer Foods' operating subsidiary,
Rymer Meat, was not a party to the Bankruptcy proceedings. To
implement the Plan, on July 8, 1997 the Company commenced a voluntary
Chapter 11 case in the United States Bankruptcy Court for the Northern
District of Illinois (the Bankruptcy Court) and filed the Plan with the
Bankruptcy Court. The Plan was confirmed by the Bankruptcy Court on
August 21, 1997 and became effective on October 6, 1997.
Fiscal 1999 Compared with Fiscal 1998
Consolidated sales for 1999 of $38.9 million increased from 1998 by
$8.7 million or 28.8%. Sales volume accounted for 87.9% of this
increase and 12.1% due to sales mix changes. Sales increased mainly
due to expansion of the Company's customer base through the acquired
line of business and growth in major customers.
As compared to 1998 consolidated cost of sales increased by $6.3
million or 22.6% while total gross profit increased by $2.4 million or
111.5%. As a percentage of sales, the consolidated gross profit margin
increased to 11.5% from 7% in 1998.
Gross profit increased compared to 1998 due to increased unit sales
combined with increases of volume and mix changes. The Company
experienced efficiencies associated with the volume and mix changes.
Selling, general and administrative expenses remained approximately the
same as compared to 1998. Both selling and administrative remained
constant from year to year.
Interest expense increased by $0.2 million or 77% from 1998 to 1999 due
primarily to increased borrowing for raw material inventory and to
accommodate Company growth.
In 1999 no provision for income taxes was recorded as existing net
operating loss carryforwards were utilized.
<PAGE>
Fiscal 1998 Compared with Fiscal 1997
Consolidated sales for 1998 of $30.2 million decreased from 1997 by
$3.7 million or 10.9%. Sales volume accounted for approximately 96% of
the sales decrease with lower prices and changes in the sales mix
accounting for the remaining decrease.
Sales decreased primarily due to reduced sales to certain major
customers during the first quarter of 1998. In addition, sales
decreased partially as a result of the Company's customers experiencing
sales declines. Many restaurant chains have experienced sales declines
due to ever-increasing competitive pressures in the casual dining
segment of the foodservice market. The decrease was primarily volume
related as the average selling price decreased by only 1.3%.
As compared to 1997, consolidated cost of sales decreased by $2.8
million or 9.1% while total gross profit decreased by $.9 million or
29.3%. As a percentage of sales, the consolidated gross margin
decreased to 7% as compared to 8.9% in 1997.
Gross profit decreased compared to 1997 primarily due to decreased unit
sales along with mix changes in sales to national restaurant chain
accounts and higher raw material costs. In addition, the Company
experienced inefficiencies in production related to changes in
personnel.
Selling, general and administrative expenses remained approximately the
same. Selling expenses increased by $.3 million primarily due to
additional promotion cost related to introduction of Angus Ranch Brand
Steaks. Administrative expenses decreased by $.3 million primarily due
to administrative headcount reductions.
Interest expense decreased by $2.1 million or 91.6% from 1997 to 1998
due primarily to the elimination of Senior Note interest in 1998.
In 1998, no provision for income taxes was recorded due to the
Company's loss.
Liquidity and Capital Resources
The Company makes sales primarily on a seven to thirty day balance due
basis. Purchases from suppliers have payment terms generally ranging
from wire transfer at time of shipment to fourteen days.
The Company's cash management techniques involve the use of zero
balance disbursement accounts. Check clearings are covered by advances
from the Company's credit lines. Thus, in the absence of excess funds
classified as cash equivalents, the Company's cash balances are credit
balance accounts representing outstanding checks. The Company
classified such credit balances as accounts payable in the Consolidated
Balance Sheet.
<PAGE>
On April 23, 1998 the Company entered into a loan and security
agreement with FINOVA Capital Corporation (FINOVA) which replaced the
working capital agreement with another financial institution. The
Credit facility provides up to $4 million for the Company through April
23, 2001. The FINOVA agreement contains loan covenants that the
Company must meet. At October 30, 1999, the Company was in compliance
with the covenants of the FINOVA credit facility.
The Company had working capital of $5.3 million at October 30, 1999 and
$1.5 million at October 31, 1998.
The Company had total lines of credit available based on borrowing base
calculations of $3.8 million at October 30, 1999 and $2.6 million at
October 31, 1998, of which $.3 million and $.7 million, respectively,
was unused.
The Company has agreements with certain of its customers to sell
merchandise over the next year for specified prices. The Company has
agreements with certain of its suppliers to purchase raw materials.
The agreements extend for up to one year and provide the price and
quantity of materials to be supplied. The Company had purchase
commitments of approximately $1.8 million as of October 30, 1999.
The Company anticipates spending approximately $350,000 for capital
expenditures in 2000. The expenditures are primarily for planned
improvements. There are no specific commitments outstanding related to
these planned expenditures. Such capital expenditures will be financed
with cash from operations and/or bank borrowings.
The Year 2000 ("Y2K") issue is the result of computer programs using a
two-digit format, as opposed to four digits, to indicate the year.
