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, 1999
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 07543
(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 February 8, 2000 there were 4,407,193 outstanding shares of the issuer's
Common Stock, $.01 par value.
1
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of
December 31, 1999 (unaudited) and June 30, 1999 3
Consolidated Statements of Earnings
For The Three and Six Month Periods Ended
December 31, 1999 and 1998 (unaudited) 4
Consolidated Statements of Cash Flows
For the six Month Periods Ended
December 31, 1999 and 1998 (unaudited) 5
Notes to Consolidated Financial 6
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 12
Signatures 13
2
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dec. 31, June 30,
1999 1999
------------- -------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 438,463 $ 358,214
Accounts receivable, net of allowances
of $570,290 at Dec. 31, 1999 and
$570,290 at June 30, 1999 48,706,610 36,007,542
Inventories 41,715,378 35,918,720
Prepaid expenses and other current assets 935,849 596,023
Deferred income taxes 228,000 228,000
------------- -------------
Total current assets 92,024,300 73,108,499
PROPERTY AND EQUIPMENT, NET 7,371,759 7,085,948
OTHER ASSETS 1,343,568 1,804,528
------------- -------------
$ 100,739,627 $ 81,998,975
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,422,528 $ 12,123,099
Current portion of long-term obligations 579,472 550,761
Mortgage payable - short term 51,184 49,220
Income taxes payable 1,276,777 1,710,000
Accrued expenses and other current
liabilities 1,970,458 2,409,839
------------- -------------
Total current liabilities 20,300,419 16,842,919
DEFERRED INCOME TAXES 1,120,000 1,120,000
REVOLVING CREDIT LOAN 44,115,000 30,441,599
SUBORDINATED DEBT 10,500,000 10,500,000
LONG-TERM CAPITAL LEASES 1,418,230 1,715,327
MORTGAGE PAYABLE - LONG TERM 850,512 868,468
------------- -------------
78,304,161 61,488,313
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 10,000,000
shares authorized, 4,613,896 and
4,598,897 issued and outstanding at
December 31, 1999 and June 30, 1999 46,138 45,988
Additional paid-in capital 11,300,623 11,247,154
Retained earnings 12,531,325 9,613,890
Treasury stock at cost, 213,370
at Dec. 31, 1999
And 78,370 at June 30, 1999 (1,442,620) (396,370)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 22,435,466 20,510,662
------------- -------------
$ 100,739,627 $ 81,998,975
============= =============
See notes to consolidated financial statements.
3
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 65,323,099 $ 45,652,119 $ 126,704,215 $ 81,550,947
Cost of sales 54,152,094 37,726,704 105,549,409 67,500,083
------------- ------------- ------------- -------------
Gross margin 11,171,005 7,925,415 21,154,806 14,050,864
------------- ------------- ------------- -------------
Expenses:
Selling and shipping 5,485,953 3,928,240 10,609,190 6,842,203
General and administrative 1,679,736 1,180,045 2,927,201 1,972,945
------------- ------------- ------------- -------------
7,165,689 5,108,285 13,536,391 8,815,148
------------- ------------- ------------- -------------
Income from operations 4,005,316 2,817,130 7,618,415 5,235,716
Other income (expense)
Interest expense, net (1,418,290) (1,053,080) (2,677,980) (2,089,630)
------------- ------------- ------------- -------------
(1,418,290) (1,053,080) (2,677,980) (2,089,630)
------------- ------------- ------------- -------------
Earnings Before Income Taxes 2,587,026 1,764,050 4,940,435 3,146,086
Income Taxes 1,083,000 723,000 2,023,000 1,290,000
------------- ------------- ------------- -------------
Net earnings $ 1,504,026 $ 1,041,050 $ 2,917,435 $ 1,856,086
============= ============= ============= =============
EARNINGS PER SHARE OF COMMON STOCK:
Basic earnings per share $ .34 $ .23 $ .66 $ .41
============= ============= ============= =============
Diluted earnings per share $ .29 $ .21 $ .57 $ .39
============= ============= ============= =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 4,399,620 4,543,257 4,440,197 4,552,385
Diluted 5,100,196 4,923,816 5,143,589 4,803,857
============= ============= ============= =============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
----------------------------
1999 1998
------------ ------------
INCREASE (DECREASE) IN CASH:
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Earnings $ 2,917,435 $ 1,856,086
Adjustments to reconcile net earnings
to net cash (used in) operating activities:
Depreciation and amortization 301,385 282,257
Provision for doubtful accounts -- --
(Increase) decrease in operating assets:
Accounts receivable (12,699,068) (6,986,359)
Inventories (5,796,658) (4,204,660)
Prepaid expenses and other
current assets (339,826) 416,189
Other assets 460,960 (512,595)
Increase (decrease) in operating liabilities:
Accounts payable 4,299,429 5,054,948
Income taxes payable (433,223) 822,664
Accrued expenses and other current
liabilities (439,380) (539,570)
Deferred income taxes -- --
------------ ------------
