<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 16, 1995
-----------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File Number 0-12800
----------------------------
VIE DE FRANCE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-0948383
------------- ------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
</TABLE>
85 S BRAGG STREET, SUITE 600, ALEXANDRIA, VA 22312
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (703) 750-9600
-----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934, during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of October 30, 1995.
<TABLE>
<S> <C>
COMMON STOCK 0.01 PAR VALUE NUMBER OF SHARES
- --------------------------- ----------------
NO CLASS 13,780,793
CLASS B NONE
</TABLE>
Page 1 of 15
<PAGE> 2
VIE DE FRANCE CORPORATION
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited consolidated financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company, all adjustments necessary
for the fair presentation of the Company's results of operations, financial
position and changes therein for the periods presented have been included.
Page 2 of 15
<PAGE> 3
VIE DE FRANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPT. 16, JUNE 24,
ASSETS 1995 1995
- ------ ------------ ------------
<S> <C> <C>
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $5,036,267 $5,314,380
Short-term investment, related party . . . . . . . . . . . . . . . . 4,900,000 4,900,000
Investments, current . . . . . . . . . . . . . . . . . . . . . . . . 3,514,232 3,995,298
Accounts receivable-trade, less allowance for doubtful accounts . . . 1,889,857 1,645,741
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,204,708 2,349,798
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 107,608 118,990
Current portion of notes receivable, related party . . . . . . . . . 1,577,701 1,551,438
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . 531,931 688,646
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 20,762,304 20,564,291
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,588 2,025,258
Note receivable, related party. . . . . . . . . . . . . . . . . . . . . 516,646 516,646
Fixed assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,909,523 5,970,945
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,317,572 834,371
----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,008,633 $29,911,511
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . $852,881 $1,486,035
Accrued payroll and related liabilities. . . . . . . . . . . . . . . 476,887 517,773
Reserves for store closings. . . . . . . . . . . . . . . . . . . . . 214,411 194,900
Other accrued taxes. . . . . . . . . . . . . . . . . . . . . . . . . 147,838 147,838
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . 84,009 101,989
Current portion of long-term debt. . . . . . . . . . . . . . . . . . 801,632 734,368
----------- -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . 2,577,658 3,182,903
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,897,062 2,247,048
----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 4,474,720 5,429,951
----------- -----------
Stockholders' equity
Common stock - $.01 par value, 20,000,000 shares authorized,
14,034,620 shares issued, and 13,778,543 shares outstanding. . . . . 140,369 140,346
Class B stock - $.01 par value, 175,000 authorized, none issued . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 21,273,411 21,269,214
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 4,542,731 4,502,775
Less cost of 256,077 shares held in treasury. . . . . . . . . . . . . (1,439,844) (1,439,844)
Translation adjustment . . . . . . . . . . . . . . . . . . . . . . . 17,246 9,069
----------- -----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . 24,533,913 24,481,560
----------- -----------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . .
