<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 December 2, 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
PIERRE 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
FRESH FOODS, INC.
(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.
<TABLE>
<CAPTION>
Class Outstanding at January 1, 2001
----- ------------------------------
<S> <C>
COMMON STOCK, NO PAR VALUE 5,781,480
</TABLE>
<PAGE> 2
PIERRE FOODS, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets -
December 2, 2000 and March 4, 2000....................................................... 1 - 2
Consolidated Statements of
Operations and Retained Earnings -
Thirteen Weeks Ended December 2, 2000
and Thirteen Weeks Ended December 4, 1999................................................ 3 - 4
Consolidated Statements of
Operations and Retained Earnings -
Thirty-Nine Weeks Ended December 2, 2000
and Thirty-Nine Weeks Ended December 4, 1999............................................ 5 - 6
Consolidated Statements of Cash Flows -
Thirty-Nine Weeks Ended December 2, 2000 and
Thirty-Nine Weeks Ended December 4, 1999................................................. 7 - 8
Notes to Consolidated Financial
Statements............................................................................... 9 - 11
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations.................................. 12 - 16
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K.................................................. 17
Signatures............................................................................... 18
Index to Exhibits........................................................................ 19 - 23
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PIERRE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 2, 2000 March 4, 2000
---------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ -- $ 2,701,464
Accounts receivable, net (includes related party receivables
of $215,000 and $292,990 at December 2, 2000 and March 4,
2000, respectively) 18,011,639 17,422,811
Notes receivable - current, net (includes related party notes
receivable of $152,456 at March 4, 2000) 84,561 238,513
Inventories 26,549,788 25,025,421
Refundable income taxes 4,051,646 2,828,156
Deferred income taxes 2,652,624 2,290,361
Prepaid expenses and other current assets (includes related
party prepaid expenses of $130,007 at December 2, 2000) 1,202,045 799,582
-------------- --------------
Total current assets 52,552,303 51,306,308
-------------- --------------
PROPERTY, PLANT AND EQUIPMENT, NET 34,798,089 35,784,819
-------------- --------------
OTHER ASSETS:
Trade name, net 40,656,136 41,764,636
Excess of cost over fair value of net assets of businesses
acquired, net 28,126,766 28,893,723
Other intangible assets, net 2,412,180 2,556,936
Notes receivable - related party 705,493 705,493
Deferred loan origination fees, net 2,749,602 3,714,748
-------------- --------------
Total other assets 74,650,177 77,635,536
-------------- --------------
Total Assets $ 162,000,569 $ 164,726,663
============== ==============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE> 4
PIERRE FOODS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Unaudited)
December 2, 2000 March 4, 2000
---------------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt $ 140,136 $ 314,433
Trade accounts payable 6,890,508 5,493,168
Accrued insurance 6,131 154,947
Accrued interest 71,565 3,213,929
Accrued payroll and payroll taxes 3,452,257 2,427,691
Accrued promotions (includes related party payables of $32,060
and $51,450 at December 2, 2000 and March 4, 2000,
respectively) 2,297,816 1,903,241
Accrued taxes (other than income and payroll) 559,196 563,879
Other accrued liabilities 637,413 831,681
-------------- --------------
Total current liabilities 14,055,022 14,902,969
-------------- --------------
LONG TERM DEBT, less current installments 116,826,531 115,164,922
-------------- --------------
OTHER LONG-TERM LIABILITIES 1,422,212 1,638,466
-------------- --------------
DEFERRED INCOME TAXES 1,483,306 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 December 2, 2000 - 5,781,480 shares and
March 4, 2000 - 5,781,000 shares 5,781,480 5,781,000
Additional paid in capital 23,317,053 23,315,881
Retained earnings 4,114,965 7,436,291
Note receivable - related party (5,000,000) (5,000,000)
-------------- --------------
Total shareholders' equity 28,213,498 31,533,172
-------------- --------------
Total Liabilities and Shareholders' Equity $ 162,000,569 $ 164,726,663
============== ==============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE> 5
PIERRE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------
December 2, 2000 December 4, 1999
---------------- ----------------
<S> <C> <C>
REVENUES:
Food processing $ 60,883,230 $ 50,012,578
-------------- --------------
Total operating revenues 60,883,230 50,012,578
