<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 3, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from ___________ to ___________
COMMISSION FILE NUMBER: 0-7277
FRESH 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 (3) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
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 July 1, 2000
----- ---------------------------
COMMON STOCK, NO PAR VALUE 5,781,470
<PAGE> 2
FRESH FOODS, INC.
INDEX
Page No.
--------
Part I. Financial Information:__________________________________________________
Item 1. Financial Statements
Consolidated Balance Sheets -
June 3, 2000 and March 4, 2000.......................................... 1 - 2
Consolidated Statements of
Operations and Retained Earnings -
Thirteen Weeks Ended June 3, 2000
and Thirteen Weeks Ended June 5, 1999.................................. 3 - 4
Consolidated Statements of Cash Flows -
Thirteen Weeks Ended June 3, 2000 and
Thirteen Weeks Ended June 5, 1999...................................... 5 - 6
Notes to Consolidated Financial
Statements............................................................. 7 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations....................... 9 - 11
Part II. Other Information:_____________________________________________________
Item 6. Exhibits and Reports on Form 8-K.............................. 12
Signatures............................................................. 13
Index to Exhibits...................................................... 14
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FRESH FOODS, INC. AND SUBSIDIARIES______________________________________________
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
ASSETS June 3, 2000 March 4, 2000
------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 839,053 $ 2,701,464
Accounts receivable, net (includes related party receivables of
$185,899 and $292,990 at June 3, 2000 and March 4, 2000,
respectively) 12,753,044 17,422,811
Notes receivable - current, net (includes related party notes
receivable of $152,456 at March 4, 2000) 84,561 238,513
Inventories 27,527,096 25,025,421
Refundable income taxes 2,714,844 2,828,156
Deferred income taxes 2,427,011 2,290,361
Prepaid expenses and other current assets (includes related party
prepaid expenses of $280,005 at June 3, 2000) 1,266,376 799,582
------------ ------------
Total current assets 47,611,985 51,306,308
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, NET 35,185,495 35,784,819
------------ ------------
OTHER ASSETS:
Trade name, net 41,395,136 41,764,636
Excess of cost over fair value of net assets of businesses acquired,
net 28,638,071 28,893,723
Other intangible assets, net 2,508,620 2,556,936
Notes receivable - related party 705,493 705,493
Deferred loan origination fees, net 2,912,758 3,714,748
------------ ------------
Total other assets 76,160,078 77,635,536
------------ ------------
Total Assets $158,957,558 $164,726,663
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE> 4
FRESH FOODS, INC. AND SUBSIDIARIES______________________________________________
<TABLE>
<CAPTION>
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY June 3, 2000 March 4, 2000
------------ -------------
<S> <C> <C>
CURRENT LIABILITIES:
Current installments of long-term debt $ 256,090 $ 314,433
Trade accounts payable 5,307,024 5,493,168
Accrued insurance 116,939 154,947
Accrued interest 106,286 3,213,929
Accrued payroll and payroll taxes 2,657,556 2,427,691
Accrued promotions (includes related party payables of $30,849
and $51,450 at June 3, 2000 and March 4, 2000, respectively) 2,176,033 1,903,241
Accrued taxes (other than income and payroll) 741,136 563,879
Other accrued liabilities 652,104 831,681
------------ ------------
Total current liabilities 12,013,168 14,902,969
------------ ------------
LONG TERM DEBT, less current installments 115,131,656 115,164,922
------------ ------------
OTHER LONG-TERM LIABILITIES 1,567,978 1,638,466
------------ ------------
DEFFERED INCOME TAXES 611,029 1,487,134
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock - par value $.10, authorized 2,500,000 shares; no
shares issued -- --
Common stock - no par value, authorized 100,000,000 shares; issued
And outstanding June 3, 2000 - 5,781,340 shares and March 4, 2000
- 5,781,000 shares 5,781,340 5,781,000
Additional paid in capital 23,316,685 23,315,881
Retained earnings 5,535,702 7,436,291
Note receivable - related party (5,000,000) (5,000,000)
------------ ------------
Total shareholders' equity 29,633,727 31,533,172
------------ ------------
Total Liabilities and Shareholders' Equity $158,957,558 $164,726,663
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE> 5
FRESH FOODS, INC. AND SUBSIDIARIES______________________________________________
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-------------------------------
June 3, 2000 June 5, 1999
------------ ------------
<S> <C> <C>
REVENUES:
Food processing $45,946,753 $43,014,350
Ham curing -- 1,440,372
----------- -----------
