UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
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 0-19263
SUPREMA SPECIALTIES, INC.
(Exact Name of Registrant as
specified in its charter)
New York 11-2662625
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
510 EAST 35TH STREET
PATERSON, NEW JERSEY 07504
(Address of principal executive offices)
(Zip Code)
(973) 684-2900
(Registrant's telephone number, including area code)
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___
As of January 15, 1998 there were 4,562,800 outstanding shares of the issuer's
Common Stock, $.01 par value.
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARY
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of 3
December 31, 1997 and June 30, 1997
Consolidated Statements of Earnings 4
For The Three and Six Month Periods Ended
December 31, 1997 and 1996
Consolidated Statements of Cash Flows 5
For the Six Month Periods Ended
December 31, 1997 and 1996
Notes to Consolidated Financial 7
Statements
ITEM 2. Management's Discussion and Analysis of 9
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
Signatures 14
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<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(unaudited)
Dec. 31, June 30,
1997 1997
----------- -----------
(unaudited)
-----------
ASSETS
CURRENT ASSETS:
Cash $ 411,771 $ 480,225
Accounts receivable, net of allowances
of $407,290 at Dec. 31, 1997 and
$407,290 at June 30, 1997 20,491,408 14,667,008
Inventories 23,582,056 22,462,421
Income Taxes Receivable 1,123,965 921,243
Prepaid expenses and other current assets 1,226,955 679,781
Deferred income taxes 188,000 168,348
----------- -----------
Total current assets 47,024,155 39,379,026
PROPERTY AND EQUIPMENT, NET 6,459,034 6,135,082
OTHER ASSETS 1,310,367 1,528,434
----------- -----------
$54,793,556 $47,042,542
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,357,091 $ 5,411,478
Current portion of long-term obligations 446,179 402,877
Mortgage payable - short term 41,627 39,875
Income taxes payable -- --
Accrued expenses and other current
liabilities 1,812,716 805,754
Deferred income taxes 143,000 172,653
----------- -----------
Total current liabilities 7,800,613 6,832,637
DEFERRED INCOME TAXES 715,000 420,952
REVOLVING CREDIT LOAN 18,770,476 15,589,856
SUBORDINATED DEBT -- 4,303,670
LONG-TERM DEBT 8,825,000 --
LONG-TERM CAPITAL LEASES 2,372,820 2,470,599
MORTGAGE PAYABLE - LONG TERM 943,608 964,870
----------- -----------
WARRANTS (Subject to mandatory redemption) -- 1,171,000
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 10,000,000
shares authorized, 4,562,800 and
4,562,800 issued and outstanding at
Dec 31, 1997 and June 30, 1997 45,628 45,628
Additional paid-in capital 11,243,347 11,243,347
Retained earnings 4,077,064 3,999,983
----------- -----------
Total stockholders' equity 15,366,039 15,288,958
----------- -----------
$54,793,556 $47,042,542
=========== ===========
See notes to consolidated financial statements.