Such computer systems will be unable to interpret dates beyond the year
1999, which could cause a system failure or other computer errors,
leading to disruptions in operations. In 1997, the Company developed a
three-phase program for the Y2K information systems compliance. Phase
I is to identify those systems which the Company has exposure to Y2K
issues. Phase II is the development and implementation of action plans
to be Y2K compliant in all areas by early 1999. Phase III, is the
final testing of each area of exposure to ensure compliance. The
Company has identified two major areas determined to be critical for
successful Y2K compliance:
(1) financial and informational systems applications and (2) third-
party relationships.
In accordance with Phase I of the program, the Company has conducted
its review and has determined all major areas which needed to be
upgraded. The Company's core financial reporting systems are Y2K
compliant at October 30, 1999. The Company has contacted most of their
major third parties who state they intend to be Y2K compliant and as of
January 12, 2000 the Company has not experienced any difficulties with
its systems or with any third parties.
Seasonality
The quarterly results of the Company are affected by seasonal factors.
Sales are usually lower in the fall and winter.
<PAGE>
Impact of Inflation
Raw materials are subject to fluctuations in price. However, the
Company does not expect such fluctuations to materially impact its
competitive position.
Fourth Quarter Adjustments
1999
None.
1998
None.
1997
On October 16, 1997, the Company entered into an agreement to sell its
Plant City, Florida facility. As a result of the pending sale, a
$566,000 loss was incurred. This charge is included as a loss from
disposition of discontinued operations in the Company's consolidated
statement of operations. The loss is primarily attributable to a
write-down of the facility's book value to the agreed contract price
plus estimated expenses to repair the facility.
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements and Supplementary
Financial Data
Pages
-----
Report of Independent Accountants 11
Financial Statements:
Consolidated Statements of Operations for the fiscal years
ended October 30, 1999, October 31, 1998 and October 25, 1997 12
Consolidated Balance Sheets as of October 30, 1999 and
October 31, 1998 13
Consolidated Statements of Cash Flows for the fiscal years
ended October 30, 1999, October 31, 1998 and October 25, 1997 14
Consolidated Statements of Stockholders' Equity (Deficit) for
the fiscal years ended October 30, 1999, October 31, 1998 and
October 25, 1997 15
Notes to Consolidated Financial Statements 16-24
Supplementary Financial Data:
Schedule II - Valuation and Qualifying Accounts and Reserves 26
Note: Reporting for the year ended October 25, 1997 is accomplished
by combining the financial results for the one-month period ended
October 25, 1997 and those of the eleven-month period ended September
20, 1997.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Rymer Foods Inc.
We have audited the consolidated balance sheets of Rymer
Foods Inc. and subsidiaries as of October 30, 1999 and
October 31, 1998, and the consolidated statements of
operations, stockholders' equity (deficit) and cash flows
for the years ended October 30, 1999 and October 31,
1998, the one-month period ended October 25, 1997 and the
eleven-month period ended September 20, 1997. These
financial statements are the responsibility of the
Company's management. Our responsibility is to express
an opinion on these financial statements.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
consolidated financial position of Rymer Foods Inc. and
subsidiaries as of October 30, 1999 and October 31, 1998,
and the consolidated results of their operations and
their cash flows for the years ended October 30, 1999 and
October 31, 1998, the one-month period ended October 25,
1997 and the eleven-month period ended September 20,
1997, in conformity with generally accepted accounting
principles. We have also audited Schedule II of Rymer
Foods Inc. and subsidiaries for the years ended October
30, 1999 and October 31, 1998. In our opinion, this
schedule presents fairly, in all material respects, the
information required to be set forth therein.
<PAGE>
As more fully described in Notes 1 and 4 to the
consolidated financial statements, effective October 6,
1997, the Company emerged from bankruptcy. In accordance
with an American Institute of Certified Public
Accountants' Statement of Position, the Company has
adopted "fresh start" reporting whereby its assets,
liabilities and new capital structure have been adjusted
to reflect estimated fair values as of September 20,
1997. As a result, the consolidated financial statements
for periods subsequent to September 20, 1997, reflect
this basis of reporting and are not necessarily
comparable to the Company's pre-reorganization
consolidated financial statements.
