-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TCVoVs9seNmwRxkZI85jCdi25doZapJG4zcqn5PfVX+PU3pUIhFlG37hvS/9ROfK EFO/IAFWZ0UXNcaLyrUOIQ== 0000067494-99-000003.txt : 19990120 0000067494-99-000003.hdr.sgml : 19990120 ACCESSION NUMBER: 0000067494-99-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981205 FILED AS OF DATE: 19990119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRESH FOODS INC CENTRAL INDEX KEY: 0000067494 STANDARD INDUSTRIAL CLASSIFICATION: BAKERY PRODUCTS [2050] IRS NUMBER: 560945643 STATE OF INCORPORATION: NC FISCAL YEAR END: 0306 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-07277 FILM NUMBER: 99508253 BUSINESS ADDRESS: STREET 1: P O BOX 399 CITY: CLAREMONT STATE: NC ZIP: 28610 BUSINESS PHONE: 7044597626 MAIL ADDRESS: STREET 1: PO BOX 399 CITY: CLAREMONT STATE: NC ZIP: 28610 FORMER COMPANY: FORMER CONFORMED NAME: WSMP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN STEER MOM N POPS INC DATE OF NAME CHANGE: 19880719 FORMER COMPANY: FORMER CONFORMED NAME: MOM N POPS HAM HOUSE INC DATE OF NAME CHANGE: 19810827 10-Q 1 THIRD QUARTER 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 5, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transaction period from to ------------- ----------------- COMMISSION FILE NUMBER: 0-7277 FRESH FOODS, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA (State or other jurisdiction of incorporation or organization) 56-0945643 (I.R.S. Employer Identification No.) 3437 EAST MAIN STREET CLAREMONT, NORTH CAROLINA 28610 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (828) 459-7626 WSMP, INC. 1 WSMP DRIVE, CLAREMONT, NORTH CAROLINA 28610 ----------------------------------------------------------- (Former name or former address, if changed since last report) 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 (3) 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 the latest practicable date.
Class Outstanding at January 19, 1999 ----- -------------------------------- COMMON STOCK, $1.00 PAR VALUE 5,914,809
FRESH FOODS, INC. AND SUBSIDIARIES INDEX
Page No. -------- Part I. Financial Information: ------------------------------------------------------------- Item 1. Financial Statements Consolidated Condensed Balance Sheets - December 5, 1998 and February 27, 1998................................................... 1-2 Consolidated Condensed Statements of Operations and Retained Earnings - Thirteen Weeks Ended December 5, 1998 and Twelve Weeks Ended November 7, 1997................................................. 3 Consolidated Condensed Statements of Operations and Retained Earnings - Forty Weeks Ended December 5, 1998 and Thirty-Six Weeks Ended November 7, 1997............................................. 4 Consolidated Condensed Statements of Cash Flows - Forty Weeks Ended December 5, 1998 and Thirty-Six Weeks Ended November 7, 1997................................................. 5 Notes to Consolidated Condensed Financial Statements.............................................................................. 6-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................ 10-15 Part II. Other Information: ------------------------------------------------------------- Item 6. Exhibits and Reports on Form 8-K............................................... 16 Signatures.............................................................................. 17 Index to Exhibits....................................................................... 18 Exhibit 11 - Computation of Earnings per Common and Common Equivalent Share.................................................. 19
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FRESH FOODS, INC. AND SUBSIDIARIES --------------------------------------------- Consolidated Condensed Balance Sheets
(Unaudited) December 5, February 27, ASSETS 1998 1998 - ------ ------------ ----------- Current assets: Cash and cash equivalents $ 4,033,147 $ 2,818,071 Marketable equity securities 211,328 206,706 Accounts receivable, net (includes related party receivables of $218,647 and $181,367 at December 5, 1998 and February 27, 1998, respectively) 18,135,307 5,204,700 Notes receivable - current, net (includes related party notes receivable of $972,838 and $526,592 at December 5, 1998 and February 27, 1998, respectively) 1,650,865 1,150,906 Inventories 27,489,042 7,361,347 Income taxes refundable 1,087,717 872,157 Deferred income taxes 942,262 424,786 Prepaid expenses and other current assets 680,828 269,222 ------------ ----------- Total current assets 54,230,496 18,307,895 ------------ ----------- Property, plant and equipment, net 73,286,429 45,023,793 ------------ ----------- Other assets: Properties held for sale 2,086,847 1,680,993 Excess of cost over fair value of net assets of businesses acquired 35,704,955 2,906,366 Other intangible assets, net 47,194,239 829,500 Notes receivable (includes related party notes receivable of $832,906 and $1,550,638 at December 5, 1998 and February 27, 1998, respectively) 944,543 1,886,249 Deferred income taxes -- 685,458 Deferred loan origination fees 4,496,390 262,828 Other 107,594 72,717 ------------ ----------- Total other assets 90,534,568 8,324,111 ------------ ----------- Total assets $218,051,493 $71,655,799 ============ ===========