-------------- --------------
COSTS AND EXPENSES:
Cost of goods sold 38,788,372 32,257,768
Selling, general and administrative expenses (includes related
party transactions totaling $970,290 and $1,842,038 in fiscal
2001 and fiscal 2000, respectively) 17,581,112 22,234,985
Net loss of disposition of property, plant and equipment 5,190 28,233
Depreciation and amortization 1,547,534 1,567,003
-------------- --------------
Total costs and expenses 57,922,208 56,087,989
-------------- --------------
OPERATING INCOME (LOSS) 2,961,022 (6,075,411)
-------------- --------------
OTHER INCOME (EXPENSE):
Interest expense (3,323,028) (3,667,038)
Other income, net - (including interest) (includes related party
income totaling $11,121 and $46,960 in fiscal 2001 and fiscal
2000, respectively) 42,076 99,224
-------------- --------------
Other expense, net (3,280,952) (3,567,814)
-------------- --------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME
TAX BENEFIT (319,930) (9,643,225)
INCOME TAX (PROVISION) BENEFIT (77,921) 1,728,597
-------------- --------------
LOSS FROM CONTINUING OPERATIONS (397,851) (7,914,628)
DISCONTINUED OPERATIONS:
Income from discontinued restaurant segment (net of income taxes
of $214,473) -- 299,246
Gain on disposal of discontinued restaurant segment (net of income
taxes of $3,968,525) -- 6,801,726
-------------- --------------
Discontinued operations, net -- 7,100,972
-------------- --------------
NET LOSS $ (397,851) $ (813,656)
============== ==============
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C> <C>
RETAINED EARNINGS:
Balance at beginning of period $ 4,512,816 $ 11,127,625
Net loss (397,851) (813,656)
-------------- ----------------
Balance at end of period $ 4,114,965 $ 10,313,969
============== ================
NET LOSS PER COMMON SHARE - BASIC AND DILUTED
Loss from continuing operations $ (0.07) $ (1.36)
Discontinued operations:
Income from discontinued restaurant segment -- 0.05
Gain on disposal of discontinued restaurant segment -- 1.17
-------------- ----------------
Discontinued operations -- 1.22
-------------- ----------------
Net loss per share $ (0.07) $ (0.14)
============== ================
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND
DILUTED 5,781,480 5,821,347
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 7
PIERRE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
-----------------------
December 2, 2000 December 4, 1999
---------------- ----------------
<S> <C> <C>
REVENUES:
Food processing $ 155,564,112 $ 133,991,291
Ham curing -- 2,096,052
--------------- ---------------
Total operating revenues 155,564,112 136,087,343
--------------- ---------------
COSTS AND EXPENSES:
Cost of goods sold (includes related party transactions totaling
$2,882 in fiscal 2000) 99,118,727 82,665,162
Selling, general and administrative expenses (includes related
party transactions totaling $1,799,736 and $3,444,961 in fiscal
2001 and fiscal 2000, respectively) 46,124,631 49,776,969
Net loss on sale of Mom `n' Pop's Country Ham, LLC -- 2,857,160
Net loss of disposition of property, plant and equipment 27,695 29,909
Depreciation and amortization 4,674,039 4,639,944
--------------- ---------------
Total costs and expenses 149,945,092 139,969,144
--------------- ---------------
OPERATING INCOME (LOSS) 5,619,020 (3,881,801)
--------------- ---------------
OTHER INCOME (EXPENSE):
Interest expense (10,042,150) (11,616,320)
Other income (expense), net - (including interest) (includes
related party income totaling $46,742 and $91,950 in fiscal 2001 and
fiscal 2000, respectively) 234,481 69,270
--------------- ---------------
Other expense, net (9,807,669) (11,547,050)
--------------- ---------------
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME
TAX BENEFIT (4,188,649) (15,428,851)
INCOME TAX BENEFIT 1,322,561 4,071,962
--------------- ---------------
LOSS FROM CONTINUING OPERATIONS (2,866,088) (11,356,889)
DISCONTINUED OPERATIONS:
Income from discontinued restaurant segment (net of income taxes
of $1,507,029) -- 2,828,367
Gain on disposal of discontinued restaurant segment (net of
income taxes of $3,968,525) -- 6,801,726
--------------- ---------------
Discontinued operations, net -- 9,630,093
--------------- ---------------
LOSS BEFORE EXTRAORDINARY ITEM (2,866,088) (1,726,796)
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C> <C>
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT (NET OF INCOME TAX
BENEFIT OF $258,303 AND $35,633 IN FISCAL 2001 AND 2000,
RESPECTIVELY) (455,238) (52,350)
------------- ----------------
NET LOSS $ (3,321,326) $ (1,779,146)
============= ================
RETAINED EARNINGS:
Balance at beginning of period $ 7,436,291 $ 12,093,115
Net loss (3,321,326) (1,779,146)
------------- ----------------
Balance at end of period $ 4,114,965 $ 10,313,969
============= ================