Net cash used in operating activities (11,728,946) (3,811,040)
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Net payments for purchase of
property and equipment (587,197) (782,965)
------------ ------------
Net cash used in investing activities (587,197) (782,965)
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from revolving credit loan 42,415,000 20,897,599
Principal payments of revolving credit loan (28,741,599) (15,839,000)
Principal payments of capital leases (268,386) (244,100)
Principal payments of mortgage (15,992) (21,262)
Proceeds from options 53,619 --
Acquisition of treasury stock (1,046,250) (182,480)
Net cash provided by financing activities 12,396,392 4,610,757
------------ ------------
NET INCREASE IN CASH 80,249 16,752
CASH, BEGINNING OF PERIOD 358,214 489,890
------------ ------------
CASH, END OF PERIOD $ 438,463 $ 506,642
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION:
Cash paid during the period for:
Interest $ 2,649,326 $ 1,742,065
============ ============
Income Taxes $ 2,457,411 $ 475,337
============ ============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The unaudited consolidated sheet as of December 31, 1999, the unaudited
consolidated statements of earnings for the three and six month periods
ended December 31, 1999 and 1998 and the unaudited consolidated statements
of cash flows for the six month periods ended December 31, 1999 and 1998
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. The balance sheet for June 30,
1999 is derived from audited financial statements. In the opinion of
management, all adjustments (which include normal recurring accruals)
necessary to present fairly the financial position and the results of
operations and cash flows at December 31, 1999 and for the three and six
month periods presented, have been included.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from this quarterly
financial statement. The attached financial statements should be read in
connection with the consolidated financial statements and notes thereto
included in the Company's 1999 Annual Report on Form 10-K for the year
ended June 30, 1999.
The results of operations and cash flows for the three and six months ended
December 31, 1999 are not necessarily indicative of the results to be
expected for the entire fiscal year.
2. INVENTORIES
Inventories are summarized as follows:
December 31, 1999 June 30, 1999
----------------- -------------
Finished goods $28,992,630 $25,848,208
Raw materials 11,520,439 9,110,302
Packaging 1,202,309 960,210
----------- -----------
$41,715,378 $35,918,720
=========== ===========
3. LONG-TERM REVOLVING CREDIT LOAN
In September, 1999, the loan agreement between the Company and Fleet Bank,
N.A. that provides the Company with a revolving credit facility (the
"Facility") was amended to increase the Facility to $55,000,000. The
commitment for the revolving credit Facility is through November 2, 2001.
The rate of interest on amounts borrowed under the Facility is the adjusted
LIBOR rate, as defined, plus 175 basis points. The Facility is
collateralized by all existing and acquired assets of the Company, as
defined in the Facility Agreement, and is guaranteed by Suprema Specialties
West, Inc. and Suprema Specialties Northeast, Inc. Advances under the
Facility are limited to 80% of eligible accounts receivable and 40% of all
inventory except packaging material, as defined in the agreement. The
Facility Agreement contains restrictive financial covenants, including the
maintenance of specified total debt to tangible net worth ratios, minimum
levels of tangible net worth, debt service coverage ratios, fixed charge
coverage ratios, minimum levels of consolidated net worth, and limitations
on capital expenditures, as defined in the agreement, and a restriction on
dividends to common shareholders. As of December 31, 1999 the Company is in
compliance with the covenants under the Facility Agreement. Borrowings
under the Facility are required to be used for working capital purposes.
6
<PAGE>
4. TREASURY STOCK
During the six months ended December 31, 1999, the Company, in accordance
with its stock repurchase plan, purchased 135,000 shares of its common
stock at a cost of $1,046,250.
5. EARNINGS PER SHARE
The earnings per share for the three and six month periods ended December
31, 1999 and 1998 were computed by dividing the weighted average number of
shares outstanding into net earnings.
The weighted average number of issued and outstanding common shares used in
the calculation of basic earnings per share for the three and six month
periods ended December 31, 1999 is based upon the 4,520,527 shares
outstanding at the beginning of the period less a pro-rata portion of the
135,000 shares of treasury stock repurchased during the six months ended
December 31,1999, as well as the pro-rata portion of 14,999 shares issued
upon the exercise of employee stock options. Also included in the weighted
average number of common shares incremental shares attributable to assumed
exercise of options and warrants.