/s/ Grant Thornton LLP
----------------------
Chicago, Illinois Grant Thornton LLP
December 10, 1999
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
For the fiscal years ended October 30, 1999, October 31, 1998 and
October 25, 1997
(in thousands except share data)
<CAPTION>
Reorganized Company Predecessor Company
------------------- -------------------
Twelve Twelve One Eleven
Month Month Month Month
Period Period Period Period
Ended Ended Ended Ended
Oct. 30, Oct. 31, Oct. 25, Sept. 20
1999 1998 1997 1997
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 38,914 $ 30,203 $ 2,796 $ 31,095
Cost of sales 34,420 28,078 2,562 28,324
------- -------- ------- --------
Gross profit 4,494 2,125 234 2,771
Selling, general and
administrative expenses 4,113 4,001 333 3,793
Restructuring charge - - - 1,608
------- -------- ------- --------
Operating Income (loss) 381 (1,876) (99) (2,630)
Interest expense 347 196 15 2,318
Other Income (expense) 1 (55) (1) (135)
------- -------- ------- --------
Income (loss) from continuing
operations before income taxes 33 (2,017) (113) (4,828)
Provision for income taxes - - - -
------- -------- ------- --------
Income (loss) from continuing
operations 33 (2,017) (113) (4,828)
Loss on dispositions of
discontinued operations, net - - - (566)
------- -------- ------- --------
Net Income (loss) before
extraordinary item 33 (2,017) (113) (5,394)
Extraordinary gain on discharge
of debt - - - 25,603
------- -------- ------- --------
Net Income (loss) $ 33 $ (2,017) $ (113) $ 20,209
======= ======== ======= ========
<PAGE>
Per common share:
Basic:
Income (loss) from continuing
operations $ 0.01 $ (0.47) $ (0.03) *
Net Income (loss) before
extraordinary item $ 0.01 $ (0.47) $ (0.03) *
Net Income (loss) $ 0.01 $ (0.47) $ (0.03) *
Diluted:
Income (loss) from continuing
operations $ 0.01 $ (0.47) $ (0.03) *
Net Income (loss) before
extraordinary item $ 0.01 $ (0.47) $ (0.03) *
Net Income (loss) $ 0.01 $ (0.47) $ (0.03) *
Weighted average shares of common
stock outstanding:
Basic 4,300,000 4,300,000 4,300,000 *
Diluted 4,677,500 4,300,000 4,300,000 *
-----------------------------------------------------------------------------
See accompanying notes.
* Earnings per share amount as it relates to the predecessor company is
not meaningful due to the reorganization.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
October 30, 1999 and October 31, 1998
ASSETS 1999 1998
------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Current assets:
Receivables, net of allowance for doubtful
accounts of $155,000 in 1999 and in 1998 $ 2,312 $ 1,956
Inventories 5,070 3,266
Other 127 113
------ ------
Total current assets 7,509 5,335
------ ------
Property, plant and equipment:
Leasehold improvements 1,004 1,001
Machinery and equipment 1,251 989
------ ------
2,255 1,990
Less accumulated depreciation and amortization 1,027 567
------ ------
1,228 1,423
------ ------
Other 51 122
------ ------
$ 8,788 $ 6,880
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------
Current liabilities:
Current portion of borrowings $ - $ 1,851
Accounts payable 593 667
Accrued interest 35 21
Accrued liabilities 1,590 1,322
------ ------
Total current liabilities 2,218 3,861
Line of credit 3,514 -
Deferred employee benefits 119 126
5,851 3,987
------ ------
Commitments and contingencies (Note 12) - -
Stockholders' equity
Preferred stock, none outstanding - -
Common stock, $.04 par, 20,000,000 shares
authorized, 4,300,000 shares outstanding
in 1999 and 1998 172 172
Additional paid-in capital 4,862 4,851
Accumulated deficit (2,097) (2,130)
------ ------
Total stockholders' equity 2,937 2,893
------ ------
$ 8,788 $ 6,880
====== ======
------------------------------------------------------------------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal years ended October 30, 1999, October 31, 1998 and October 25, 1997
Reorganized Company Predecessor Company
Twelve Twelve One Eleven
Month Month Month Month
Period Period Period Period
Ended Ended Ended Ended
Oct. 30, Oct. 31, Oct. 25, Sept. 20,
1999 1998 1997 1997
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $ 33 $ (2,017) $ (113) $ (4,828)
Non-cash adjustments to income (loss):
Depreciation and amortization 460 523 44 579
Restructuring charge - - - 1,608
Variable stock option 11 - - -
Provision for bad debts - 60 10 110
Changes in assets and liabilities:
Net (increase) decrease to accounts receivable (356) (610) 179 1,024
Net (increase) decrease to inventories (1,804) 1,038 58 (1,090)
Net decrease (increase) to other current
and other long-term assets 57 1 (17) 95
Net increase (decrease) to accounts
payable and accrued expenses 19 (257) 40 1,128
------ ------ ------- -------
Net cash flows from operating activities
of continuing operations (1,580) (1,262) 201 (1,374)
Net cash flows from operating activities
of discontinued operations (7) - (7) (196)
------ ------ ------- -------
Net cash flows from operating activities (1,587) (1,262) (194) (1,571)
------ ------ ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of Rymer Seafood - - - 950
Capital expenditures (265) (221) (6) (609)
Other - - - 1
Net cash flows from investing activities
of discontinued operations - 800 - -
Net cash flows from investing activities (265) 579 (6) 342
------ ------ ------- -------
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in cash overdraft 189 226 38 (181)
Repayments under line-of-credit facility (54,383) (33,689) (3,051) (27,021)
Borrowings under line-of-credit facility 56,046 34,146 2,825 28,431
Net cash flows from financing activities
of continuing operations 1,852 683 (188) 1,229
------ ------ ------- -------
Net cash flows from financing activities 1,852 683 (188) 1,229
------ ------ ------- -------
Net change in cash - - - -
Cash and cash equivalents balance at
beginning of fiscal year - - - -
------ ------ ------- -------
Cash and cash equivalents balance at end
of fiscal year $ - $ - $ - $ -
====== ====== ======= =======
--------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the fiscal years ended October 30, 1999, October 31, 1998
and October 25, 1997
Additional Total
Common Paid-In Accumulated Stockholders'
Stock Capital Deficit Equity
(Deficit)
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at October 26, 1996 $10,754 $44,363 $(70,733) $(15,616)
Net income for the eleven
month period ended
September 20, 1997 - - 20,209 20,209
Effect of reorganization and
fresh start accounting:
Cancellation of predecessor
deficit (10,599) (39,925) 50,524 -
Issuance of new shares pursuant
to plan of reorganization 17 413 - 430
------ ------ ------- -------
Balance at September 20, 1997 172 4,851 - 5,023
Net loss for one month period
ended October 25, 1997 - - (113) (113)
------ ------ ------- -------
Balance at October 25, 1997 172 4,851 (113) 4,910
Net loss - - (2,017) (2,017)
------ ------ ------- -------
Balance at October 31, 1998 172 4,851 (2,130) 2,893
Net Income - - 33 33
Variable stock option - 11 - 11
------ ------ ------- -------
Balance at October 30, 1999 $ 172 $ 4,862 $ (2,097) $ 2,937
====== ====== ======= =======
-------------------------------------------------------------------------------
See accompanying notes.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Fiscal Year and Basis of Presentation
The fiscal year of the Company ends the last Saturday in October. For
all years presented, the fiscal year was 52 weeks except 1998 which was
53 weeks.