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<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------- --------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $26,113,427 $22,307,104 $51,269,867 $44,228,868
COST OF SALES 21,642,311 18,583,184 42,526,560 36,559,490
------------ ------------ ------------ ------------
GROSS MARGIN 4,471,116 3,723,920 8,743,307 7,669,378
------------ ------------ ------------ ------------
EXPENSES:
Selling and shipping 2,071,651 1,844,419 4,230,736 4,268,555
General and administrative 742,817 564,297 1,405,621 1,032,866
------------ ------------ ------------ ------------
2,814,468 2,408,716 5,636,357 5,301,421
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 1,656,648 1,315,204 3,106,950 2,367,957
OTHER INCOME (EXPENSE)
Interest expense, net (605,715) (629,157) (1,245,868) (1,161,591)
Other -- -- -- --
------------ ------------ ------------ ------------
(605,715) (629,157) (1,245,868) (1,161,591)
Earnings Before Income Taxes
And Extraordinary Item 1,050,933 686,047 1,861,082 1,206,366
Income Taxes 441,000 269,000 773,000 481,000
------------ ------------ ------------ ------------
Earnings Before
Extraordinary Item 609,933 417,047 1,088,082 725,366
Extraordinary Loss On
Extinguishment Of Debt (1,011,001) -- (1,011,001) (Net of Taxes)
NET EARNINGS $(401,068) $417,047 $77,081 $725,366
============ ============ ============ ============
EARNINGS PER SHARE OF COMMON STOCK:
NET EARNINGS PER SHARE
BEFORE EXTRAORDINARY ITEM $.13 $.08 $.23 $.14
============ ============ ============ ============
EXTRAORDINARY LOSS ON
EXTINGUISHMENT OF DEBT
(NET OF TAXES) (.22) -- (.22) --
============ ============ ============ ============
NET EARNINGS PER SHARE $(.09) $.08 $.01 $.14
============ ============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING USED TO COMPUTE
NET Earnings PER SHARE $4,650,981 5,058,185 4,817,441 5,071,055
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
December 31,
----------------
1997 1996
---- ----
INCREASE (DECREASE) IN CASH:
CASH FLOW FROM OPERATING ACTIVITIES:
Net Earnings $77,081 $725,366
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Other income -- --
Depreciation and amortization 241,154 701,313
Provision for doubtful accounts -- (38,000)
(Increase) decrease in assets:
Accounts receivable (5,824,400) (3,518,010)
Inventories (1,119,635) (2,408,900)
Prepaid expenses and other
current assets (547,174) (134,080)
Prepaid Income Taxes (202,722) (425,117)
Other assets 218,067 929,224
Increase (decrease) in liabilities:
Accounts payable (54,387) 1,278,514
Income taxes payable -- (244,413)
Accrued expenses and other current
liabilities 1,110,931 (138,518)
Deferred income taxes 244,743 104,011
----------- -----------
Net cash used in operating
activities (5,856,342) (3,168,610)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Net payments for purchase of
property and equipment (415,106) (2,033,775)
Net cash used in investing
activities (415,106) (2,033,775)
----------- -----------
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<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
(unaudited)
Six Months Ended
December 31,
-----------------------------
1997 1996
---- ----
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from revolving credit loan $ 12,985,981 $ 23,460,000
Principal payments of revolving credit loan (9,805,361) (18,539,000)
Principal payments of capital leases (204,477) (831,451)
Principal payments of mortgage (19,510) (17,901)
Proceeds from bridge loan financing 8,825,000 --
Payment of subordinated debt (5,578,639) --
Proceeds from secondary offering (net) -- 1,073,778
Net cash provided by financing
activities 6,202,994 5,145,426
------------ ------------
NET (DECREASE) INCREASE IN CASH (68,454) (56,959)
CASH, BEGINNING OF PERIOD 480,225 528,865
------------ ------------
CASH, END OF PERIOD $ 411,771 $ 471,906
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION:
Cash paid during the period for:
Interest $ 605,714 $ 1,220,844
============ ============
Income Taxes $ 12,500 $ 1,046,662
============ ============
Noncash investing and financing transactions:
Purchases of property and equipment through
capital leases $ 150,000 $ 3,562,840
============ ============
See notes to consolidated financial statements.
-6-
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The unaudited balance sheet as of December 31, 1997, the unaudited
consolidated statements of earnings for the three and six month periods ended
December 31, 1997 and 1996 and the unaudited consolidated statements of cash
flows for the six month periods ended December 31, 1997 and 1996 have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. In the opinion of management, all adjustments (which include
normal recurring accruals) necessary to present fairly the financial position,
results of operations and cash flows at December 31, 1997 and 1996 and for the
three and six month periods presented, have been included.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The attached financial statements should be read
in connection with the consolidated financial statements and notes thereto
included in the Company's 1997 Annual Report on Form 10-K for the year ended
June 30, 1997.
The results of operations for the three and six months ended December 31,
1997 are not necessarily indicative of the results to be expected for the entire
fiscal year.