----------- -----------
Total liabilities and stockholders' equity . . . . . . . . . . . . . $29,008,633 $29,911,511
=========== ===========
</TABLE>
Page 3 of 15
<PAGE> 4
VIE DE FRANCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER
--------------------------------
TWELVE WEEKS ENDED
--------------------------------
SEPTEMBER 16, SEPTEMBER 17,
1995 1994
------------- -------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,862,182 $3,229,720
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 3,485,762 2,442,531
----------- -----------
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 376,420 787,189
Selling and administration . . . . . . . . . . . . . . . . . . . . . . 927,039 987,712
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 26,434 185,175
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,761) (1,927)
------------ ------------
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . (572,292) (383,771)
------------ ------------
Nonoperating income
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 257,117 290,337
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . (65,710) (1,183)
Foreign exchange income . . . . . . . . . . . . . . . . . . . . . . . 39,313
----------- -----------
Net nonoperating income . . . . . . . . . . . . . . . . . . . . . . 230,720 289,154
----------- -----------
Loss from continuing operations before income
taxes, disc ops, and change in acctg principle . . . . . . . . . . . (341,572) (94,617)
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . 109,575 37,772
----------- ----------
Loss from continuing operations before
discontinued ops & cum effect of acctg change . . . . . . . . . . . . (231,997) (56,845)
Discontinued operations
Gain from Bakery division . . . . . . . . . . . . . . . . . . . . . . 75,000
Cum effect of change in accounting principle . . . . . . . . . . . . 196,953
----------- -----------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $39,956 ($56,845)
=========== ============
Earnings per common share:
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . ($0.01) $ 0.00
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . 0.00
Cum effect of change in accounting principle . . . . . . . . . . . . 0.01
----------- -----------
Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . $0.00 $ 0.00
=========== ===========
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . 13,780,338 13,567,787
</TABLE>
Page 4 of 15
<PAGE> 5
VIE DE FRANCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FIRST QUARTER
--------------------------------
TWELVE WEEKS ENDED
SEPTEMBER 16, SEPTEMBER 17,
------------- -------------
1995 1994
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . $39,956 ($56,845)
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 276,934 185,175
Change in translation adjustment . . . . . . . . . . . . . . . . . . 8,177 32,706
Gain on discontinued operations . . . . . . . . . . . . . . . . . . . (75,000)
Changes in assets and liabilities:
(Increase) decrease in receivables . . . . . . . . . . . . . (244,116) 100,907
Increase in notes receivable, related party . . . . . . . . . (26,263) (509,641)
Increase in inventory . . . . . . . . . . . . . . . . . . . . (854,910) (209,559)
Decrease in prepaid expenses . . . . . . . . . . . . . . . . 11,383 64,063
Increase in accounts payable and accrued expenses . . . . . . (538,644) (91,522)
Decrease in accrued payroll and payroll taxes . . . . . . . . (40,886) (244,956)
Decrease in other accrued taxes . . . . . . . . . . . . . . . (68,885)
Change in income taxes, net . . . . . . . . . . . . . . . . . (17,980) (3,310,993)
Change in other assets and liabilities, net . . . . . . . . . 173,514 (23,930)
------------ -------------
Net cash used by operating activities . . . . . . . . . . . . (1,287,835) (4,133,480)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in investments, net . . . . . . . . . . . . . . . . . . . . 2,003,736 1,065,194
Investment in preferred stock . . . . . . . . . . . . . . . . . . . . (500,000)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . (215,512) (652,020)
----------- -----------
Net cash provided by investing activities . . . . . . . . . . 1,288,224 413,174
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock under stock option plans . . . . . . 4,220 24,392
Additions to debt . . . . . . . . . . . . . . . . . . . . . . . . . . 367,646
Reductions of debt . . . . . . . . . . . . . . . . . . . . . . . . . (282,722)
------------ -----------
Net cash (used) provided by financing activities . . . . . . (278,502) 392,038
------------ -----------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . (278,113) (3,328,268)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . 5,314,380 8,931,476
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . $5,036,267 $5,603,208
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the quarter for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000
Income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . $342,000
Non-Cash Activity:
Depreciation expense included in cost of goods sold and inventory . . $250,500
</TABLE>
Page 5 of 15
<PAGE> 6
VIE de FRANCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) Fiscal Periods
The Company utilizes a 52/53 week fiscal year which ends on the last
Saturday in June. The third quarter of each year contains 16 weeks while
the other three quarters contain 12 weeks each.
2) Dividends - None.
3) Contingency - None.
Page 6 of 15
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fiscal year 1996's first quarter results reflect continued sales
growth among the Company's existing customers, as well as more recent customers
within the healthcare and retail markets. The current quarter's earnings were
negatively impacted by considerable retail marketing expense along with losses
associated with the Norwegian operations. These costs were offset by
investment income and two non-recurring items, resulting in a profitable first
quarter for fiscal year 1996.