Total operating revenues 45,946,753 44,454,722
----------- -----------
COSTS AND EXPENSES:
Cost of goods sold (includes related party transactions totaling
$34,322 in 2000) 29,257,679 26,198,582
Selling, general and administrative expenses (includes related party
transactions totaling $365,280 and $653,163 in fiscal 2001 and
fiscal 2000, respectively) 14,186,902 13,514,427
Depreciation and amortization 1,565,571 1,511,429
----------- -----------
Total costs and expenses 45,010,152 41,224,438
----------- -----------
OPERATING INCOME 936,601 3,230,284
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (3,320,592) (3,849,205)
Other income (expense), net - (including interest) (includes related
party income totaling $17,640 and $18,162 in fiscal 2001 and fiscal
2000, respectively) 118,545 (69,253)
----------- -----------
Other expense, net (3,202,047) (3,918,458)
----------- -----------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX
BENEFIT (2,265,446) (688,174)
INCOME TAX BENEFIT 820,095 279,706
----------- -----------
LOSS FROM CONTINUING OPERATIONS (1,445,351) (408,468)
INCOME FROM DISCONTINUED RESTAURANT SEGMENT (NET
OF INCOME TAXES OF $845,246) -- 1,241,783
----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (1,445,351) 833,315
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT (NET OF INCOME TAX
BENEFIT OF $258,303) (455,238) --
----------- -----------
NET INCOME (LOSS) $(1,900,589) $ 833,315
=========== ===========
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C> <C>
RETAINED EARNINGS:
Balance at beginning of period $ 7,436,291 $12,093,115
Net income (loss) (1,900,589) 833,315
----------- -----------
Balance at end of period $ 5,535,702 $12,926,430
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED
Loss from continuing operations $ (.25) $ (.07)
Income from discontinued restaurant segment -- .21
Extraordinary loss on early extinguishment of debt (.08) --
----------- -----------
Net income (loss) per share $ (.33) $ .14
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND
DILUTED 5,781,181 5,808,573
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 7
FRESH FOODS, INC. AND SUBSIDIARIES______________________________________________
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------
June 3, 2000 June 5, 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(1,900,589) $ 833,315
----------- -----------
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Extraordinary loss on early extinguishment of debt before income
tax benefit 713,541 --
Depreciation and amortization 1,565,571 2,296,648
Amortization of deferred loan origination fees 173,441 183,250
Deferred income taxes (1,012,755) (214,267)
Net loss on disposition of property, plant and equipment -- 60,333
Decrease in other long-term liabilities (70,488) --
Other non-cash adjustments to earnings 1,144 373,740
Changes in operating assets and liabilities:
Receivables 4,669,767 1,933,726
Inventories (2,501,675) (7,173,280)
Refundable income taxes, prepaid expenses and other
current assets (353,482) 272,205
Trade accounts payable and other accrued liabilities (2,831,458) (6,662,695)
----------- -----------
Total adjustments 353,606 (8,930,340)
----------- -----------
Net cash used in operating activities (1,546,983) (8,097,025)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of property, plant and equipment -- 228,770
Decrease in related party notes receivables 152,456 100,698
Decrease in other notes receivable 1,496 113,936
Capital expenditures to related parties -- (33,996)
Capital expenditures - other (292,779) (1,225,035)
Other investing activities, net -- 68,121
----------- -----------
Net cash used in investing activities (138,827) (747,506)
----------- -----------
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving credit agreement -- 9,060,337
Principal payments on long-term debt (91,609) (165,246)
Loan origination fees (84,992) (32,772)
Proceeds from issuance of common stock -- 6,500
----------- -----------
Net cash provided by (used in) financing activities (176,601) 8,868,819
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,862,411) 24,288
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,701,464 1,664,398
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 839,053 $ 1,688,686
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 9
FRESH FOODS, INC. AND SUBSIDIARIES______________________________________________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position as of June 3, 2000 and March 4, 2000, the results of
operations and cash flows for the thirteen weeks ended June 3, 2000 and June 5,
1999. Financial statements for the period ended June 5, 1999 ("fiscal 2000")
have been reclassified, where applicable, to conform to financial statement
presentation used for the period ended June 3, 2000 ("fiscal 2001").
The Company reports the results of its operations using a 52-53 week
basis. In line with this, each quarter of the fiscal year will contain 13 weeks
except for the infrequent fiscal years with 53 weeks.