2. INVENTORIES
Inventories are summarized as follows:
Dec. 31, 1997 June 30, 1997
------------- -------------
Finished goods $21,329,085 $19,293,624
Raw materials 1,472,263 2,236,541
Packaging 780,708 932,256
----------- -----------
$23,582,056 $22,462,421
=========== ===========
3. ISSUANCE OF COMMON STOCK
In association with the Company's secondary public offering, the Company
granted to the underwriter an option to purchase an aggregate of 225,000 shares
of the Company's common stock at the price of $5.50 per share to cover
over-allotments. In July, 1996, the underwriter exercised its option. Gross
proceeds payable to the Company from the issuance was approximately $1,237,500
and net proceeds to the Company was approximately $1,024,000.
4. LONG-TERM REVOLVING CREDIT LOAN
In January 1998, the loan agreement between the Company and Fleet Bank,
N.A. that provides the Company with a revolving credit facility was amended to:
a) increase the facility to $21 million until such time as the Bridge
Loan is repaid and thereafter to $25 million through November 2, 1999;
b) add or revise certain covenants and events of default, including those
covenants providing for maintenance of minimum levels of tangible net
worth, ratios of debt to tangible net worth and capital expenditures;
-7-
<PAGE>
c) amend the advance rate formula.
The rate of interest on amounts borrowed under the Facility is the adjusted
LIBOR rate, plus 200 basis points. The Facility is collateralized by all
existing and acquired assets of the Company, and is guaranteed by Suprema
Specialties West, Inc. and Suprema Specialties Northeast, Inc.
The Company believes that it is currently in compliance with the covenants
under the loan agreement, as amended. Borrowings under the facility are, and are
required to be, used for working capital purposes.
5. BRIDGE LOAN
In October 1997, the Company entered into an agreement with Fleet Bank,
N.A. pursuant to which the bank provided bridge financing of $10,000,000 to the
Company. Approximately $6.7 million ($5.6 million during the second quarter and
$1.1 million in the third quarter) of the proceeds from the loan was used to
retire $5.0 million of subordinated debt with CoreStates Enterprise Fund
("CoreStates") and to repurchase from CoreStates warrants to purchase 354,990
shares of the Company's common stock. The balance of the proceeds was used for
general working capital purposes. As a result of prepayment penalties related to
the early extinguishment of the subordinated debt and associated fees, the
Company took an extraordinary charge of approximately $1.7 million
(approximately $1.0 million net of tax) during the second quarter ended December
31, 1997. The rate of interest on the bridge loan is the adjusted LIBOR Rate
plus the applicable margin in effect at the end of each interest period. The
principal balance of the Bridge Loan is due in April 1998 unless the bridge loan
is converted into a term loan pursuant to the terms and conditions of the
document. If the Loan is converted into a term loan, then the outstanding
principal balance of the term loan shall be payable in equal consecutive annual
installments of $3,333,333 commencing in April, 2004 and on each anniversary of
such date. The loan contains certain covenants and events of default, including
those covenants providing for maintenance of minimum levels of tangible net
worth, ratios of debt to tangible net worth, minimum debt service coverage
ratios and capital expenditures.
6. EARNINGS PER SHARE
The earnings per share for the three and six month periods ended December
31, 1997 and 1996 were computed by dividing the weighted average number of
shares outstanding into net earnings.
Fully diluted earnings per share computations for both periods have not
been set forth because the effect is antidilutive.
The weighted average number of issued and outstanding common shares for the
three and six month periods ended December 31, 1997 is based upon the 4,562,800
shares outstanding at the beginning of the year. Also included in the weighted
average number of common shares are incremental shares attributable to assumed
exercise of options and warrants.
The weighted average number of issued and outstanding common shares for the
three and six month periods ended December 31, 1996 is based upon the 4,300,193
shares outstanding at the beginning of the year plus a proration of the 225,000
shares issued in connection with the exercise of the underwriters over-allotment
from the Company's secondary public offering (see note 3). Also included in the
weighted average number of common shares are incremental shares attributable to
assumed exercise of options and warrants.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Results of Operations - Three months ended December 31, 1997 vs. three months
ended December 31, 1996.