SALES AND GROSS MARGINS
The Company's sales have been primarily to hotels, airlines, and other
food service providers who order through their distributor networks. During
fiscal year 1996's first quarter, the Company's hotel sales amounted to 47%
of net sales, with Hyatt and Marriott representing almost the full amount of
sales within this segment. Airline sales for 1996's first quarter amounted to
approximately 32% of net sales, representing sales to six major airlines, as
compared to just 27% of net sales for last year's first quarter. Sales
associated with the Company's Norwegian subsidiary, other than intercompany
sales, were immaterial in the current quarter.
Near the end of last fiscal year, the Company expanded its sales
within the foodservice market by adding a national health care chain, Unicare
Healthcare Facilities, to its customer base. The Company believes that sales to
the health care segment may grow to be a significant component of sales over
the next one to two years.
Sales also expanded within the retail market, based upon the test
introduction of a specific product line within Sam's Club, a division of
Wal-Mart Stores, Inc. During the first quarter of fiscal year 1996, sales to
this customer represented approximately 9% of total net sales. With the
completion of the initial test period, a portion of the product line has been
shipped to all 430 Sam's Clubs. The results of this expansion will not be
clear until later in the fiscal year.
As a result of the exposure stemming from these two new accounts, the
Company has received inquiries from a number of prospective customers.
Discussions and recipe development work are currently underway with these
prospective customers.
A comparison of net sales, gross margin percentages and losses from
operations follows:
Page 7 of 15
<PAGE> 8
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------
SEPT. 16, SEPT. 17,
1995 1994
---- ----
(dollars in thousands)
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,862 $ 3,230
Gross margin percentage . . . . . . . . . . . . . . . . . . . . . . . . . 10% 24%
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . $ (572) (384)
</TABLE>
Fiscal year 1996's first quarter sales increased by 23% over last
year's same quarter to $3,862,000 from $3,230,000. As outlined above, the
majority of this increase is attributed to strong growth within the airline
segment, followed by the new business with Sam's Clubs, along with the export
of selected products to several customers in Asia.
Gross margin as a percentage of total net sales decreased to 10% from
24% in the first quarter fiscal year 1996 versus fiscal year 1995. The
decrease is due to a change made in the first quarter of fiscal year 1996
relating to the Company's method of accounting for its finished goods
inventory. On an aggregate basis, the reclassification impact on the first
quarter's statement of operations is as follows (excluding the cumulative
effect of the change in accounting principle) :
<TABLE>
<CAPTION>
INCR (DECR)
INCREASE AS A % OF
(DECREASE) NET SALES
---------- ---------
<S> <C> <C>
Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 700,000 18%
Selling and Administrative . . . . . . . . . . . . . . . . . . . . . . . (450,000) (12%)
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (250,000) (6%)
-------- -------
Net impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 0%
======== =======
</TABLE>
A detailed discussion of the reason and the effects of this change is found
below.
SELLING AND ADMINISTRATIVE EXPENSES
A comparison of selling and general administrative costs follows:
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------
SEPT 16, SEPT. 17,
1995 1994
---- ----
<S> <C> <C>
Selling and administrative costs . . . . . . . . . . . . . . . . . . . . $ 927 $ 988
</TABLE>
Page 8 of 15
<PAGE> 9
Selling and administrative costs decreased as a percentage of net sales
to 24% from 31%. For the first quarter of fiscal year 1996, these costs
decreased by 6% as compared to the prior year, to $927,000 from $988,000. This
decrease is due to the reclassification of approximately $450,000 in fiscal
1996 costs from this expense category to cost of goods sold, stemming from the
change in accounting principle, as summarized earlier. Included in this
quarter's selling expenses is approximately $110,000 in costs associated with
the Sam's Club initiative.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased by $159,000 to $26,000 for the
first quarter of fiscal year 1996 versus $185,000 for the same period a year
ago. This decrease is due to the reclassification of approximately $250,000 in
fiscal 1996 costs from this expense category to cost of goods sold, stemming
from the change in accounting principle, as highlighted above. Included as
part of the $250,000 depreciation expense reclassification is approximately
$80,000 in depreciation expense relating to Norway not present in last year's
first quarter results.