The results of operations for the thirteen weeks ended June 3, 2000 are
not necessarily indicative of the results to be expected for the full year.
These interim unaudited consolidated financial statements should be read in
conjunction with the Company's March 4, 2000 audited consolidated financial
statements and notes thereto.
2. INVENTORY
A summary of inventories, by major classifications, follows:
June 3, 2000 March 4, 2000
------------------- ---------------------
Manufacturing supplies $ 2,484,792 $ 1,149,107
Raw materials 2,699,703 3,857,801
Work in process 6,859 -
Finished goods 22,335,742 20,018,513
------------------- ---------------------
Total $ 27,527,096 $ 25,025,421
=================== =====================
3. SUPPLEMENTAL CASH FLOW DISCLOSURES - CASH PAID DURING THE PERIOD
Thirteen Thirteen
Weeks Ended Weeks Ended
June 3, 2000 June 5, 1999
---------------------- ----------------------
Interest $ 6,254,794 $ 7,067,943
====================== ======================
Income taxes net of
refunds received $ (178,955) $ 374,307
====================== ======================
4. COMPREHENSIVE INCOME
Total comprehensive income (loss) was comprised solely of the net loss
in the fiscal 2001 period and net income in the fiscal 2000 period.
Comprehensive loss was $(1,900,589) for the quarter ended June 3, 2000, and
comprehensive income was $833,315 for the quarter ended June 5, 1999.
7
<PAGE> 10
5. LONG-TERM DEBT
Effective May 30, 2000, the Company terminated its $75 million credit
facility, resulting in an extraordinary loss on early extinguishment of debt of
$455,238, net of income taxes of $258,303.
Effective May 24, 2000, the Company obtained a three-year variable rate
$25 million revolving credit facility. As of June 3, 2000, the Company had no
borrowings under the facility, and borrowing availability of approximately $16.7
million. In addition, at June 3, 2000, the Company was in compliance with the
financial covenants under this facility.
6. SHAREHOLDERS' EQUITY
The increases in common stock and additional paid in capital are due to
the issuance of 340 shares of the Company's common stock to employees for
longevity awards.
7. SUBSEQUENT EVENTS
Effective June 16, 2000, the Company terminated its Employee Stock
Purchase Plan. As of the termination date, the Plan assets, comprised of the
Company's common stock and cash, totaled approximately $230,000. Stock
certificates will be issued to Plan participants and cash on hand will be paid
to Plan participants based on their respective account balances.
Effective July 3, 2000, the Company increased the Company's matching
contribution in its 401(k) Retirement Plan from a 50% match up to the
participant's first 4% contribution to a 50% match up to the participant's first
5% contribution.
8. RECENTLY ISSUED ACCOUNTING GUIDANCE
The Securities and Exchange Commission ("SEC") has issued Staff
Accounting Bulletin No. 101 ("SAB 101"), as amended on June 26, 2000, titled
"Revenue Recognition in Financial Statements." SAB 101 provides the SEC staff's
views in applying generally accepted accounting principles to selected revenue
recognition issues. The Company must implement any applicable provisions of SAB
101 no later than the fourth quarter of fiscal 2001. The Company has not yet
evaluated the effects of implementation, if any, on the Company's financial
statements.
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's operations historically have been classified into three
business segments: food processing operations, restaurant operations and ham
curing operations. As discussed in the Company's Annual Report filed on Form
10-K for the fiscal year ended March 4, 2000, the Company sold its ham curing
business effective July 3, 1999, and sold its restaurant operations effective
October 8, 1999. Accordingly, the results of the restaurant operations are
presented as a discontinued operation in fiscal 2000, and are excluded from the
table below. The ham curing operations did not quality for discontinued
operations presentation. Subsequent to the sales of the restaurant operations
and ham curing operations, the Company's operations consist solely of food
processing.
Fiscal Quarter Ended June 3, 2000 Compared to Fiscal Quarter Ended June 5, 1999
Revenues. Revenues from continuing operations increased by $1.5
million, or 3.4%, comprised of a $2.9 million (6.8%) increase in the food
processing segment offset by a $1.4 million decrease in the ham curing segment.
The increase in food processing revenues was due to overall increases in demand
in core customer channels. The decrease in ham curing revenues was due to the
Company's strategic decision to exit the ham curing business, which was
effective July 3, 1999.
