<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
20549
FORM 1O-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 2, 1995 Commission File No. 0-15696
PIEMONTE FOODS, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0626121
(State of other jurisdiction of I.R.S. Employer
incorporation of organization) Identification
400 Augusta Street, Greenville, South Carolina 29604
(Address of principal executive offices)
Registrant's telephone number, including area code: (803) 242-0424
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
The number of shares of common stock outstanding as of December
31, 1995 was 1,449,803.
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PIEMONTE FOODS, INC.
INDEX TO FORM 10-Q
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - December 2, 1995 and November 26,
1994.
Consolidated Statements of Income for the second quarters ended
December 2, 1995 and November 26, 1994 and the six months then
ended.
Consolidated Statements of Cash Flows for the second quarters
ended December 2, 1995 and November 26, 1994 and the six months
then ended.
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
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PIEMONTE FOODS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS Dec. 2,1995 Nov. 26,1994
<S> <C> <C>
CURRENT ASSETS
Cash 352,827 561,846
Accounts receivable, net 2,301,697 2,189,481
Inventories 2,032,409 1,835,744
Prepaid expenses 603,030 299,613
Deferred marketing costs 246,317 266,162
TOTAL CURRENT ASSETS 5,536,280 5,152,846
PROPERTY, PLANT AND EQUIPMENT, NET 4,812,340 4,959,803
DEFERRED CHARGES, INTANGIBLE AND OTHER ASSETS
Deferred marketing costs-noncurrent portion -44,756 205,168
Excess of cost over fair value of net assets acquired 719,439 746,346
Investment in joint venture 50,000 50,000
Loan to joint venture 308,532 0
Other assets 179,015 110,168
1,212,230 1,111,682
TOTAL ASSETS 11,560,850 11,224,331
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt 609,131 445,560
Short term borrowings 500,000 750,000
Accounts payable, trade 1,902,119 1,488,143
Accrued promotional allowances 95,521 56,856
Accrued compensation and payroll taxes 149,004 235,705
Accrued property taxes 86,845 38,794
Other accrued expenses 45,532 211,030
Income taxes payable 0 4,503
TOTAL CURRENT LIABILITIES 3,388,152 3,230,591
LONG-TERM DEBT 1,052,658 666,730
DEFERRED INCOME TAXES 420,728 389,728
STOCKHOLDERS' EQUITY
Common stock 14,498 14,316
Capital in excess of stated value 2,052,829 1,993,717
Retained earnings 4,631,985 4,929,249
TOTAL STOCKHOLDERS' EQUITY 6,699,312 6,937,282
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 11,560,850 11,224,331
</TABLE>
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PIEMONTE FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ending December 2,1995 and November 26,1994
<TABLE>
<CAPTION>
Three Months Six Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Sales 7,984,259 8,533,001 14,626,214 15,101,771
Operating Expenses
Cost of goods sold 6,466,615 6,623,139 12,147,620 11,805,713
Selling, general and administrative 1,461,065 1,664,585 2,762,776 3,089,658
7,927,680 8,287,724 14,910,396 14,895,371
Operating Income (Loss 56,579 245,277 -284,182 206,400
Other Expenses
Interest expense 45,357 34,805 84,567 68,085
Other expense (income) -13,758 -14,293 -15,308 -31,531
Sale of Assets 1,024 4,780
Interest income -8,315 -5,332 -19,440 -14,813
24,308 15,180 54,599 21,741
Income Before Income Taxes (Loss) 32,271 230,097 -338,781 184,659
Provision for Income Taxes 13,000 92,000 -135,000 74,000
Net Income (Loss) 19,271 138.097 -203,781 110,659
Average Number of Shares Outstanding 1,529,803 1,542,192 1,529,803 1,542,192
Net Income (Loss) Per Share 0.01 0.09 -0.13 0.07
</TABLE>
See accompanying Notes to Financial Statements
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PIEMONTE FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and six months ending December 2, 1995 and November 26, 1994.
<TABLE>
<CAPTION>
Three Months Six Months
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net income 19,271 138,097 -203,781 110,659
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 175,960 240,112 359,350 412,920
Decrease (increase) in
Receivables -362,033 -257,805 -522,924 -23,650
Inventory -246,613 -114,815 -123,305 -407,849
Prepaid expenses 160,815 199,083 -95,174 -6,756
Other assets 52,801 4,155 107,798 19,445
Investment in joint venture -50,000 -50,000
Increase (decrease) in
Accounts payable 229,965 -89,329 523,031 352,113
Accrued liabilities -41,213 85,305 -62,229 -78,973
Income tax payable 0 4,503 0 -21,926
Deferred income taxes 0 0 0 0
Net cash provided by operating activities -11,047 159,306 -17,234 305,983
Cash Flows From Investing Activities
Purchases of property, plant and equipment -168,947 -298,333 -372,066 -817,683
Loan to joint venture 0 0 -308,532 0
Purchase of marketing services 0 -13,484 - 38,650 -13,345
Net cash used in investing activities -168,947 -311,817 -719,248 -831,028
Cash Flows From Financing Activities
Proceeds from issuance of common stock -3,751 15,331 7,908 28,688
Advances (repayments) of credit line 0 250,000 500,000 250,000
Repayment of long-term debt -152,283 -111,390 -304,566 -222,780
Net cash used in financing activities -156,034 153,941 203,342 55,908
Net increase (decrease) in cash -336,028 1,430 -533,140 -469,137
Cash, beginning of period 688,855 560,416 885,967 1,030,983
Cash, end of period 352,827 561,846 352,827 561,846
</TABLE>
See accompanying Notes to financial Statements
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 2, 1995
1. Principles of Consolidation
The accompanying financial statements include the accounts of Piemonte Foods,
Inc. and its wholly-owned subsidiaries, Piemonte Foods of Indiana, Inc. and
Origena, Inc. The consolidated balance sheet as of December 2, 1995 and the
related statements of income and cash flows for the six month period then ended
are unaudited. In the opinion of management, all adjustments necessary for a
fair presentation of such financial statements have been included. Such
adjustments consisted only of normal recurring items.