NONOPERATING INCOME AND EXPENSE
Investment income consists of returns earned on funds received from the
sale of the Restaurant Division together with interest income associated with a
$4.9 million collateralized European bank deposit, which earns interest at a
rate which the Company believes to be in excess of the prevailing short-term
interest rates in the United States.
Interest expense relates to the borrowings, including a capital lease,
associated with the Company's Norwegian subsidiary. At September 16, 1995, the
Company, through its Norwegian subsidiary, had borrowings of approximately $2.7
million, bearing interest at rates ranging from 7.25% to 10.0%. It is
anticipated that these borrowings will remain outstanding during the upcoming
fiscal year.
PROVISION FOR TAXES
The income tax benefit for fiscal year 1996's first quarter relates
primarily to the taxes recoverable from prior year payments at the Company's
effective tax rate of 40%.
CHANGE IN ACCOUNTING
Effective June 25, 1995, the Company changed its overhead absorption
policy with regard to finished goods inventories. Prior to this change, the
Company had valued its inventories using partial absorption of certain
plant-level indirect manufacturing overhead costs. Additional costs, such as
material handling, purchasing and receiving, plant administration and factory
and equipment depreciation, were expensed as period costs. These costs will
now be treated as product costs under the full absorption method adopted by the
Company in order to better match costs with related revenues and to better
conform to prevailing manufacturing industry practice.
Page 9 of 15
<PAGE> 10
The following table reflects the Company's results for the first
quarter of fiscal years 1996 and 1995 as reported:
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------
SEPT. 16, SEPT. 17,
1995 1994
---- ----
<S> <C> <C>
Loss from continuing operations
after taxes and before
discontinued operations and
cumulative effect of
accounting change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (231,997) $ (56,845)
Add: Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Add: Cumulative effect of change
in accounting principle (Note 1) . . . . . . . . . . . . . . . . . . . . . . 196,953
------- -------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,956 $ (56,845)
======= =======
Earnings per common share:
Loss from continuing operations
after taxes and before
discontinued operations and
cumulative effect of
accounting change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.01) $ 0.00
Add: Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Add: Cumulative effect of change
in accounting principle (Note 1) . . . . . . . . . . . . . . . . . . . . . . 0.01
----- ----
Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00 $ 0.00
===== ====
</TABLE>
Page 10 of 15
<PAGE> 11
The following table reflects the Company's results for the first quarter of
fiscal years 1996 and 1995 as if the change had been retroactively applied
(Note 1) :
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------
SEPT. 16, SEPT. 17,
1995 1994
---- ----
<S> <C> <C>
Loss from continuing operations
after taxes and before
discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . $ (231,997) $ (56,845)
Add : Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . 75,000
-------- -------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (156,997) $ (56,845)
======== =======
Earnings per common share:
Loss from continuing operations
after taxes and before
discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.01) $ 0.00
Add: Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . 0.00
----- ----
Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.01) $ 0.00
===== ====
</TABLE>
Note 1 : During the quarter ended September 16, 1995, the Company
changed its accounting for finished goods inventories from a partial absorption
method to the full absorption method. The new method is the generally accepted
method used in the manufacturing industry and it is believed that the new
method will cause the Company's operating results to be more comparable with
the operating results of other manufacturing companies. The change in
accounting principle had no effect on loss from continuing operations after
taxes or inventories for the quarter ended September 16, 1995. The adjustment
of $196,953 to apply retroactively the new method is included in net income for
fiscal 1996's first quarter. The pro forma amounts for fiscal 1995's first
quarter results do not change based on the retroactive application of the
change cost of goods sold. This is due to the fact that the Company's finished
goods inventory levels did not materially change during the first quarter of
fiscal year 1995.