In accordance with the AICPA Statement of Position 90-7, Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code, the
Company adopted fresh-start reporting as of September 20, 1997. In
accordance with fresh-start accounting, the gain on discharge of debt
resulting from the bankruptcy proceedings was reflected on the
predecessor Company's financial statements for the period ended
September 20, 1997. In addition, the accumulated deficit of the
predecessor Company at September 20, 1997, was eliminated, and at
September 21, 1997, the reorganized Company's financial statements
reflected no beginning retained earnings or deficit. In addition, the
Company's capital structure was recast in conformity with its approved
Plan.
As a result of the Company adoption of fresh-start accounting,
reporting for the year ended October 25, 1997 is accomplished by
combining the financial results for the one-month period ended October
25, 1997 and those of the eleven-month period ended September 20, 1997.
Because of the application of fresh-start reporting, the financial
statements for the periods after reorganization are not comparable in
any respect to the financial statements for the periods prior to
reorganization.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and all of its subsidiaries after elimination of all
significant intercompany accounts and transactions. The Company is
engaged in the development and production of frozen, pre-seasoned,
portion controlled meat entrees for restaurants and other foodservice
customers, primarily in the United States.
Cash Equivalents
The Company considers short-term investments purchased with maturities
of ninety days or less to be cash equivalents.
Inventories
Inventories are stated at the lower of first-in, first-out cost or
market.
<PAGE>
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is
recognized on a straight-line basis over the estimated useful lives of
the related assets generally from 3 years to 7 years. Expenditures for
maintenance and repairs are charged to operations as incurred. Gains
or losses on the disposition of assets are reflected in results of
operations.
Revenue Recognition
The Company recognizes sales revenues at the time of shipment.
Income Taxes
Deferred income taxes are recorded to reflect the tax consequences on
future years of differences between the basis of assets and liabilities
for income tax and for financial reporting purposes. In addition, the
amount of any future tax benefits is reduced by
a valuation allowance to the extent such benefits are not expected to
be fully realized.
Earnings (Loss) Per Share
The difference between basic and dilutive weighted average common
shares results from the assumption that dilutive stock option-
outstanding were exercised.
Since there is a net loss for the year ended October 31, 1998 and the
one month period ended October 25, 1997, common stock equivalents are
excluded from the diluted earnings per share calculation since they
would be antidilutive.
Amounts for the predecessor company are not presented as the data is
not meaningful due to the Company's reorganization.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
October 30, 1999 and October 31, 1998, and the reported amounts of
revenues and expenses during the three year period ended October 30,
1999. Actual results could differ from those estimates.
<PAGE>
2. Restructuring and Restructuring Charges
During the 1997 fiscal year, the Company recorded a Restructuring
charge of $1.6 million related to its Senior Note restructuring plan.
These costs included legal fees, financial consultants, and other
costs associated with the conversion process of the Company's Senior
Notes to equity.
3. Discontinued Operations and Assets Held for Sale
The accompanying consolidated financial statements reflect the
operations of the Company's Rymer Plant City subsidiary as discontinued
operations for accounting purposes.
Rymer Chicken - Plant City
During 1992, the Company decided to place its idle Plant City, Florida
chicken facility and equipment for sale.
During 1993, the Company recognized a loss of $344,000 to reduce the
carrying value of the Plant City property to an estimated net
realizable value of $1.6 million. This loss was partially offset by
income of $272,000 from the elimination of reserves established during
1992 for Plant City losses. In December 1996, the Company had an
independent appraisal performed of the Plant City facility. As a
result of the appraisal, the carrying value of the facility and land
was written down by $450,000 to the appraised value of approximately
$1.2 million. The $450,000 writedown is included as a loss from
discontinued operations in the Company's consolidated statement of
operations.
During the final quarter of 1997, the Company entered into an agreement
to sell its Plant City, Florida facility. The contract called for a
purchase price of $800,000. The terms of the selling agreement were as
follows: 35% down payment, balance to be paid over a five-year note.