NET LOSS PER COMMON SHARE - BASIC AND DILUTED
Loss from continuing operations $ (0.49) $ (1.95)
Discontinued operations:
Income from discontinued restaurant segment -- 0.49
Gain on disposal of discontinued restaurant segment -- 1.17
------------- ----------------
Discontinued operations -- 1.66
------------- ----------------
Extraordinary loss on early extinguishment of debt (0.08) (0.01)
------------- ----------------
Net loss per share (0.57) (0.30)
============= ================
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND
DILUTED 5,781,319 5,827,173
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 9
PIERRE FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
-----------------------
December 2, 2000 December 4, 1999
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,321,326) $ (1,779,146)
-------------- --------------
Adjustments to reconcile net loss to net cash used in operating activities:
Extraordinary loss on early extinguishment of debt before income
tax benefit 713,541 87,983
Depreciation and amortization 4,674,039 6,795,241
Depreciation on properties leased to others -- 116,837
Deferred income taxes (530,314) 713,223
Net gain on disposition of discontinued operations -- (10,805,626)
Net loss on disposition of property, plant and equipment 27,695 2,866,027
Decrease in other long-term liabilities (216,254) --
Other non-cash adjustments to earnings 338,249 642,727
Changes in operating assets and liabilities:
Receivables (588,828) (476,767)
Inventories (1,524,367) (3,793,185)
Refundable income taxes, prepaid expenses and other
current assets (1,461,730) (2,231,561)
Trade accounts payable and other accrued liabilities (673,650) (3,623,030)
-------------- --------------
Total adjustments 758,381 (9,708,131)
-------------- --------------
Net cash used in operating activities (2,562,945) (11,487,277)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of property, plant and equipment 60,300 620,292
Net proceeds from disposal of restaurant division 49,234,814
Decrease in related party notes receivables 152,456 1,436,782
Decrease in other notes receivable 1,496 139,180
Capital expenditures to related parties -- (316,233)
Capital expenditures - other (1,755,091) (3,468,571)
Payments for non-compete and consulting agreements -- (490,178)
Other investing activities, net -- 53,877
-------------- --------------
Net cash provided by (used in) investing activities (1,540,839) 47,209,963
-------------- --------------
</TABLE>
7
<PAGE> 10
<TABLE>
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under revolving credit agreement 1,717,520 (29,000,000)
Principal payments on long-term debt (230,208) (2,337,775)
Loan origination fees (84,992) (177,909)
Proceeds from issuance of common stock -- 116,925
-------------- --------------
Net cash provided by (used in) financing activities 1,402,320 (31,398,759)
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,701,464) 4,323,927
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,701,464 1,664,398
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ -- $ 5,988,325
============== ==============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
8
<PAGE> 11
PIERRE 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 December 2, 2000 and March 4, 2000, the results of
operations for the thirteen weeks and thirty-nine weeks ended December 2, 2000
and December 4, 1999, and the cash flows for the thirty-nine weeks ended
December 2, 2000 and December 4, 1999. Financial statements for the period ended
December 4, 1999 ("fiscal 2000") have been reclassified, where applicable, to
conform to financial statement presentation used for the period ended December
2, 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 and thirty-nine weeks
ended December 2, 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:
<TABLE>
<CAPTION>
December 2, 2000 March 4, 2000
---------------- -------------
<S> <C> <C>
Manufacturing supplies $ 2,833,592 $ 1,149,107
Raw materials 2,565,592 3,857,801
Work in process 2,457 --
Finished goods 21,148,147 20,018,513
------------- -------------
Total $ 26,549,788 $ 25,025,421
============= =============
</TABLE>
3. SUPPLEMENTAL CASH FLOW DISCLOSURES - CASH PAID DURING THE PERIOD
<TABLE>
<CAPTION>
Thirty-nine Thirty-nine
Weeks Ended Weeks Ended
December 2, 2000 December 4, 1999
---------------- ----------------
<S> <C> <C>
Interest $ 12,219,368 $ 14,413,440
============= =============
Income taxes net of
refunds received $ 8,717 $ 2,952,890
============= =============
</TABLE>
9
<PAGE> 12
4. COMPREHENSIVE INCOME
Total comprehensive loss was comprised solely of the net loss in fiscal
2001 and fiscal 2000. Comprehensive loss was $397,851 and $813,656 for the
quarters ended December 2, 2000 and December 4, 1999, respectively; and
$3,321,326 and $1,779,146 for the year to date periods ended December 2, 2000
and December 4, 1999, respectively.