Net sales for the three month period ended December 31, 1997 were
approximately $26,113,000 as compared to approximately $22,307,000 for the three
months ended December 31, 1996, an increase of approximately $3,806,000 or
17.1%. This increase reflects higher sales volume for food service and food
ingredient products manufactured by the Company.
The Company's gross margin increased by approximately $747,000 from
approximately $3,724,000 in the three month period ended December 31, 1996 to
approximately $4,471,000 in the three month period ended December 31, 1997,
primarily as a result of the increased sales volume. The Company's gross margin
as a percentage of sales increased to 17.1% in the three month period ended
December 31, 1997 from 16.7 % in the three month period ended December 31, 1996.
The increase in gross margin as a percentage of sales was due to higher costs of
raw materials during the three month period ended December 31, 1996 partially
offset by the costs associated with the Ogdensburg New York facility and the
shift toward lower margin sales associated with food service and food ingredient
markets.
Selling and shipping expenses increased approximately $227,000 from
approximately $1,844,000 for the three month period ended December 31, 1996 to
approximately $2,071,000 for the three month period ended December 31, 1997. The
increase in selling and shipping expenses is primarily due to an increase in
promotional advertising partially offset by decreases in commission expense and
shipping expenses. As a percentage of sales, selling and shipping expenses
decreased from 8.3% in the three month period ended December 31, 1996 to 7.9% in
the three month period ended December 31, 1997. The decrease in selling and
shipping expenses as a percentage of sales is primarily due to the Company's
increased revenue growth.
General and administrative ("G&A") expenses increased by approximately
$178,000 to approximately $742,000 for the three month period ended December 31,
1997 as compared to $564,000 for the comparable period in 1996. The increase in
general and administrative expenses is primarily due to an increase in
personnel. As a percentage of sales, G&A expenses increased slightly to 2.8% for
the three month period ended December 31, 1997, from 2.5% for the comparable
period in 1996.
Net interest expense decreased slightly to approximately $606,000 for the
three month period ended December 31, 1997 from approximately $629,000 for the
three month period ended December 31, 1996. The decrease in interest expense was
primarily the result of a decrease in capital lease interest expense due to the
sale leaseback transaction completed during the fourth quarter of fiscal 1997
partially offset by the company's expanded borrowing requirements necessary for
working capital needs.
The provision for income taxes for the three month period ended December
31, 1997 increased by approximately $172,000 compared to the three month period
ended December 31, 1996 as a result of increased taxable income.
The Company took an extraordinary charge on the extinguishment of the
Subordinated Debt Notes net of tax of approximately $1,011,000 during the
quarter ended December 31, 1997. (See note 5)
The charge was the result of prepayment penalties related to the early
extinguishment of the subordinated debt and associated fees.
-9-
<PAGE>
Net earnings applicable to common stock before the extraordinary charge on
the extinguishment of debt increased by approximately $193,000 to approximately
$610,000 for the three month period ended December 31, 1997, from approximately
$417,000 for the comparable period ended December 31, 1996 due to the increase
in gross margin and a decrease in interest expense, partially offset by
increases in selling and shipping expenses and general and administrative
expenses.
Results of Operations - Six months ended December 31, 1997 vs. six months ended
December 31, 1996.
Net sales for the six month period ended December 31, 1997 were
approximately $51,270,000 as compared to approximately $44,229,000 for the six
months ended December 31, 1996, an increase of approximately $7,041,000 or
15.9%. This increase reflects higher sales volume for food service and food
ingredient products manufactured by the Company.
The Company's gross margin increased by approximately $1,074,000, from
approximately $7,669,000 in the six month period ended December 31, 1996 to
approximately $8,743,000 in the six month period ended December 31, 1997,
primarily as a result of the increased sales volume. The Company's gross margin
as a percentage of sales decreased slightly from 17.3% in the six months ended
December 31, 1996 to 17.1% for the comparable six month period in 1997. The
decrease in gross margin as a percentage of sales was due primarily to costs
associated with the Ogdensburg New York manufacturing facility and the shift
toward lower margin sales associated with the food service and food ingredient
markets partially offset by higher costs of raw materials during the six month
period ended December 31, 1996.