The five year note was paid off in cash in 1998. The sale was closed
in the second fiscal quarter of 1998. As a result of the sale of the
facility, a $566,000 loss was incurred. This charge is included as a
loss from disposition of discontinued operations in the Company's
consolidated statement of operations prior to the reorganization in
1997. The loss is primarily attributable to a write-down of the
plant's book value to the agreed contract price plus estimated expenses
to repair the facility.
<PAGE>
Other Discontinued Operations
The following summarizes the results of the various discontinued
operations reflected in the accompanying Consolidated Statements of
Operations (in thousands):
<TABLE>
Reorganized Company Predecessor
Company
-------------------------- ---------
Twelve Twelve One Eleven
Month Month Month Month
Period Period Period Period
Ended Ended Ended Ended
Oct. 30, Oct. 31, Oct. 25, Sept. 20,
1999 1998 1997 1997
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Rymer Chicken $ - $ - $ - $ -
Total sales $ - $ - $ - $ -
Income (loss) from
discontinued operations:
Rymer Chicken $ - $ - $ - $ -
$ - $ - $ - $ -
Loss on dispositions of
discontinued operations:
Rymer Chicken $ - $ - $ - $ (566)
$ - $ - $ - $ (566)
</TABLE>
4. Reorganization Plan
The Company adopted "fresh-start reporting" on September 20, 1997 in
accordance with Statement of Position ("SOP") 90-7 issued by the
American Institute of Certified Public Accountants. SOP 90-7 calls for
the adoption of "fresh-start reporting" if the reorganization value of
the emerging entity immediately before the date of confirmation is less
than the total of all postpetition liabilities and prepetition allowed
claims, and if holders of existing voting shares immediately before
confirmation receive less than 50 percent of the voting shares of the
emerging entity, both conditions of which were satisfied by the
Company. Although the consummation date was October 6, 1997, fresh-
start reporting was adopted on September 20, 1997. There were no
fresh-start related adjustments during the period September 21, 1997 to
October 6, 1997.
Under fresh-start accounting, all assets and liabilities are restated
to reflect their reorganization value, which approximates book value at
date of reorganization. Therefore, no reorganization value has been
allocated to the assets and liabilities. In addition, the amount of
debt forgiveness was $25.6 million and the accumulated deficit of the
predecessor company at September 20, 1997 totalling $50.4 million was
eliminated, and at September 21, 1997, the reorganized company's
financial statements reflected no beginning retained earnings or
deficit.
<PAGE>
5. Inventories
Inventories consist of the following (in thousands):
October 30, October 31,
1999 1998
------ ------
Raw materials $ 3,251 $ 2,166
Finished goods 1,819 1,100
------ ------
$ 5,070 $ 3,266
====== ======
6. Borrowings
Borrowings consisted of the following (in thousands):
October 30, October 31,
1999 1998
------- -------
Banks, with interest of 2% over
prime in 1999 and 1998 $ 3,514 $ 1,851
Less current maturities $ - $ 1,851
------- -------
$ 3,514 $ 0
======= =======
The prime rate applicable to the Company's outstanding bank notes
payable was 8.25% at October 30, 1999 and 8% at October 31, 1998. The
weighted average interest rate relating to these borrowings was 9.9%
and 10.1% during fiscal 1999 and 1998 respectively.
The Company on April 23, 1998 entered into a loan agreement with FINOVA
that replaced the loan agreement with another financial institution.
The credit facility provides up to $4 million for the Company through
April 23, 2001. The FINOVA agreement contains loan covenants that the
Company must meet. At October 31, 1998, the Company was in compliance
with all covenants.
Under the agreement noted above the Company's Rymer Meat subsidiary had
total lines of credit available of $3.8 million at October 30, 1999 and
$2.6 million at October 31, 1998, of which $.3 million and $.7 million,
respectively, was unused.
The Company's bank agreements contain certain restrictive covenants
which, among other things, limit the amount of indebtedness incurred by
the Company and its subsidiaries and require the maintenance of certain
financial ratios by the Company and its subsidiaries.
Substantially all of the Company's property, plant and equipment and
certain current assets are pledged as collateral under its bank
agreement.
<PAGE>
7. Leases
The Company and its subsidiaries lease certain facilities and equipment
used for offices and manufacturing. Total rental expense from
continuing operations under all operating leases was approximately
$512,000, $476,000 and $476,000 in fiscal 1999, fiscal 1998 and fiscal
1997, respectively. The above lease costs do not include the costs of
taxes, insurance, maintenance and utilities which the Company and its
subsidiaries are required to pay.
The lease for the Chicago meat processing facility expired in July
1996. The Company has subsequently negotiated for revised lease space
and lower rental costs and leases the facility on a month-to-month
basis.
Property, plant and equipment recorded under lease commitments under
non-cancelable leases are not material.
8. Income Taxes
The Company's deferred tax asset is related primarily to its operating
loss carryforward for tax reporting purposes which approximated $21.0
million at October 30, 1999 and October 31, 1998. The Company
recorded a valuation allowance amounting to the entire deferred tax
asset balance because the Company's financial condition, its lack of a
history of consistent earnings, possible limitations on the use of
carryforwards, and the expiration dates of certain of the net operating
loss carryforwards give rise to uncertainty as to whether the deferred
tax asset is realizable.