Cost of goods sold. Cost of goods sold increased by $3.1 million, or
11.7%, comprised of a $4.4 million (17.6%) increase in the food processing
segment offset by a $1.3 million decrease in the ham curing segment. As a
percentage of food processing revenues, food processing cost of goods sold
increased from 57.9% to 63.7%. This increase primarily is due to 1) demand for
new product categories with lower margins; 2) production of fewer pounds during
the fiscal quarter ended June 3, 2000 compared to the fiscal quarter ended June
5, 1999; and 3) training costs incurred to create additional required capacity
for future expected growth. The decrease in ham curing cost of goods sold was
due to the Company's strategic decision to exit the ham curing business,
effective July 3, 1999.
Selling, general and administrative. Selling, general and
administrative expenses increased by $.7 million, or 5.0%, primarily due to 1)
increased selling expenses related to new products; and 2) increased
distribution costs due to fuel surcharges. As a percentage of operating
revenues, selling, general and administrative expenses increased from 30.4% to
30.9%.
Depreciation and amortization. Depreciation and amortization expense
increased by $.1 million, or 3.6%, due to routine capital expenditures. As a
percentage of operating revenues, depreciation and amortization remained
constant at 3.4%.
Other expense, net. Other expense, net decreased by $.7 million, or
18.3%. This decrease primarily was due to a decrease in interest expense due to
decreased borrowings under the Company's revolving credit facilities (see ---
"Liquidity and Capital Resources" below).
Income tax provision (benefit). The effective tax rate for the fiscal
quarter ended June 3, 2000 was 36.2%, as compared to 40.6% for the fiscal
quarter ended June 5, 1999. The lower rate in the fiscal quarter ended June 3,
2000 is due to 1) a tax benefit recorded of $1,078,398 in fiscal 2001 compared
to tax expense recorded of $565,540 in fiscal 2000; and 2) the effects of
permanent timing differences.
9
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities was $1.5 million for the fiscal
quarter ended June 3, 2000, as compared to $8.1 million for the fiscal quarter
ended June 5, 1999. The primary components of net cash used in operating
activities for the fiscal quarter ended June 3, 2000 were 1) a decrease in
accounts receivables by $4.7 million; offset by 2) an increase in inventory of
$2.5 million due to the seasonal building of inventories which normally occurs
during late spring and early summer to service certain market channels that
require heavy shipments in late summer and early fall; and 3) an increase in
trade accounts payable and other accrued liabilities of $2.8 million due to
timing of certain payments. The decrease in net cash used by operating
activities primarily was due to a more significant inventory build in the fiscal
quarter ended June 5, 1999 compared to the fiscal quarter ended June 3, 2000.
Net cash used by investing activities was $.1 million for the fiscal
quarter ended June 3, 2000, compared to $.7 million for the fiscal quarter ended
June 5, 1999. The decrease in net cash used by investing activities primarily
was due to restaurant capital expenditures and other restaurant activities
during fiscal 2000 which did not recur in fiscal 2001.
Net cash used in financing activities was $.2 million for the fiscal
quarter ended June 3, 2000, compared to net cash provided by financing
activities of $8.9 million for the fiscal quarter ended June 5, 1999. The
decrease in cash provided by financing activities was due to borrowings under
the revolving credit facility in fiscal 2000 which did not recur in fiscal 2001.
Effective May 24, 2000, the Company secured a three-year $25 million
revolving credit facility, under which the Company may borrow up to an amount
(including standby letters of credit up to $.5 million) equal to the lesser of
$25 million less required minimum availability or a borrowing base (comprised of
eligible accounts receivable and inventory). Funds available under the facility
are available for working capital requirements, permitted investments and
general corporate purposes. Borrowings under the facility will bear interest at
floating rates based upon the interest rate option selected from time to time by
the Company, and are secured by a first priority security interest in
substantially all of the accounts receivable and inventory of the Company. In
addition, the Company is required to meet certain financial covenants regarding
net worth, cash flow and restricted payments, including limited dividend
payments.
At June 3, 2000, the Company had no outstanding borrowings under the
revolving credit facility, and approximately $16.7 million of availability. At
June 3, 2000, the Company was in compliance with the financial covenants under
the facility.
The Company has budgeted approximately $2.8 million for capital
expenditures for the remainder of the current fiscal year. These expenditures
are devoted to routine capital improvement projects and other miscellaneous
expenditures and should be sufficient to maintain current operating capacity.