DISCONTINUED OPERATIONS
Income from discontinued operations relates to the reduction in Bakery
Division reserves as a result of the Company's settlement of a claim made by
the U.S. Environmental Protection Agency (the "EPA"). In fiscal 1994, the
Company recorded a reserve of $250,000 due to a claim made by the EPA against
one of the Company's former Bakery Division locations. During the first
quarter of fiscal year 1996, the Company reached a settlement with the EPA in
an amount
Page 11 of 15
<PAGE> 12
approximately $75,000 less than reserved, after accounting for all claim
expenses. Payment of the settlement will occur later during fiscal year 1996.
IMPACT OF INFLATION AND THE ECONOMY
Inflation has from time to time had a material impact on the Company's
expenses. Inflation in labor and ingredient costs can significantly affect the
Company's operations. Many of the Company's employees are paid hourly rates
related to, but generally higher than the federal minimum rates.
The Company's sales pricing structure allows for the fluctuation of raw
material prices. As a result, market price variations do not significantly
affect the gross margin realized on product sales. Customer sensitivity to
price changes can influence the overall sales of individual products.
LIQUIDITY AND CAPITAL RESOURCES
The Company has experienced a decline in its liquidity since the end of
last fiscal year. The combined total of the cash and short-term investment
balances was $13,450,000 and $14,210,000 at September 17, 1995 and June 24,
1995, respectively. Additionally, the Company held investments of $503,000 and
$2,025,000 at September 16, 1995 and June 24, 1995, respectively, with
maturities greater than one year. In addition, the Company held one preferred
stock investment of $1,000,000 and $500,000 at September 16, 1995 and June 24,
1995, respectively. This decrease in liquidity is a direct result of the
increased working capital requirements for the Company along with a decrease in
accounts payable.
Cash used by operations for the first quarter amounted to $1,288,000
and $4,133,000 for fiscal years 1996 and 1995 respectively. The use of cash in
fiscal year 1996 resulted primarily from an increase in receivables and
inventories along with a decrease in trade payables and income taxes. The
Company's inventory increase is associated primarily with the Sam's Club retail
initiative. Cash in the amount of $1,288,000 was used by investing activities,
representing a decrease in investments needed to finance capital expenditures
of $215,000, increases in inventories and receivables, along with the Company's
second $500,000 preferred stock investment. Cash in the amount of $278,000 was
used by financing activities, representing primarily the repayment of one debt
installment paid by the Norway subsidiary and a reduction of Norway's overdraft
facility.
The Company continues to evaluate the possibility of establishing
additional production facilities in order to increase efficiencies. One such
way would be to produce sous vide products closer to the source of supply and
as a means to enter new markets. The cost of such facilities ranges from
approximately $1,000,000 to $5,000,000, depending upon the nature of the
product and the production volume desired. Local governments may provide
subsidies and other assistance in connection with such facilities. It is
possible that the Company may use some of its cash resources to fund these
efforts.
Page 12 of 15
<PAGE> 13
The Company's Norwegian subsidiary has secured a working capital
commitment for its liquidity needs in Norway in the form of an overdraft
facility. As of September 16, 1995, $385,000 was outstanding under this
overdraft facility as compared to $603,000 as of June 24, 1995. The subsidiary
can borrow up to $600,000 under this commitment.
The Company has on deposit $4.9 million with a European bank. This
deposit is denominated in U.S. dollars and earns a rate of return in excess of
the prevailing short-term rates in the United States. This deposit has been
pledged as collateral to the bank so that the bank may loan funds to a French
subsidiary of Setucaf S.A., a French company which is 21% owned by Food
Research Corporation, the majority stockholder of the Company. This deposit is
redeemable on thirty days notice without penalty. The Company believes no
material risk to principal is associated with this deposit.