Selling and shipping expenses decreased by approximately $38,000 from
approximately $4,268,000 for the six month period ended December 31, 1996 to
approximately $4,230,000 for the six month period ended December 31, 1997. This
decrease is primarily due to decreases in commission expenses as well as
shipping expenses. As a percentage of sales, selling and shipping expenses
decreased from 9.7% for the six month period ended December 31, 1996 to 8.3% for
the six month period ended December 31, 1997. The decrease in selling and
shipping expenses as a percentage of sales is primarily the result of the
Company's increased revenues and to a lesser extent, the decreases in commission
expense and shipping expenses.
General and administrative expenses increased by approximately $373,000
from approximately $1,033,000 for the six month period ended December 31, 1996
to approximately $1,406,000 for the comparable period in 1997. The increase in
general and administrative expenses is primarily a result of an increase in
personnel. As a percentage of sales general and administrative expenses
increased to 2.7% for the six month period ended December 31, 1997, from 2.3%
for the comparable period in 1996, as a result of the increase in personnel
during the current six month period.
Net interest expense increased to approximately $1,246,000 for the six
month period ended December 31, 1997 from approximately $1,162,000 for the six
month period ended December 31, 1996. The increase was primarily the result of
the Company's expanded borrowing requirements necessary for working capital
needs partially offset by a decrease in capital leases interest expense due to
the sale leaseback transaction completed during the fourth quarter of fiscal
1997.
The provision for income taxes for the six month period ended December 31,
1997, increased by approximately $292,000 compared to the six month period ended
December 31, 1996 primarily as a result of increased taxable income.
The Company took an extraordinary charge on the extinguishment of the
Subordinated Debt Notes net of tax of approximately $1,011,000 during the
quarter ended December 31, 1997. (See note 5). The charge was the result of
prepayment
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<PAGE>
penalties related to the early extinguishment of the subordinated debt and
associated fees.
Net earnings applicable to common stock before the extraordinary charge on
the extinguishment of debt increased by approximately $363,000 to approximately
$1,088,000 for the six month period ended December 31, 1997, from approximately
$725,000 for the comparable period ended December 31, 1996 due to the increase
in gross margin as a result of increased sales volumes, and to a lesser extent
the decrease in selling and shipping expenses, partially offset by the increases
in general and administrative expenses and interest expense.
Financial Position, Liquidity and Capital Resources
At December 31, 1997 the Company had working capital of approximately
$39,224,000, as compared with $32,546,000 at June 30, 1997, an increase of
approximately $6,678,000. The increase in working capital is primarily due to
the increase in accounts receivable and inventory levels in support of the
Company's increased sales volumes, as well as increases in prepaid expenses and
other current assets and accounts payable, partially offset by the increase in
accrued expenses and other current liabilities.
The Company also typically financed equipment purchases through capital
lease financing transactions. At December 31, 1997, the Company had obligations
of approximately $2,819,000 under capital leases, including $150,000 under
capital lease agreements entered into in fiscal 1998. The decrease in capital
lease obligations is due to the extinguished capital lease obligations
associated with the sale leaseback transaction consummated during the fourth
quarter of fiscal 1997.
In March 1996, the Company purchased its Paterson production facility which
it previously had leased. At December 31, 1997, the Company had outstanding
obligations of approximately $985,000 under the mortgage financing the purchase
of the Paterson facility.
The Company has a revolving credit facility with Fleet Bank, N.A. ("Fleet")
that, as amended in January 1998, extended the term of the facility until
November 2, 1999 and, increased the bank's potential commitment to $25,000,000.
The rate of interest on amounts borrowed under the facility is the adjusted
LIBOR rate, plus 2%. The Facility is collateralized by all existing and after
acquired assets of the Company, and is guaranteed by Suprema Specialties West,
Inc. and Suprema Specialties Northeast, Inc. The revolving credit loan agreement
expires on November 2, 1999. Advances under this facility are limited to 80% of
eligible accounts receivable, 40% of most inventory. The agreement contains
restrictive covenants, including the maintenance of total debt to tangible net
worth and debt service coverage ratios, minimum levels of tangible net worth,
and capital expenditure limitations. As of December 31, 1997, the Company
believes it is in compliance with these covenants. At December 31, 1997 the
Company's total outstanding debt to the bank was $18,770,476.