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 December 2, 2000, outstanding
borrowings under the revolving credit facility were approximately $1.7 million,
and additional borrowing availability was approximately $17.5 million. In
addition, at December 2, 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 480 shares of the Company's common stock to employees for
longevity awards.
7. EMPLOYEE BENEFIT PLANS
Effective June 16, 2000, the Company terminated its Employee Stock
Purchase Plan. The Plan assets, comprised of the Company's common stock and
cash, totaling approximately $230,000, were distributed 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.
Effective August 1, 2000, the Company adopted the Pierre Foods, Inc.
Compensation Exchange Plan. The Plan is a non-qualified deferred compensation
plan in which eligible participants consist of certain highly compensated
employees and the Company's Board of Directors. As of December 2, 2000, cash
contributions to the plan total $29,206.
8. RECENTLY ISSUED ACCOUNTING GUIDANCE
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133, as amended, establishes accounting and reporting standards for
derivative financial instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as embedded derivatives)
and for hedging activities. The new standard requires an entity to recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. SFAS No. 133 will be in
effect for the first quarter of the fiscal year ending March 2, 2002. The
Company believes that certain forward contracts entered into as part of the
normal operations will not significantly impact earnings due to the adoption of
SFAS No. 133.
10
<PAGE> 13
In June 2000, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "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 the fiscal year ending March 3, 2001. Management is currently
evaluating the effects of SAB 101 on the Company's financial statements and
current disclosures.
11
<PAGE> 14
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 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 information
below. The ham curing operations did not qualify 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 December 2, 2000 Compared to Fiscal Quarter Ended December
4, 1999
Revenues. Revenues from continuing operations increased by $10.9
million, or 21.7%. The increase in revenues is due to increases in demand in all
core customer channels.
Cost of goods sold. Cost of goods sold increased by $6.5 million, or
20.2%. As a percentage of revenues, cost of goods sold decreased from 64.5% to
63.7%. This decrease primarily is due to an increase in production volume during
the fiscal quarter ended December 2, 2000, compared to the fiscal quarter ended
December 4, 1999.
Selling, general and administrative. Selling, general and
administrative expenses decreased by $4.7 million (20.9%). The decrease
primarily is due to a decrease in overhead costs following the divestitures of
the restaurant operations and ham curing business and subsequent corporate
restructuring in fiscal 2000. As a percentage of operating revenues, selling,
general and administrative expenses decreased from 44.5% to 28.9%.
Depreciation and amortization. Depreciation and amortization expense
decreased 1.2%. The decrease primarily is due to a reduction in capital
expenditures in fiscal 2001 compared to fiscal 2000. As a percentage of
operating revenues, depreciation and amortization decreased from 3.1% to 2.5%.
Other expense, net. Other expense, net decreased by $.3 million, or
8.0%. This decrease primarily is due to a decrease in interest expense due to
decreased borrowings under the Company's revolving credit facility (see ---
"Liquidity and Capital Resources" below).
Income tax (provision) benefit. The provision for income taxes for the
fiscal quarter ended December 2, 2000 is the result of the change in estimated
tax benefit from the prior year in connection with the completion of the income
tax return; combined with the effects of permanent timing differences in the
fiscal quarter ended December 2, 2000. The 17.9% effective tax rate for the
fiscal quarter ended December 4, 1999 is due to 1) a tax benefit of $1.7
million relating to the loss from continuing operations in the fiscal quarter
ended December 4, 1999 which did not recur in the fiscal quarter ended December
2, 2000; offset by 2) $2.5 million in expenses which were not deducted for
income tax purposes in the fiscal quarter ended December 4, 1999 due to
limitations imposed by Section 162(m) of the Internal Revenue Code which did
not recur in the fiscal quarter ended December 2, 2000; plus 3) the effects of
permanent timing differences in the fiscal quarter ended December 2, 2000.