FUTURE PROSPECTS
The Company has begun fiscal 1996 by increasing its sales in several
areas - airlines, healthcare, and retail. The Company intends to aggressively
improve upon these results. The Company will continue to develop its emerging
markets and formats that show promise of generating significant sous vide
sales. Additionally, the Company will continue to invest in its European sales
efforts in order to secure its first significant orders during this fiscal
year. Although the course of the European business is difficult to forecast,
it is management's expectation that its Norwegian operations will reduce its
losses substantially in fiscal 1996. If so, the Company will move towards, and
may attain, overall operating profitability during the coming year.
Page 13 of 15
<PAGE> 14
VIE DE FRANCE CORPORATION
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is engaged in ordinary and routine litigation incidental to
its business. Management does not anticipate that any amounts which it may be
required to pay by reason thereof will have a material effect on the Company's
financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS.
The Company's annual meeting of shareholders was held on October 25,
1995. The following individuals were elected to serve as Directors for a
period of one year and until their successors are elected and qualify:
Jean-Louis Vilgrain (Chairman), Stanislas Vilgrain (President & CEO), Bruno
Goussault, Alexandre Vilgrain, George Naddaff, Carl Youngman and James Hackney.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits -
18 - Letter from Price Waterhouse LLP
(b) Reports on Form 8-K -
None.
Page 14 of 15
<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 hereunto duly authorized.
VIE DE FRANCE CORPORATION
-----------------------------------
Date: November 1, 1995 By: /s/Stanislas Vilgrain
------------------------ -------------------------------
Stanislas Vilgrain
President and CEO
By: /s/Alan V. Esenstad
-------------------------------
Alan V. Esenstad
Vice President of Finance
and Accounting (Principal
Financial Officer)
Page 15 of 15
<PAGE> 1
October 24, 1995
To the Board of Directors
of Vie de France Corporation
Dear Directors:
We have been furnished with a copy of the Corporation's Form 10-Q for the
quarter ended September 16, 1995. Discussed in Results of Operations therein
describes a change in the method of determining the indirect manufactured
overhead costs of manufactured inventories from a partial absorption of
manufacturing costs to a full absorption of manufacturing costs. It should be
understood that the preferability of one acceptable method of inventory
accounting over another has not been addressed in any authoritative accounting
literature and in arriving at our opinion expressed below, we have relied on
management's business planning and judgment. Based upon our discussions with
management and the stated reasons for the change, we believe that such change
represents, in your circumstances, the adoption of a preferable alternative
accounting principle for inventories in conformity with Accounting Principles
Board Opinion No. 20.
We have not made an audit in accordance with generally accepted auditing
standards of the financial statements of Vie de France Corporation for the
three-month periods ended September 16, 1995 or September 17, 1994 and,
accordingly, we express no opinion thereon or on the financial information
filed as part of the Form 10-Q of which this letter is to be an exhibit.
Yours very truly,
/s/ PRICE WATERHOUSE LLP
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> JUN-25-1995
<PERIOD-END> SEP-16-1995
<CASH> 5,036,267
<SECURITIES> 4,016,820
<RECEIVABLES> 3,989,204
<ALLOWANCES> 5,000
<INVENTORY> 3,204,708
<CURRENT-ASSETS> 20,762,304
<PP&E> 9,656,457
<DEPRECIATION> 3,746,934
<TOTAL-ASSETS> 29,008,633
<CURRENT-LIABILITIES> 2,577,658
<BONDS> 2,698,694
<COMMON> 140,369
0
0
<OTHER-SE> 24,393,544
<TOTAL-LIABILITY-AND-EQUITY> 29,008,633
<SALES> 3,862,182
<TOTAL-REVENUES> 3,862,182
<CGS> 3,485,762
<TOTAL-COSTS> 3,485,762
<OTHER-EXPENSES> 953,473
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,710
<INCOME-PRETAX> (341,572)
<INCOME-TAX> 109,575
<INCOME-CONTINUING> (231,997)
<DISCONTINUED> 75,000
<EXTRAORDINARY> 0
<CHANGES> 196,953
<NET-INCOME> 39,956
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