The components of the net deferred tax asset recorded in the
accompanying consolidated balance sheets as of October 30, 1999 and
October 31, 1998 are as follows (in thousands):
1999 1998
------ ------
Deferred tax assets:
Accounts receivable $ 53 $ 53
Inventories 137 94
Property, plant and equipment 431 352
Other liabilities and reserves 147 97
Alternative minimum tax credits 68 68
Net operating loss carryforwards 7,182 7,300
Investment tax credits 512 512
Contribution carryover 27 10
------ ------
Total deferred tax assets 8,557 8,486
Less: Valuation allowance (8,557) (8,486)
------ ------
Net deferred tax asset $ - $ -
====== ======
<PAGE>
The following table accounts for the difference between the actual tax
provision attributable to loss before income taxes and the amounts
obtained by applying the statutory U.S. Federal income tax rate of 34%
to the loss before income taxes.
Fiscal Years Ended
-----------------------------------
October 30, October 31, October 25,
1999 1998 1997
---- ---- ----
(Loss) income before income taxes:
Income (loss) from continuing operations $ 33 $ (2,017) $ (4,941)
(Loss) income from discontinued operations - - (566)
---- ------- -------
Total income (loss) before income taxes $ 33 $ (2,017) $ (5,507)
==== ======= =======
Total (benefit) provision computed by applying
the U.S. statutory rate (34%) $ 11 $ (686) $ (1,872)
Increases (decreases) in taxes due to:
Loss which provides no current tax benefit - 686 1,872
Use of net operating loss carryforwards $ (11) - -
Other differences, net - - -
---- ------- -------
Actual tax provision $ - $ - $ -
==== ======= =======
The Company's Federal income tax returns are subject to review by the
Internal Revenue Service, the results of which cannot be predicted with
certainty. At October 30, 1999, the Company had an operating loss
carryforward for tax reporting purposes approximating $21 million which
is available to offset future Federal taxable income which begins to
expire in 2007. Additional restrictions under Section 382 may apply to
limit the amount of net operating loss carryforward which can be
utilized in the future.
9. Stockholders' Equity
The Company has authorized 20,000,000 shares of common stock with a
par value of $0.04 per share and 400,000 shares of preferred stock with
a par value of $10 per share.
At October 30, 1999, there were 430,000 stock shares reserved for the
exercise of stock options.
10. Capital Stock, Stock Options and Warrants
In 1994, the Company adopted the 1994 Stock Plan (the 1994 Plan). The
1994 Plan permitted the issuance to key employees and directors options
to purchase up to 580,000 shares of common stock.
Options granted under the 1994 Plan were exercisable at the fair market
value of the Common Stock on the date the option was granted. At
October 26, 1996, 293,250 options were outstanding under the 1994 Plan.
In connection with the Company's restructuring, the options under the
1994 Plan were cancelled.
<PAGE>
A summary of stock option activity and other related information is as
follows:
Options Outstanding
-------------------
Weighted
Number Average
Outstanding Price per share
------- -------
Balance, October 27, 1996 293,250 $ 1.68
Granted -
Exercised -
Canceled (293,250) $ 1.68
------- -------
Balance, October 25, 1997 -
Granted 348,000 $ 0.87
Exercised -
Canceled -
------- -------
Balance, October 31, 1998 348,000 $ 0.87
Granted 426,000 $ 0.25
Exercised -
Canceled (348,000) $ 0.87
------- -------
Balance, October 30, 1999 426,000 $ 0.25
======= =======
In October 1995, the Company engaged the financial advisory and
turnaround firm of Kirkland Messina, Inc. (KM) to assist the Company in
developing a plan to return the Company to profitability. As part of
KM's compensation, the Company issued KM 500,000 warrants to purchase
common stock of the Company at an exercise price in cash of $1.675 per
share. The warrants issued to KM expire October 1, 1998, however,
these warrants were cancelled as the result of the Company's
restructuring.
On November 8, 1995, the Company announced that it had hired P. E. (Ed)
Schenk as its President and Chief Executive Officer. As part of Mr.
Schenk's compensation, he was issued 750,000 warrants to purchase
common stock of the Company at an exercise price of $1.00 per share.
The warrants issued to Mr. Schenk expire November 8, 1998. These
warrants also were cancelled as the result of the Company's
restructuring.
In connection with the reorganization, the Company issued 430,000
common shares to senior management. The estimated fair value of the
shares was recorded as expense for the eleven month period ended
September 20, 1997.
Effective with the Company's reorganization, a new stock option plan
was put into place. As of October 25, 1997, there were no shares
granted or exercised under the new plan.
<PAGE>
During 1998, the Company issued options to key employees and board
members for the purchase of 348,000 shares of common stock. The
options vest either immediately or equally over a four year period,
commencing with the date of grant. The exercise price ranges from
$0.44 per share to $1.00 per share, the market price on the date of
grant. The options will expire five years from the date of grant. On
March 12, 1999 all of the options previously issued were cancelled, and
then reissued at a exercise price of $0.22 per share, the market price
on the date of reissuance. Compensation expense of $11,000 has been
recognized by the Company as a result of repricing some of the options.