12
<PAGE> 15
Fiscal Year to Date Ended December 2, 2000 Compared to Fiscal Year to Date Ended
December 4, 1999
Revenues. Revenues from continuing operations increased by $19.5
million, or 14.3%, comprised of a $21.6 million (16.1%) increase in the food
processing segment offset by a $2.1 million decrease in the ham curing segment.
The increase in food processing revenues was due to increases in demand in all
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 $16.5 million, or
19.9%, comprised of a $18.4 million (22.7%) increase in the food processing
segment offset by a $1.9 million decrease in the ham curing segment. As a
percentage of food processing revenues, food processing cost of goods sold
increased from 60.3% to 63.7%. This increase primarily is due to increased
demand for product categories with lower margins and costs incurred due to
change in product mix. 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 decreased by $3.7 million, or 7.3%, comprised of a $3.4
million (6.8%) decrease in the food processing segment combined with a $.3
million decrease in the ham curing segment. The decrease in the food processing
segment primarily is due to a decrease in overhead costs following the
divestitures of the restaurant operations and ham curing business and subsequent
corporate restructuring in fiscal 2000, offset by increased distribution costs
due to fuel surcharges. The decrease in ham curing selling, general and
administrative expenses was due to the Company's strategic decision to exit the
ham curing business, effective July 3, 1999. As a percentage of operating
revenues, selling, general and administrative expenses decreased from 36.6% to
29.6%.
Depreciation and amortization. Depreciation and amortization expense
increased by .7%, comprised of a $.2 million increase in the food processing
segment offset by a $.1 million decrease in the ham curing segment. The increase
in the food processing segment is due to routine capital expenditures. The
decrease in ham curing depreciation and amortization was due to the Company's
strategic decision to exit the ham curing business. As a percentage of operating
revenues, depreciation and amortization decreased from 3.4% to 3.0%.
Other expense, net. Other expense, net decreased by $1.7 million, or
15.1%. This decrease primarily is due to a decrease in interest expense
resulting from decreased borrowings under the Company's revolving credit
facility (see --- "Liquidity and Capital Resources" below).
Income tax benefit. The effective tax rate for the fiscal year to date
ended December 2, 2000 was 31.6%, compared to 26.4% for the fiscal year to date
ended December 4, 1999. The higher rate in the fiscal year to date ended
December 2, 2000 is due to 1) a tax benefit of $4.1 million relating to the loss
from continuing operations in the fiscal year to date ended December 4, 1999
which did not recur in the fiscal year to date ended December 2, 2000, offset by
2) $2.5 million in expenses which were not deducted for income tax purposes in
the fiscal year to date ended December 4, 1999 due to limitations imposed by
Section 162(m) of the Internal Revenue Code which did not recur in the fiscal
year to date ended December 2, 2000; 3) state tax liabilities incurred in fiscal
2000 related to income from discontinued operations; 4) the effects of permanent
timing differences; and 5) a change in estimated tax benefit from the prior year
in connection with the completion of the income tax return.
13
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $2.6 million for the fiscal
year to date ended December 2, 2000, as compared to $11.5 million for the fiscal
year to date ended December 4, 1999. The primary components of net cash used in
operating activities for the fiscal year to date ended December 2, 2000 were: 1)
an increase in refundable income taxes of $1.1 million, combined with a decrease
in deferred income tax assets of $1.0 million and a decrease in deferred income
tax liabilities of $1.5 million; and 2) an increase in prepaid and other current
assets of $.4 million combined with a decrease in trade accounts payable and
other accrued liabilities of $.7 million due to timing of certain payments. The
decrease in net cash used in operating activities primarily was due to a
decrease in the loss from continuing operations in the fiscal year to date ended
December 2, 2000, compared to the loss from continuing operations in the fiscal
year to date ended December 4, 1999.
Net cash used in investing activities was $1.5 million for the fiscal
year to date ended December 2, 2000, compared to $47.2 million provided by
investing activities for the fiscal year to date ended December 4, 1999. The
primary components of net cash used in investing activities for the fiscal year
to date ended December 2, 2000 were capital expenditures. The decrease in net
cash provided by investing activities primarily was due to net proceeds from
disposal of the restaurant division which did not recur in fiscal 2001.