In October 1997, the Company entered into an agreement with Fleet pursuant
to which the bank provided bridge financing of $10,000,000 to the Company.
Approximately $6.7 million ($5.6 million during the second quarter and $1.1
million in the third quarter) of the proceeds from the loan was used to retire
$5.0 million of subordinated debt with CoreStates Enterprise Fund ("CoreStates")
and to repurchase from CoreStates warrants to purchase 354,990 shares of the
Company's common stock. The balance of the proceeds was used for general working
capital purposes. As a result of prepayment penalties related to the early
extinguishment of the subordinated debt and associated fees, the Company took an
extraordinary charge of approximately $1.7 million (approximately $1.0 million
net of tax) during the second quarter ended December 31, 1997.
In June 1996, the Company completed a public offering for 1,500,000 shares
of its $.01 par value common stock of which 1,000,000 shares were issued by the
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<PAGE>
Company and 500,000 shares were offered by selling shareholders upon conversion
of 500,000 shares of the Company's convertible preferred stock, at a purchase
price of $5.50 per share. Gross proceeds payable to the Company from the
offering was approximately $5,500,000 and net proceeds to the Company was
approximately $4,481,350. The Company received no proceeds from the shares sold
by the selling shareholders. In July, 1996, the underwriter exercised its option
to purchase 225,000 shares of the Company's common stock at the price of $5.50
per share to cover over-allotments (see note 3). Gross proceeds payable to the
Company from the issuance was approximately $1,237,500 and net proceeds was
approximately $1,024,000.
Management believes that with an increase in its line of credit facility
from $20,000,000 to $21,000,000 until the Bridge Loan is repaid and $25,000,000
thereafter and the Bridge Loan, the Company has adequate working capital to meet
its reasonably foreseeable cash requirements.
Net cash used in operating activities in the six month period ended
December 31, 1997 was approximately $5,856,000 as compared to $3,169,000 in the
comparable period of the prior year. The use of cash in operations was primarily
the result of increases in accounts receivable and inventories in support of the
Company's increased revenue growth, and prepaid expenses and other current
assets and a decrease in other assets and accounts payable, partially offset by
an increase in accrued liabilities and other current liabilities. The cash used
in operations was financed through cash flow from financing activities. Net cash
used in investing activities in the six month period ended December 31, 1997 was
approximately $415,000, as compared to $2,034,000 in the six month period ended
December 31, 1996, as a result of continued expenditures for fixed assets
(including capital equipment utilized in the Company's California manufacturing
facility and the Ogdensburg, New York manufacturing facility). As a result, at
December 31, 1997 the Company had cash of $411,771 as compared to $471,906 as at
December 31, 1996.
-12-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit 27
Financial Data Schedule
Reports on Form 8-K
None
-13-
<PAGE>
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.
SUPREMA SPECIALTIES, INC.
(registrant)
Date: January 30, 1998 By: /s/ Mark Cocchiola
------------------------
Mark Cocchiola
President
& Chief Executive Officer
Date: January 30, 1998 By: /s/ Steven Venechanos
------------------------
Steven Venechanos
Chief Financial Officer
& Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY CONSOLIDATED FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q AT DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 411,771
<SECURITIES> 0
<RECEIVABLES> 20,898,698
<ALLOWANCES> 407,290
<INVENTORY> 23,582,056
<CURRENT-ASSETS> 47,024,155
<PP&E> 6,459,034
<DEPRECIATION> 241,154
<TOTAL-ASSETS> 54,793,556
<CURRENT-LIABILITIES> 7,800,613
<BONDS> 0
0
0
<COMMON> 45,628
<OTHER-SE> 15,320,411
<TOTAL-LIABILITY-AND-EQUITY> 54,793,556
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<EXTRAORDINARY> (1,011,001)
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</TABLE>