The pro forma affect of applying the fair value based method to these
options would not have a material affect on the reported net earnings
(loss) and would not change the net earnings (loss) per share for the
years ended October 30, 1999 and October 31, 1998 respectfully. The
fair value of these options was computed by applying the following
assumptions to the Black Scholes options pricing model: no dividends;
risk-free interest rate of 5.46%; volatility of 26.8%; and an average
term of 4 years.
In accordance with the provisions of SFAS No. 123, and "Accounting for
Stock-Based Compensation", the Company has elected to continue to
account for stock based compensation under the intrinsic value based
method of accounting prescribed by Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees". Under APB
Opinion 25, generally no cost is recorded for options issued to
employees unless the option price is below the fair value at date
options are granted.
11. Employee Benefit Plans
The Company currently sponsors a Company-wide 401(k) savings plan. The
plan covers all salaried personnel at the Chicago processing plant and
the Company's corporate headquarters who have completed 6 months of
service. The Company makes matching contributions to the 401(k)
savings plan of up to 5% of each participants' compensation.
Contributions and costs expensed under the 401(k) savings plan for
employees relating to the Company's continuing operations amounted to
approximately $82,000, $86,000 and $96,000 for fiscal 1999, fiscal
1998, and fiscal 1997, respectively.
12. Commitments and Contingencies
The amounts of liability, if any, for claims and actions against the
Company and its subsidiaries at October 30, 1999 are not determinable
but, in the opinion of management, such liability, if any, would not
have a material effect upon the Company's financial position or results
of operations.
The Company has agreements with certain of its customers to sell
merchandise over the next year for specified prices. The Company also
has agreements with certain of its suppliers to purchase raw materials.
The agreements extend for up to one year and provide the price and
quantity of materials to be supplied. The Company had purchase
commitments of $1.8 million as of October 30, 1999.
<PAGE>
13. Supplemental Cash Flow Information
Supplemental cash flow information is as follows (in thousands):
1999 1998 1997
---- ---- ----
Cash paid for:
Interest $ 333 $ 190 $ 128
==== ==== ====
Federal, state and local
income taxes (net of tax refunds) $ 15 $ 10 $ 10
==== ==== ====
14. Concentration of Credit Risk and Supplemental Sales Information
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of
accounts receivable.
The Company routinely assesses the financial strength of its customers
and, as a consequence, believes that its trade accounts receivable
credit risk exposure is limited. The Company establishes an allowance
for doubtful accounts based upon factors
surrounding the credit risk of specific customers, historical trends,
and other information.
Sales to customers outside the United States were less than 10% of
consolidated sales in each year presented.
No customer represents 10% or more of the Company's sales in 1999 or
1998.
15. Fourth Quarter Adjustments
1999
None
1998
None
1997
During the final quarter of 1997, the Company entered into an agreement
to sell its Plant City, Florida facility. As a result of the pending
sale, a $566,000 loss was incurred. This charge is included as a loss
from disposition of discontinued operations in the Company's
consolidated statement of operations. The loss is primarily
attributable to a write-down of the facility's book value to the agreed
contract price plus estimated expenses to repair the facility.
<PAGE>
16. New Accounting Standards
There are no currently issued but not yet effective accounting
standards that adoption of would have a material impact on the
Company's financial position or results of operations.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The disclosure required by Item 10 is set forth in, and is incorporated
by reference to, the Company's Proxy Statement relating to the 1999
Annual Meeting of Stockholders, which will be filed with the Securities
and Exchange Commission on or before February 29, 2000 (the 2000 Proxy
Statement).
Item 11. Executive Compensation
The disclosure required by Item 11 is set forth in, and is incorporated
by reference to, the 2000 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The disclosure required by Item 12 is set forth in, and is incorporated
by reference to, the 2000 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The disclosure required by Item 13 is set forth in, and is incorporated
by reference to, the 2000 Proxy Statement.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
Page
(a) 1. The following audited consolidated financial statements of
the Company are included in Part II, Item 8:
Consolidated Statements of Operations for the fiscal years
ended October 30, 1999, October 31, 1998 and October 25, 1997 12
Consolidated Balance Sheets as of October 30, 1999 and
October 31, 1998 13
Consolidated Statements of Cash Flows for the fiscal years
ended October 30, 1999, October 31, 1998 and October 25, 1997 14
Consolidated Statements of Stockholders' (Deficit) Equity for
the fiscal years ended October 30, 1999, October 31, 1998 and
October 25, 1997 15
Notes to Consolidated Financial Statements 16-24
Note: Reporting for the year ended October 25, 1997 is
accomplished by combining the financial results for the
one-month period ended October 25, 1997 and those of the
eleven-month period ended September 20, 1997.
(a) 2. Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts and Reserves 26
Schedules, other than those listed above, are omitted as they
are not applicable or required or equivalent information has been
included in the financial statements or notes thereto.
