SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended August 30, 1997 Commission File No. 0-15696
PIEMONTE FOODS, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0626121
(State or other jurisdiction of I.R.S. Employer
incorporation of organization) Identification
400 Augusta Street, Greenville, South Carolina 29601
(Address of principal executive offices)
Registrant's telephone number, including area code: (864) 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 September
30, 1997 was 1,556,734.
<PAGE>
PIEMONTE FOODS, INC.
INDEX TO FORM 10-Q
Part I Financial Information
Item 1. Financial Statements, unaudited
Consolidated Balance Sheets - August 30, 1997, and May
31, 1997
Consolidated Statements of Operations for the First
Quarter ended August 30, 1997, and August 31, 1996.
Consolidated Statements of Cash Flows for the First
Quarter ended August 30, 1997, and August 31, 1996.
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
Exhibits
<PAGE>
<TABLE>
<CAPTION>
PIEMONTE FOODS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS August 30, 1997 May 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
<S> <C> <C>
Cash & cash equivalents $526,832 $591,153
Accounts receivable, net 1,533,141 1,930,050
Inventories 1,194,698 855,121
Refundable income taxes 415,572 415,572
Prepaid expenses 141,719 123,320
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 3,811,962 3,915,216
- ----------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT & EQUIPMENT, NET 4,574,000 4,744,761
DEFERRED CHARGES, INTANGIBLE AND OTHER ASSETS .
Excess of cost over fair value of net assets acquired 729,168 737,406
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 729,168 737,406
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $9,115,130 $9,397,383
============================================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Current portion of long-term debt $376,851 $373,009
Prepayment of long-term debt subsequent to May 31, 1997 $0 $1,000,000
Accounts payable, trade 1,875,592 748,793
Accrued expenses 497,125 588,405
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,749,568 2,710,207
- ----------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 2,021,244 2,124,134
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 4,770,812 4,834,341
- ----------------------------------------------------------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Common Stock 15,444 15,444
Capital in excess of stated value of common stock 2,868,360 2,868,360
Retained earnings 1,460,514 1,679,238
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 4,344,318 4,563,042
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $9,115,130 $9,397,383
============================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
PIEMONTE FOODS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended August 30, 1997 and August 31, 1996
Three Months
FY98 FY97
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $4,676,967 $5,981,402
Operating Expenses
Cost of Goods Sold 3,668,561 5,144,017
Selling, general and administrative 1,194,919 1,365,861
- ----------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 4,863,480 6,509,878
- ----------------------------------------------------------------------------------------------------------------------------
OPERATING LOSS (186,513) (528,476)
Other Expenses
Interest expense (net) 43,851 47,173
(Gain)/Loss on disposal of assets (5,000) 0
Equity in loss on European joint venture 0 149,900
Other income (6,640) (5,492)
- ----------------------------------------------------------------------------------------------------------------------------
Total Other Expenses 32,211 191,581
- ----------------------------------------------------------------------------------------------------------------------------
Loss Before Income Taxes (218,724) (720,057)
Income Tax Benefit 0 216,000
- ----------------------------------------------------------------------------------------------------------------------------
NET LOSS ($218,724) ($504,057)
============================================================================================================================
Average Number of Shares Outstanding 1,561,095 1,518,220
NET LOSS PER SHARE ($0.14) ($0.33)
============================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
PIEMONTE FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended August 30, 1997 and August 31, 1996
Three Months
FY98 FY97
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Loss ($218,724) ($504,057)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 170,319 203,935
Decrease (increase) in:
Receivables 396,909 364,054
Inventories (339,577) (353,753)
Prepaid expenses (18,399) (5,153)
Other assets 0 9,426
Equity in loss on European joint venture 0 149,900
Increase (decrease) in:
Accounts payable 1,126,799 52,745
Accrued liabilities (91,280) (348,883)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities 1,026,047 (431,786)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment 0 (167,921)
Proceeds from the sale of property, plant and equipment 8,680 0
Investment in European joint venture 0 (227,592)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities 8,680 (395,513)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 0 (7)
Repayment of long-term debt (1,099,048) (125,714)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities (1,099,048) (125,721)
- ----------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH (64,321) (953,020)
Cash, beginning of period 591,153 1,658,514
- ----------------------------------------------------------------------------------------------------------------------------
Cash, end of period 526,832 705,494
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 30, 1997
Note 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 August 30, 1997 and the related statements of
operations and cash flows for the three 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.
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Working capital at the end of the First Quarter was $1,062,000.
Receivables were drawn down by $397 thousand during the period,
partially offset by a $340 thousand increase in inventories. The
increase in inventories was a direct result of anticipated
increases in sales activity.
Payables were managed higher by $1.1 million, due to the increase
in inventories as well as part of a tighter cash management
approach.
As was highlighted in our recently published 10-K, a $1 million
payment on long-term debt was made during the first period of the
quarter.
RESULTS OF OPERATIONS
Quarter Ended August 30, 1997 Compared to
Quarter Ended August 31, 1996
Revenues for the First Quarter were $4.7 million which were 22%
lower than last year. Lower revenues were the combined result of
the fourth quarter 1997 exit from our cake business in Nashville,
and lower overall sales in Deli and Foodservice.
As a result of re-focusing our core business, reducing the cost
structure, and successful price increases; we saw significant
improvement in our gross margins during the first quarter of this
year. On lower sales, gross margin dollars improved by $171
thousand from $837 thousand in FY97 to $1.008 million in FY98.
Gross margin percents improved from the same quarter a year ago at
14% to 22% in FY98.
The Loss from Operations improved from $528 thousand loss in first
quarter 1997 to $187 thousand loss in first quarter 1998. This was
a turn around of $341 thousand.
Selling, general, and administrative expenses were lowered $171
thousand as the company continues its proactive measures to
minimize operating costs.
Overall, losses for the quarter were $219 thousand, an improvement
over the prior year first quarter of $285 thousand. On a per share
basis, earnings were ($.14) versus ($.33).
Historically, Sales revenues are the lowest during the first fiscal
quarter and this appears to be true in FY1998. Sales should
continue to see improvement during the remainder of the year.
Coupled with continued improvements in margins, it is management's
belief that Piemonte Foods will return to profitability in the
second quarter.
<PAGE>
Part II Item 6 Exhibits and Reports on Form 8-K
a) Exhibits required by Item 601 of Regulation S-K
None
b) Reports on Form 8-K
None
Exhibits Exhibit 27
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: October 13, 1997 /s/ Virgil L. Clark
------------- ---------------------------
Virgil L. Clark
Chairman and CEO
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-30-1997
<CASH> 526,832
<SECURITIES> 0
<RECEIVABLES> 1,533,144
<ALLOWANCES> 0
<INVENTORY> 1,194,698
<CURRENT-ASSETS> 3,811,962
<PP&E> 4,574,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,115,130
<CURRENT-LIABILITIES> 2,749,568
<BONDS> 2,021,244
0
0
<COMMON> 15,444
<OTHER-SE> 2,868,360
<TOTAL-LIABILITY-AND-EQUITY> 9,115,130
<SALES> 4,676,967
<TOTAL-REVENUES> 4,676,967
<CGS> 3,668,561
<TOTAL-COSTS> 4,863,480
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,851
<INCOME-PRETAX> (218,724)
<INCOME-TAX> 0
<INCOME-CONTINUING> (218,724)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (218,724)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