The Company believes that funds from operations, borrowings under the $25
million revolving credit facility, as well as the Company's ability to enter
into capital or operating leases, will be adequate to finance these capital
expenditures. If Pierre continues its historical revenue growth trend as
expected, then the Company will be required to raise and invest additional
capital for various plant expansion projects to provide operating capacity to
satisfy increased demand. The Company believes that future cash requirements for
these plant expansion projects would need to be met through other long-term
financing sources, such as an increase in borrowing availability under the $25
million credit facility, the issuance of industrial revenue bonds or equity
investment. The incurrence of additional long-term debt is governed and
restricted by the Company's existing debt instruments. Furthermore, there can be
no assurance that additional long-term financing will be available on
advantageous terms (or any terms) when needed by the Company.
The Company anticipates continued sales growth in key market areas. As
noted above, however, this growth will require capital expansion projects to
increase existing plant capacity to satisfy increased demand. Sales growth,
improved operating performance and expanded plant capacity - none of which is
assured - will be necessary for the Company to continue to service existing
debt.
10
<PAGE> 13
MARKET RISK
As discussed in its annual report for the fiscal year ended March 4,
2000, the Company is exposed to market risks stemming from changes in interest
rates, foreign exchange rates and commodity prices. Changes in these factors
could cause fluctuations in the Company's financial condition, results of
operations and cash flows. The Company owned no derivative financial instruments
or nonderivative financial instruments held for trading purposes at June 3, 2000
or March 4, 2000. Certain of the Company's outstanding nonderivative financial
instruments at June 3, 2000 are subject to interest rate risk, but not subject
to foreign currency or commodity price risk.
The Company's major market risk exposure is potential loss arising from
changing interest rates and its impact on long-term debt. The Company's policy
is to manage interest rate risk by maintaining a combination of fixed and
variable rate financial instruments in amounts and with maturities that
management considers appropriate. The risks associated with long-term debt at
June 3, 2000 have not changed materially since March 4, 2000. All long-term debt
outstanding at June 3, 2000, comprised of $115 million of Senior Notes and $.1
million in capital lease obligations, was accruing interest at fixed rates. In
the future, should the Company borrow funds under its existing credit facility
or other long-term financing sources, a rise in prevailing interest rates could
have adverse effects on the Company's financial condition and results of
operations.
SEASONALITY
Except for sales to school districts, which decline during the early
spring and summer and early January, there is no significant seasonal variation
in sales.
INFLATION
The Company believes that inflation has not had a material impact on
its results of operations for any of the periods reported herein.
CAUTIONARY STATEMENT AS TO FORWARD LOOKING INFORMATION
Statements contained in this report as to the Company's outlook for
sales, operations, capital expenditures and other amounts, including budgeted
amounts and projections of future financial or economic performance of the
Company, and statements of the Company's plans and objectives for future
operations, are "forward looking" statements provided in reliance upon the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
Important factors that could cause actual results or events to differ materially
from those projected, estimated, assumed or anticipated in any such forward
looking statements include, among others, the substantial leverage and
insufficient cash flows from operations of the Company, restrictions imposed on
the Company by the terms of its debt instruments, competitive considerations,
government regulation and general risks of the food industry, the possibility of
adverse changes in materials costs, the availability of supplies, the Company's
dependence on key personnel and potential labor disruptions. See Exhibit 99.1 to
the Company's Annual Report on Form 10-K for the fiscal year ended March 4,
2000.
11
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See the Exhibit Index provided elsewhere in this report.
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed on June 26, 2000,
announcing that the Company received notification from the Nasdaq Stock Market
("Nasdaq") that Nasdaq is currently reviewing the Company's eligibility for
continued listing on the Nasdaq National Market.
12
<PAGE> 15
SIGNATURES
Pursuant to the requirements 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.
FRESH FOODS, INC.