The weighted average number of issued and outstanding common shares used in
the calculation of basic earnings per share for the three and six month
periods ended December 31, 1998 is based upon the 4,562,800 shares
outstanding at the beginning of the year less a pro-rata portion of the
38,970 shares of treasury stock repurchased during the six months ended
December 31, 1998. Also included in the weighted average number of common
shares are incremental shares attributable to assumed exercise of options
and warrants.
Basic and diluted earnings per share for three and six months ended
December 31, 1999 and 1998 are calculated as follows:
<TABLE>
<CAPTION>
Three months ended Dec. 31, 1999 Three months ended Dec. 31, 1998
--------------------------------- --------------------------------
Net Income Shares Per Share Net Income Shares Per Share
---------- ------ --------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings
per share $1,504,026 4,399,620 $.34 $1,041,050 4,543,257 $.23
Effect of assumed
conversion of warrants
and employee stock
options 700,576 380,559
---------- --------- ---- ---------- --------- ----
Diluted earnings
Per share $1,504,026 5,100,196 $.29 $1,041,050 4,923,816 $.21
<CAPTION>
Six months ended Dec. 31, 1999 Six months ended Dec. 31, 1998
--------------------------------- -------------------------------
Net Income Shares Per Share Net Income Shares Per Share
---------- ------ --------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings
Per share $2,917,435 4,440,197 $.66 $1,856,086 4,552,385 $.41
Effect of assumed
conversion of warrants
and employee stock
options 703,392 251,472
---------- --------- ---- ---------- --------- ---
Diluted earnings
Per share $2,917,435 5,143,589 $.57 $1,856,086 4,803,857 .39
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
report contains statements that are forward-looking, such as statements relating
to plans for future activities. Such forward-looking information involves
important known and unknown risks and uncertainties that could significantly
affect actual results, performance or achievements of the Company in the future
and, accordingly, such actual results, performance or achievements may
materially differ from those expressed or implied in any forward-looking
statements made by or on behalf of the Company. These risks and uncertainties
include, but are not limited to, those relating to the Company's growth
strategy, customer concentration, outstanding indebtedness, seasonality,
expansion and other activities of competitors, changes in federal or state laws
and the administration of such laws, protection of trademarks and other
proprietary rights, and the general condition of the economy and its effect on
the securities markets and other risks detailed in the Company's other filings
with the Securities and Exchange Commission. The words "believe," "expect,"
"anticipate," "intend," and "plan," and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements which speak only as of the date the statement
was made.
Results of Operations - Three months ended December 31, 1999 vs. three months
ended December 31, 1998.
Net sales for the three month period ended December 31, 1999 were approximately
$65,323,000, as compared to approximately $45,652,000 for the three months ended
December 31, 1998, an increase of approximately $19,671,000 or 43.1%. This
increase reflects an increase in sales volume for food service products
manufactured by the Company.
The Company's gross margin increased by approximately $3,246,000 from
approximately $7,925,000 in the three month period ended December 31, 1998 to
approximately $11,171,000 in the three month period ended December 31, 1999,
primarily as a result of an increase in the Company's sales volume. The
Company's gross margin as a percentage of sales decreased to 17.1% in the three
month period ended December 31, 1999 from 17.4% in the three month period ended
December 31, 1998. The decrease in gross margin as a percentage of sales was
primarily due to the lower average selling price for cheese (as a result of the
lower average CME Block Cheddar Market, the commodity index on which bulk cheese
prices are based) during the three months ended December 31, 1999, as well as
the shift toward lower margin sales associated with the food service markets,
partially offset by the increase in sales volume.
Selling and shipping expenses increased approximately $1,558,000 from
approximately $3,928,000 for the three month period ended December 31, 1998 to
approximately $5,486,000. The increase in selling and shipping expenses is
primarily due to increases in advertising and promotional expenses, commission
expense and shipping expenses in support of the Company's revenue growth. As a
percentage of sales, selling and shipping expenses decreased from 8.6% in the
three month period ended December 31, 1998 to 8.4% in the three month period
ended December 31, 1999. The percentage decrease in selling and shipping
expenses is primarily due to the increase in the Company's revenue growth
partially offset by the increases in advertising and promotional allowances,
commission expense and shipping expenses in support of the Company's revenue
growth.