Net cash provided by financing activities was $1.4 million for the
fiscal year to date ended December 2, 2000, compared to $31.4 million used in
financing activities for the fiscal year to date ended December 4, 1999. The
primary component of net cash provided by financing activities for the fiscal
year to date ended December 2, 2000 was borrowings under the $25 million
revolving credit agreement. The decrease in cash used in financing activities
primarily was due to the reduction of the $75 million revolving credit facility
subsequent to the disposal of the restaurant division in the fiscal year to date
ended December 4, 1999, 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 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 December 2, 2000, the Company had no cash or cash equivalent on
hand, had outstanding borrowings of $1.7 million under the revolving credit
facility, and had approximately $17.5 million of additional borrowing
availability. At December 2, 2000, the Company was in compliance with the
financial covenants under the facility, but continued compliance will depend
upon future cash flows and net income which are not assured.
The Company has budgeted approximately $1.0 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 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 the Company
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; and there is no reason to believe that additional long-term
financing is available to the Company.
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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.
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 December 2,
2000 or March 4, 2000. Certain of the Company's outstanding nonderivative
financial instruments at December 2, 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
December 2, 2000 have not changed materially since March 4, 2000. At December 2,
2000, the $115 million of Senior Notes and $.1 million in capital lease
obligations were accruing interest at fixed rates, and the $1.7 million
borrowings under the revolving credit facility were accruing interest at
variable rates. In the future, should the Company continue to borrow funds under
its existing credit facility or enter into other long-term financing
arrangements, 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.
STOCK TRANSFER TO NASDAQ SMALLCAP MARKET
Subsequent to notification from the Nasdaq Stock Market ("Nasdaq") that
Nasdaq was reviewing the Company's eligibility for continued listing on the
Nasdaq National Market, the Company applied for listing on the Nasdaq SmallCap
Market tier of Nasdaq. The Company's stock was successfully transferred to the
Nasdaq SmallCap Market on August 25, 2000, and continues to trade under the
symbol "FOOD."
To keep its listing on the Nasdaq SmallCap Market, the Company will
need to maintain net tangible assets of at least $2 million or generate net
income of $500,000 in the current fiscal year, both of which are unlikely to
happen. The Company's stock, which has recently been trading below $1.00 a
share, also must maintain a bid price at or above $1.00 in the Nasdaq SmallCap
Market transactions. If the Company cannot continue to satisfy these standards
for maintaining the listing of its common stock on the Nasdaq SmallCap Market,
then Nasdaq can be expected to delist the stock from that market, leaving the
Company's common stock to trade only in the relatively illiquid OTC Bulletin
Board, sponsored by Nasdaq, or the still-less-visible "pink sheets."
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
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<PAGE> 18
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.
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<PAGE> 19
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See the Index to Exhibits provided elsewhere in this report.
(b) Reports on Form 8-K
None.
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<PAGE> 20
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.
PIERRE FOODS, INC.
Date January 16, 2001 By: /s/ Norbert E. Woodhams
-----------------------------------------
Norbert E. Woodhams
President and Chief Executive Officer
(Principal Executive Officer)
Date January 16, 2001 By: /s/ Pamela M. Witters
-----------------------------------------
Pamela M. Witters
Chief Financial Officer
(Principal Financial Officer)
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<PAGE> 21
INDEX TO EXHIBITS
For inclusion in Quarterly Report on Form 10-Q for the Quarter Ended December 2,
2000
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
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 Note (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)
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C>
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, Trustee, 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 between the Company and State Street Bank
and Trust Company, Trustee, (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 Form S-8
(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 Employee 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))
</TABLE>
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<PAGE> 23
<TABLE>
<S> <C>
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)
</TABLE>
21
<PAGE> 24
<TABLE>
<S> <C>
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)
</TABLE>
22
<PAGE> 25
<TABLE>
<S> <C>
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)
10.38 Pierre Foods, Inc. Compensation Exchange Plan dated August 1, 2000 (incorporated by reference to
Exhibit 10.38 to the Company's Quarterly Report on Form 10-Q for its fiscal quarter ended
September 2, 2000)
</TABLE>
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.
23