Date July 18, 2000 By: /Norbert E. Woodhams/
------------- ----------------------------------------
Norbert E. Woodhams
President and Chief Executive Officer
(Principal Executive Officer)
Date July 18, 2000 By: /Pamela M. Witters/
------------- ----------------------------------------
Pamela M. Witters
Chief Financial Officer
(Principal Financial Officer)
13
<PAGE> 16
INDEX TO EXHIBITS
For inclusion in Quarterly Report on Form 10-Q Quarter Ended June 3, 2000
Exhibit No. Description
----------- -----------
2.1 Purchase Agreement dated as of August 6, 1999, among Mom `n' Pop's
Country Ham, LLC, Pierre Foods, LLC, the Company and Hoggs, LLC
(schedules and exhibits omitted) (incorporated by reference to Exhibit
2.3 to the Company's Quarterly Report on Form 10-Q for its fiscal
quarter ended December 4, 1999)
2.2 Purchase Agreement dated as of September 10, 1999 among Claremont
Restaurant Group, LLC, Fresh Foods Sales, LLC, the Company and CRG
Holdings Corp. (incorporated by reference to Exhibit 2.4 to the
Company's Quarterly Report on Form 10-Q for its fiscal quarter ended
December 4, 1999)
2.3 Plan of Merger dated as of December 27, 1999 among Pierre Foods, LLC,
Pierre Leasing, LLC and the Company (incorporated by reference to
Exhibit 2.5 to the Company's Quarterly Report on From 10-Q for its
fiscal quarter ended December 4, 1999)
3.1 Restated Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-4 (No. 333-58711))
3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.4 to the
Company's Annual Report on Form 10-K for its fiscal year ended February
27, 1998)
4.1 Note Purchase Agreement, dated June 4, 1998, among the Company, the
Guarantors and the Initial Purchasers (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the
SEC on June 24, 1998)
4.2 Indenture, dated as of June 9, 1998, among the Company, certain
Guarantors and State Street Bank and Trust Company, Trustee
(incorporated by reference to Exhibit 4.2 to the Company's Current
Report on Form 8-K filed with the SEC on June 24, 1998)
4.3 Registration Rights Agreement, dated June 9, 1998, among the Company,
certain Guarantors and certain Initial Purchasers (incorporated by
reference to Exhibit 4.3 to the Company's Current Report on Form 8-K
filed with the SEC on June 24, 1998 and incorporated herein by
reference)
4.4 Form of Initial Global Note (included as Exhibit A to Exhibit 4.2 to
the Company's Current Report on Form 8-K filed with the SEC on June 24,
1998 and incorporated herein by reference)
4.5 Form of Initial Certificated Note (included as Exhibit B to Exhibit 4.2
to the Company's Current Report on Form 8-K filed with the SEC on June
24, 1998 and incorporated herein by reference)
4.6 Form of Exchange Global Note (included as Exhibit C to Exhibit 4.2 to
the Company's Current Report on Form 8-K filed with the SEC on June 24,
1998 and incorporated herein by reference)
4.7 Form of Exchange Certificated Noted (included as Exhibit D to Exhibit
4.2 to the Company's Current Report on Form 8-K filed with the SEC on
June 24, 1998 and incorporated herein by reference)
14
<PAGE> 17
4.8 First Supplemental Indenture, dated as of September 5, 1998, among the
Company, State Street Bank and Trust Company, Trustee, and Pierre
Leasing, LLC (incorporated by reference to Exhibit 4.8 to Pre-Effective
amendment No. 1 to the Company's Registration Statement on Form S-4
(No. 333-58711))
4.9 Second Supplemental Indenture dated as of February 26, 1999 among the
Company, State Street Bank and Trust Company and Fresh Foods Restaurant
Group, LLC (incorporated by reference to Exhibit 4.9 to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended December 4,
1999)
4.10 Third Supplemental Indenture dated as of October 8, 1999 among the
Company and State Street Bank and Trust Company (incorporated by
reference to Exhibit 4.10 to the Company's Quarterly Report on Form
10-Q for its fiscal quarter ended December 4, 1999)
10.1 1987 Incentive Stock Option Plan (incorporated by reference to Exhibit
4 to the Company's Registration Statement on Form S-8 (No. 33-15017))
10.2 First Amendment to 1987 Incentive Stock Option Plan (incorporated by
reference to Exhibit 4(b) to Post-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-8 (No. 33-15017))
10.3 1987 Special Stock Option Plan (restated as of May 15, 1997)
(incorporated by reference to Exhibit 99 to the Company's Registration
Statement on Form S-8 (No. 333-29111))
10.4 1997 Incentive Stock Option Plan (as amended and restated February 23,
1998) (incorporated by reference to Post-Effective Amendment No. 1 to
Exhibit 99(a) to the Company's Registration Statement on Form S-8 (No.