General and administrative expenses increased by approximately $499,000 to
approximately $1,680,000 for the three month period ended December 31, 1999 as
compared to $1,180,000 for the comparable period in 1998. The increase in
general and administrative expenses is primarily due to an increase in personnel
and other administrative expenses associated with the Company's revenue growth.
As a percentage of sales, general and administrative expenses remained constant
at 2.6% for the three month period ended December 31, 1999, as compared to
December 31, 1998.
Net interest expense increased to approximately $1,418,000 for the three month
period ended December 31, 1999 from approximately $1,053,000 for the three month
period ended December 31, 1998. The increase in interest expense was primarily
due to the Company's expanded borrowing requirements necessary for working
capital needs.
The provision for income taxes for the three month period ended December 31,
1999 increased by approximately $360,000 compared to the three month period
ended December 31, 1998 as a result of increased taxable income. The effective
tax rate is relatively consistent between the periods.
Net earnings increased approximately $463,000 to approximately $1,504,000 for
the three month period ended December 31, 1999, from approximately $1,041,000
for the comparable period ended December 31, 1998 due to the increase in gross
margin as a result of increased sales volumes partially offset by the increases
in selling and shipping expenses, general and administrative expenses and
interest expense.
8
<PAGE>
Results of Operations - Six months ended December 31, 1999 vs. Six months ended
December 31, 1998.
Net sales for the six month period ended December 31, 1999 were approximately
$126,704,000 as compared to approximately $81,551,000 for the six months ended
December 31, 1998, an increase of approximately $45,153,000 or 55.4%. This
increase reflects an increase in sales volumes for food service products
manufactured by the Company and to a lessor extent, the increase in the average
selling price for cheese (as a result of the higher average CME Block Cheddar
Market, the commodity index on which bulk cheese prices are based) during the
first quarter of fiscal 2000.
The Company's gross margin increased by approximately $7,104,000, from
approximately $14,051,000 in the six month period ended December 31, 1998 to
approximately $21,155,000 in the six month period ended December 31, 1999,
primarily as a result of an increase in sales volume for food service products
manufactured by the Company and to a lessor extent an increase in the average
selling price as a result of the higher average CME Block Cheddar Market during
the quarter ended September 30, 1999. The Company's gross margin as a percentage
of sales decreased from 17.2% in the six months ended December 31, 1998 to 16.7%
for the comparable six month period in 1999. The decrease in gross margin as a
percentage of sales was primarily due to the higher costs of raw materials
during the three months ended September 30, 1999, along with the lower average
selling price for cheese (as a result of the lower average CME Block Cheddar
Market, the commodity index on which bulk cheese prices are based) during the
three months ended December 31, 1999, as well as the shift toward lower margin
sales associated with the food service markets, partially offset by the increase
in the sales volume.
Selling and shipping expenses increased by approximately $3,767,000 from
approximately $6,842,000 for the six month period ended December 31, 1998 to
approximately $10,609,000 for the six month period ended December 31, 1999. The
increase in selling and shipping expenses is primarily due to increases in
advertising and promotional allowances, commission expense and shipping expenses
in support of the Company's revenue growth. As a percentage of sales, selling
and shipping expenses remained constant at 8.4% for the six month period ended
December 31, 1999 as compared to the six month period ended December 31, 1998.
General and administrative expenses increased by approximately $954,000 from
approximately $1,973,000 for the six month period ended December 31, 1998 to
approximately $2,927,000 for the comparable period in fiscal 2000. The increase
in general and administrative expenses is primarily a result of an increase in
personnel and other administrative expenses associated with the Company's
revenue growth. As a percentage of sales, general and administrative expenses
decreased slightly to 2.3% for the six month period ended December 31, 1999,
from 2.4% for the comparable period in 1998, primarily due to the increase in
the Company's revenue growth partially offset by an increase in personnel and
other administrative expenses.
Net interest expense increased to approximately $2,678,000 for the six month
period ended December 31, 1999 from approximately $2,090,000 for the six month
period ended December 31, 1998. The increase was primarily the result of the
Company's expanded borrowing requirements necessary for working capital needs.
The provision for income taxes for the six month period ended December 31, 1999,
increased by approximately $733,000 as compared to the six month period ended
December 31, 1998 primarily as a result of increased taxable income. The
effective tax rate is relatively consistent between the periods.
Net earnings increased by approximately $1,061,000 to approximately $2,917,000
for the six month period ended December 31, 1999, from approximately $1,856,000
for the comparable period ended December 31, 1998 due to the increase in gross
margin primarily as a result of increased sales volumes, partially offset by the
increases in selling and shipping expenses, general and administrative expenses
and interest expense.