(a) 3. Exhibits:
2 Plan of Reorganization *
11 Computation of Earnings Per Share 28
21 Subsidiaries of the Company 29
27 Financial Data Schedule (EDGAR filing version) N/A
NOTE: With the exception of Exhibit Nos. 2, 11, 21 and 27, the
registrant will furnish copies of such other Exhibits upon
written request to the Secretary at the address on the cover of
the Form 10-K Annual Report. A reasonable copying and handling
fee will be charged.
(b) Reports on Form 8K
None
* Included as an exhibit in the Company's S-4 filing;
incorporated herein by reference.
<PAGE>
<TABLE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED OCTOBER 30, 1999, OCTOBER 31, 1998 AND OCTOBER 25, 1997
RYMER FOODS INC. AND SUBSIDIARIES
Additions
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts Deductions end
Description of Year Expenses (describe) (describe) of Year
---------- ---------- ---------- ---------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Deducted in the balance
sheets from the assets
to which they apply:
Allowance for doubtful
accounts-current:
For the fiscal year ended
October 30, 1999 $ 155 $ - $ - $ 155
For the fiscal year ended
October 31, 1998 141 60 46 (a) 155
For the fiscal year ended
October 25, 1997 200 120 179 (a) 141
(a) Accounts written off, net of recoveries
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Rymer Foods Inc.
(Registrant)
By /s/ P. Edward Schenk
P. Edward Schenk, Chairman of the Board
and Chief Executive Officer
Date: January 25, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date indicated.
/s/ P. Edward Schenk Chairman of the Board 1/25/00
P. Edward Schenk and Chief Executive Officer
(Principal Executive Officer)
/s/ Edward M. Hebert Director, President, Chief Financial 1/25/00
Edward M. Hebert Officer, Treasurer and Secretary
/s/ Michael Bowen Director 1/25/00
Michael Bowen
/s/ Michael J. Brinati Director 1/25/00
Michael J. Brinati
/s/ John W. Elting Director 1/25/00
John W. Elting
/s/ Barry Spector Director 1/25/00
Barry Spector
<TABLE>
Exhibit 11
Rymer Foods Inc.
Computation of Earnings Per Share
for the periods ended October 30, 1999 and October 31, 1998
(in thousands, except per share data)
Fiscal Year Fiscal Year
Ending Ending
Oct. 30, Oct. 31,
1999 1998
--------------- ---------------
Basic Diluted Basic Diluted
----- ------- ----- -------
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING
1 Average shares outstanding 4,300 4,300 4,300 4,300
2 Net additional shares outstanding
assuming exercise of stock
options* - 378 - -
3 Net additional shares assuming
conversion of preferred stock not
considered a common stock
equivalent at issuance - - - -
----- ----- ----- -----
4 Average number of common
shares outstanding 4,300 4,678 4,300 4,300
===== ===== ===== =====
EARNINGS
5 Income (loss) from
continuing operations $ 33 $ 33 $(2,017) $(2,017)
===== ===== ===== =====
6 Net Income (loss) $ 33 $ 33 $(2,017) $(2,017)
===== ===== ===== =====
PER SHARE AMOUNTS
Income (loss) from
continuing operations
(line 5 / line 4) $ 0.01 $ 0.01 $ (.047) $ (0.47)
===== ===== ===== =====
Net Income (loss)
(line 6 / line 4) $ 0.01 $ 0.01 $ (0.47) $ (0.47)
===== ===== ===== =====
Note: Earnings per share amounts for all other reporting periods as it
relates to the predecessor company is not meaningful due to the
reorganization.
* Since there is a net loss for the year ended October 31, 1998,
common stock equivalents are excluded from the diluted earnings
per share calculations since they would be antidilutive.
</TABLE>
Exhibit 21
RYMER FOODS INC.
SUBSIDIARIES OF THE COMPANY
OCTOBER 30, 1999
State of Percent
Subsidiary Name Incorporation Owned Owner
--------------- ------------- ----- -----
Rymer Meat Inc. Illinois 100 Rymer Foods Inc.
Rymer Chicken Inc. (1) Arkansas 100 Rymer Meat Inc.
Rymer International
Seafood Inc. Illinois 100 Rymer Meat Inc.
Rymer Chicken Inc. -
Plant City (2) Florida 100 Rymer Meat Inc.
Queen City Foods Inc. Georgia 100 Rymer Meat Inc.
(1) Substantially all of the assets of Rymer Chicken Inc. were
sold on December 10, 1993. See Note 4 to the Consolidated
Financial Statements.
(2) Facility was sold in 1998. See Note 4 to the Consolidated
Financial Statements.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-30-1999
<PERIOD-END> OCT-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,467
<ALLOWANCES> 155
<INVENTORY> 5,070
<CURRENT-ASSETS> 7,509
<PP&E> 2,255
<DEPRECIATION> 1,027
<TOTAL-ASSETS> 8,788
<CURRENT-LIABILITIES> 2,218
<BONDS> 0
0
0
<COMMON> 172
<OTHER-SE> 2,765
<TOTAL-LIABILITY-AND-EQUITY> 8,788
<SALES> 38,914
<TOTAL-REVENUES> 38,914
<CGS> 34,420
<TOTAL-COSTS> 4,113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 347
<INCOME-PRETAX> 33
<INCOME-TAX> 0
<INCOME-CONTINUING> 33
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