333-32455))
10.5 First Amendment to 1997 Incentive Stock Option Plan, dated February 23,
1998 (incorporated by reference to Exhibit 99(b) to Post-Effective
Amendment No. 1 to the Company's Registration Statement on Form S-8
(No. 333-32455))
10.6 1997 Special Stock Option Plan (as amended and restated February 23,
1998) (incorporated by reference to Exhibit 99.1 to Post-Effective
Amendment No. 1 to the Company's Registration Statement on Form S-8
(No. 333-33439))
10.7 First Amendment to 1997 Special Stock Option Plan, dated February 23,
1998 (incorporated by reference to Exhibit 99.2 to Post-Effective
Amendment No. 1 to the Company's Registration Statement on For (No.
333-33439))
10.8 1994 Employee Stock Purchase Plan (incorporated by reference to Exhibit
4(c) to the Company's Registration Statement on Form S-8 (No.
33-79014))
10.9 Amendment to 1994 Employee Stock Purchase Plan, dated as of May 10,
1995 (incorporated by reference to Exhibit 4(b) to Post-Effective
Amendment No. 3 to the Company's Registration Statement on Form S-8
(No. 33-79014)
10.10 Second Amendment to 1994 Employee Stock Purchase Plan, dated as of
August 30, 1995 (incorporated by reference to Exhibit 4(c) to
Post-Effective Amendment No. 3 to the Company's Registration Statement
on Form S-8 (No. 33-79014)
10.11 Third Amendment to 1994 Stock Purchase Plan, dated as of February 12,
1997 (incorporated by reference to Exhibit 4(d) to Post-Effective
Amendment No. 4 to the Company's Registration Statement on Form S-8
(No. 33-79014))
15
<PAGE> 18
10.12 Employment Contract, dated as of June 30, 1996, between the Company and
David R. Clark, together with Amendment to Employment Contract, dated
as of February 23, 1998 (incorporated by reference to Exhibit 10.18 to
the Company's Registration Statement on Form S-4 (No. 333-58711))
10.13 Consulting and Non-Competition Agreement, dated as of January 29, 1998,
between the Company and Charles F. Connor, Jr. (incorporated by
reference to Exhibit 10.20 to the Company's Registration Statement on
Form S-4 (No. 333-58711))
10.14 Rights Agreement, dated as of September 2, 1997, between the Company
and American Stock Transfer & Trust Company, Rights Agent (incorporated
by reference to Exhibit 99.1 to the Company's Current Report on Form
8-K filed with the SEC on September 5, 1997)
10.15 Credit Agreement, dated as of June 9, 1998, among the Company, certain
Guarantors, First Union Commercial Corporation ("First Union"), as
Agent and a Lender, and NationsBank N.A., American National Bank and
Trust Company of Chicago and National City Commercial Finance, Inc., as
Lenders (incorporated by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K filed with the SEC on June 24, 1998)
10.16 Security Agreement, dated as of June 9, 1998, among the Company,
certain Guarantors and First Union, as Agent (incorporated by reference
to Exhibit 99.2 to the Company's Current Report on Form 8-K filed with
the SEC on June 24, 1998)
10.17 Pledge Agreement, dated as of June 9, 1998, among the Company, certain
Guarantors and First Union, as Agent (incorporated by reference to
Exhibit 99.3 to the Company's Current Report on Form 8-K filed with the
SEC on June 24, 1998)
10.18 Amendment to Credit Agreement and Consent, dated as of September 5,
1998, among the Company, certain subsidiaries of the Company, First
Union, as Agent and a Lender, and certain other Lenders (incorporated
by reference to Exhibit 10.32 to Pre-Effective Amendment No. 1 to the
Company's Registration Statement on Form S-4 (No. 333-58711)
10.19 Borrower Joinder Agreement dated as of February 26, 1999 between Fresh
Foods Restaurant Group, LLC and First Union, as Agent (schedules
omitted) (incorporated by reference to Exhibit 10.33 to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended December 4,
1999)
10.20 Amendment No. 2 to Credit Agreement and Waiver dated as of April 14,
1999 among the Company, certain subsidiaries of the Company, First
Union, as Agent and a Lender, and certain other Lenders (incorporated
by reference to Exhibit 10.34 to the Company's Quarterly Report on Form
10-Q for its fiscal quarter ended December 4, 1999)
10.21 Amendment No. 3 to Credit Agreement dated as of May 14, 1999 among the
Company, certain subsidiaries of the Company, First Union, as Agent and
a Lender, and certain other Lenders (incorporated by reference to
Exhibit 10.35 to the Company's Quarterly Report on Form 10-Q for its
fiscal quarter ended December 4, 1999)
10.22 Consent dated as of July 29, 1999 among the Company, certain
subsidiaries of the Company, First Union, as Agent and a Lender, and