The financial statements and notes are presented as permitted by Form 10-Q,
and do not contain certain information included in the company's
annual financial statements and notes.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Working capital improved $226 thousand to $2.1 million for the three months
ending December 2, 1995 compared with the same period last year. Accounts
receivable rose $112 thousand due to a higher level of business with the
United States military. Inventories increased $197 thousand as a result
of new product development.
During the second quarter of fiscal 1996, capital improvements total $169
thousand versus $312 thousand a year ago. For the year-to-date period,
capital improvements were $719 thousand compared with $831 thousand the
prior year. The largest single capital commitment in fiscal 1996 has been
a loan to the Company's joint venture in Holland, which is expected to
commence operations in late February, 1996.
The Company is is compliance with all restrictive covenants contained in
its debt agreements.
RESULTS OF OPERATIONS
Quarter Ended December 2, 1995 Compared to
Quarter Ended November 26, 1994
Net sales for the second quarter of fiscal 1996 were $8.0 million versus
$8.5 million last year. Cost of goods sold rose to 81.0% of net sales from
77.6% a year ago. This represents improvement over the first quarter level
of 85.5%, however, it is higher than the 77.6% which was recorded for the
same quarter last year. Results for the most recent quarter were impacted
by higher flour prices which began last June and continued pressure on
packaging costs. The improved gross margin in the second quarter includes
a price increase initiated in September, 1995.
Gross margins continue to be impacted by the loss of a high margin product
packed specifically for a national customer. A change in the customer's
strategic direction eliminated the need for the product.
Continued emphasis on cost restraint and reduction resulted in a $203
thousand reduction in selling, general and administrative (SG&A) expenses
for the second quarter of fiscal 1996. SG&A expenses were 18.3% of net
sales for the three months ended December 2, 1995, versus 19.5% a year ago.
The improved gross margin for the second quarter combined with lower
selling, general and administrative expenses contributed to net income of
$19 thousand for the quarter.
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Six Months Ended December 2, 1995 Compared to
Six Months Ended November 26, 1994
Net sales for the six months ended December 2, 1995 declined 3% to $14.6
million from $15.1 million the prior year. Higher flour prices and
packaging costs throughout the first half of fiscal 1996 contributed to an
increase of $342 thousand in the cost of goods. As a result, gross margin
was 17.1% for the first two quarters of fiscal 1996 versus 21.8% last year.
Selling, general and administrative expenses were $2,762,776 or 10.6% lower
than the comparable period a year ago. Year-to-date 1996 results include
a net loss of $204 thousand compared with net income of $111 the prior
year. Weakness which was previously reported in the company's Foodservice
Division was not fully absorbed in the first six months of fiscal 1996.
The company's penetration in Deli and Industrial channels of distribution
continues to improve.
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
No reports on Form 8-K were filed by the
Company during the quarter ended December 2, 1995.
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.
PIEMONTE FOODS, INC.
Date January 10, 1996 By /s/ Virgil L. Clark
Virgil L. Clark
President and CEO
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-01-1996 JUN-01-1996
<PERIOD-END> SEP-02-1995 DEC-02-1995
<CASH> 688,855 352,827
<SECURITIES> 0 0
<RECEIVABLES> 1,939,664 2,301,697
<ALLOWANCES> 0 0
<INVENTORY> 1,785,796 2,032,409
<CURRENT-ASSETS> 5,424,477 5,536,280
<PP&E> 4,811,853 4,812,340
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 11,508,861 11,560,850
<CURRENT-LIABILITIES> 3,199,392 3,388,152
<BONDS> 1,204,941 1,052,658
0 0
0 0
<COMMON> 14,507 14,498
<OTHER-SE> 2,056,571 2,052,827
<TOTAL-LIABILITY-AND-EQUITY> 11,508,861 11,560,850
<SALES> 6,641,955 7,984,259
<TOTAL-REVENUES> 6,641,955 7,984,259
<CGS> 5,681,005 6,466,615
<TOTAL-COSTS> 6,982,715 7,927,680
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 30,292 24,308
<INCOME-PRETAX> (371,052) 32,271
<INCOME-TAX> (148,000) 13,000
<INCOME-CONTINUING> (223,052) 19,271
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (223,052) 19,271
<EPS-PRIMARY> (0.15) 0.01
<EPS-DILUTED> (0.15) 0.01
</TABLE>