Financial Position, Liquidity and Capital Resources
At December 31, 1999 the Company had working capital of approximately
$71,724,000, as compared with $56,265,000 at June 30, 1999, an increase of
approximately $15,459,000. 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, as well as decreases in income taxes payable and accrued
expenses and other current liabilities, partially offset by increases in
accounts payable and other assets.
9
<PAGE>
The Company previously entered into certain capital lease financing transactions
to purchase equipment. At December 31, 1999, the Company had obligations of
approximately $1,997,702 under capital leases.
In March 1996, the Company purchased its Paterson production facility which it
previously had leased. On March 29, 1999, the Company refinanced its mortgage on
its Paterson facility for the principal amount of $929,573. The seven year note
which bears interest at 7.85% per annum is being amortized at a fifteen year
rate and requires a balloon payment at the end of year seven of approximately
$501,000. At December 31, 1999, the Company had outstanding obligations of
approximately 901,000 under the mortgage on the Paterson facility.
The Company has a bank revolving credit facility, ("the Facility"), that in
September 1999 was amended to increase the bank's potential commitment to
$55,000,000 through November 2, 2001. The rate of interest on amounts borrowed
under the Facility is the adjusted LIBOR rate plus 175 basis points. The
interest rate at December 31, 1999 was 8.3% The Facility is collateralized by
substantially all existing and acquired assets of the Company, as defined in the
Facility, and is guaranteed by the Company's subsidiaries, Suprema Specialties
West, Inc, and Suprema Specialties Northeast, Inc. Advances under this Facility
are limited to 80% of eligible accounts receivable, and 40% of most inventory.
The Facility Agreement contains restrictive covenants, including the maintenance
of specified total debt to tangible net worth ratios, minimum levels of tangible
net worth, debt service coverage ratios, fixed charge coverage ratios, minimum
levels of consolidated net worth, and capital expenditure limitations, as
defined in the agreement, and restriction on dividends to common shareholders.
As of December 31, 1999 the Company believes it is in compliance with these
covenants. At December 31, 1999 the Company's total outstanding debt to Fleet
Bank was $44,115,000.
Management believes that with an increase in its line of credit facility to
$55,000,000, 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,
1999 was approximately $11,729,000 as compared to $3,811,000 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, as well
as decreases in income taxes payable and accrued expenses and other current
liabilities partially offset by an increase in net earnings as adjusted for
non-cash expenses, and increases in accounts payable and income taxes payable.
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, 1999 was approximately $587,000, as compared to $783,000 in the six
month period ended December 31, 1998, 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, 1999 the Company had cash of $438,463.
Year 2000 Issue
The Company has assessed the potential issues associated with the year 2000 and
believes that its costs to address such issues will not be material. The Company
anticipates that all of its operating systems are Year 2000 compliant. The
Company also believes that costs or consequences of an incomplete or untimely
resolution would not result in the occurrence of a material event or uncertainty
reasonably likely to have a material adverse effect on the Company. However, the
Company has not determined whether its principal suppliers and customers are
Year 2000 compliant. In the event any of the Company's principal suppliers and
customers are not Year 2000 compliant, it may have a material adverse effect on
the Company.
The Company did not experience any Year 2000 compliance problems and does not
anticipate that Year 2000 technology problems will have any impact on its future
earnings or cash flow.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
An Annual Meeting of Stockholders was held on November 18, 1999 at which
time the following directors were reappointed to serve as directors until the
Annual Meeting of Stockholders of the Company to be held in the year 2000:
10
<PAGE>
Votes For Votes Withheld
--------- --------------
Mark Cocchiola 3,859,322 275,350
Paul Lauriero 3,858,822 275,850
Marco Cocchiola 3,852,672 282,000
Dr. Rudolph Acosta 3,853,522 281,150
Paul DeSocio 3,858,022 276,650
William C. Gascoigne 3,859,522 275,150
In addition, at the Meeting, the stockholders approved the adoption of the
Company's 1999 Stock Incentive Plan by a vote of 1,769,064 in favor, 1,174,672
against and 19,825 abstaining. There were 1,171,111 broker non-votes with
respect to this proposal.
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
Exhibit 27. Financial Data Schedule
Reports on Form 8-K
None
11
<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: February 8, 2000 By: /s/ Mark Cocchiola
--------------------------
Mark Cocchiola
President &
Chief Executive Officer
Date: February 8, 2000 By: /s/ Steven Venechanos
-------------------------
Chief Financial Officer &
Secretary
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AT
DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
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0
0
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