certain other Lenders (incorporated by reference to Exhibit 10.36 to
the Company's Quarterly Report on Form 10-Q for its fiscal quarter
ended December 4, 1999)
10.23 Amended and Restated Change in Control Agreement dated as of July 6,
1999 between the Company and David R. Clark (incorporated by reference)
to Exhibit 10.37 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 4, 1999)
16
<PAGE> 19
10.24 Amended and Restated Change in Control Agreement dated as of July 6,
1999 between the Company and James C. Richardson, Jr. (incorporated by
reference to Exhibit 10.38 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended December 4, 1999)
10.25 Severance, Consulting and Noncompete Agreement dated as of July 12,
1999 among Claremont Restaurant Group, LLC, the Company and L. Dent
Miller (incorporated by reference to Exhibit 10.39 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended December 4,
1999)
10.26 Severance, Consulting and Noncompete Agreement dated as of July 12,
1999 among Claremont Restaurant Group, LLC, the Company, HERTH
Management, Inc. and Richard F. Howard (incorporated by reference to
Exhibit 10.40 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 4, 1999)
10.27 Incentive Agreement dated as of August 18, 1999 among the Company,
Pierre Foods, LLC and Norbert E. Woodhams, together with First
Amendment to Incentive Agreement dated as of January 1, 2000
(incorporated by reference to Exhibit 10.41 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 4, 1999)
10.28 Severance, Consulting and Noncompete Agreement dated as of September
13, 1999 among Claremont Restaurant Group, LLC, the Company, HERTH
Management, Inc. and James M. Templeton (incorporated by reference to
Exhibit 10.42 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 4, 1999)
10.29 Amendment No. 4 to Credit Agreement dated as of September 23, 1999
among the Company, certain subsidiaries of the Company, First Union, as
Agent and Lender, and certain other Lenders (incorporated by reference
to Exhibit 10.43 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 4, 1999)
10.30 Asset Purchase Agreement dated as of September 30, 1999 among Fairgrove
Restaurants, LLC, the Company and Fresh Foods Sales, LLC (schedules and
exhibits omitted) (incorporated by reference to Exhibit 10.44 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 4, 1999)
10.31 Amended and Restated Management Services Agreement dated as of December
17, 1999 between HERTH Management, Inc. and the Company (incorporated
by reference to Exhibit 10.45 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended December 4, 1999)
10.32 Agreement dated December 21, 1999 between the Company and Gungor
Solmaz, together with form of Agreement dated January 2000 between the
Company and Gungor Solmaz (incorporated by reference to Exhibit 10.46
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 4, 1999)
10.33 Fifth Amendment to Credit Agreement and Consent dated as of December
30, 1999 by and among the Company, certain subsidiaries of the Company,
First Union, as Agent and Lender, and certain other Lenders (schedules
and exhibits omitted) (incorporated by reference to Exhibit 10.47 to
the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 4, 1999)
10.34 Consulting and Noncompete Agreement dated as of January 6, 2000 between
the Company and L. Dent Miller (incorporated by reference to Exhibit
10.48 to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended December 4, 1999)
10.35 Consulting and Noncompete Agreement dated as of January 14, 2000
between the Company and Charles F. Connor, Jr. (incorporated by
reference to Exhibit 10.49 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended December 4, 1999)
17
<PAGE> 20
10.36 Bonus Agreement dated as of June 30, 1999 between the Company and James
E. Harris (incorporated by reference to Exhibit 10.50 to the Company's
Quarterly Report on Form 10-Q for its fiscal quarter ended December 4,
1999)
10.37 Loan and Security Agreement, dated as of May 24, 2000, between the
Company and Fleet Capital Corporation, as Lender (schedules omitted)
(incorporated by reference to Exhibit 10.51 to the Company's Annual
Report on Form 10-K for its fiscal year ended March 6, 2000)
27 Financial Data Schedule
27(a) Restated Financial Data Schedule for the quarter ended June 5, 1999.
The Company hereby agrees to provide to the Commission, upon request,
copies of long-term debt instruments omitted from this report pursuant to Item
601(b)(4)(iii)(A) of Regulation S-K under the Securities Act.
18