See accompanying notes to unaudited consolidated condensed financial statements. 1 FRESH FOODS, INC. AND SUBSIDIARIES ---------------------------------------------
(Unaudited) December 5, February 27, LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1998 - ------------------------------------ ------------ ----------- Current liabilities: Notes payable -- $ 5,105,144 Current installments of long-term debt $ 658,375 2,189,401 Trade accounts payable 6,820,012 6,605,893 Income taxes payable 245,965 -- Accrued insurance 1,592,548 614,846 Accrued interest 557,720 87,426 Accrued payroll and payroll taxes 3,753,882 1,960,534 Accrued promotions 2,864,338 12,000 Accrued taxes (other than income and payroll) 1,829,984 379,269 Other accrued liabilities 3,167,312 1,850,766 ------------ ----------- Total current liabilities 21,490,136 18,805,279 Deferred income 75,010 -- Deferred income taxes 217,062 -- Long-term debt, excluding current installments 155,695,901 13,623,532 ------------ ----------- Total liabilities 177,478,109 32,428,811 ------------ ----------- Commitments and Contingencies (Note 9) Shareholders' equity: Preferred stock - par value $.10, authorized 2,500,000 shares; no shares issued -- -- Common stock - par value $1, authorized 100,000,000 shares; issued 5,914,174 shares at December 5, 1998 and 5,898,449 shares at February 27, 1998 5,914,174 5,898,449 Capital in excess of par value 23,762,596 23,647,020 Other comprehensive income - unrealized gain on securities available for sale 16,905 19,261 Retained earnings 10,879,709 9,662,258 ------------ ----------- Total shareholders' equity 40,573,384 39,226,988 ------------ ----------- Total liabilities and shareholders' equity $218,051,493 $71,655,799 ============ ===========
See accompanying notes to unaudited consolidated condensed financial statements. 2 FRESH FOODS, INC. AND SUBSIDIARIES --------------------------------------------- Consolidated Condensed Statements of Operations and Retained Earnings Thirteen Weeks Ended December 5, 1998 and Twelve Weeks Ended November 7, 1997 (Unaudited)
1998 1997 ------------ ----------- Operating revenues: Food processing $ 48,352,396 $14,571,313 Restaurant operations and franchising (includes related party transactions totaling $11,555 in 1998 and $51,410 in 1997) 25,766,144 21,396,708 ------------ ----------- Total operating revenues 74,118,540 35,968,021 ------------ ----------- Costs and expenses: Cost of goods sold (includes related party transactions totaling $52,978 in 1998 and $109,827 in 1997) 39,952,148 20,593,143 Restaurant operating expenses (includes related party transactions totaling $1,135,028 in 1998 and $1,063,013 in 1997) 12,032,354 9,329,829 Selling, general and administrative expenses (includes related party transactions totaling $579,029 in 1998 and $396,491 in 13,086,321 3,195,340 Depreciation and amortization 2,646,139 1,081,284 ------------ ----------- Total costs and expenses 67,716,962 34,199,596 ------------ ----------- Operating income 6,401,578 1,768,425 ------------ ----------- Other income (expense): Other income (including interest) (includes related party transactions totaling $30,235 in 1998 and $38,258 in 1997) 108,524 146,953 Net gain (loss) on dispositions and sales of assets (includes related party transactions totaling $878 in 1998 and $365,781 in 1997 (14,970) 533,079 Interest expense (includes related party transactions totaling $25,125 in 1997) (4,037,142) (415,624) Other expense (includes related party transactions totaling $7,339 in 1998 and $48,595 in 1997) (321,482) (158,601) ------------ ----------- Net other income (expense) (4,265,070) 105,807 ------------ ----------- Earnings before income taxes 2,136,508 1,874,232 Income tax provision 899,309 705,021 ------------ ----------- Net earnings 1,237,199 $ 1,169,211 ============ =========== Retained earnings: Balance at beginning of period $ 9,642,510 $ 9,499,564 Net earnings 1,237,199 1,169,211 ------------ ----------- Balance at end of period $ 10,879,709 $10,668,775 ============ =========== Net earnings per common share - basic $ .21 $ .21 ============ =========== Net earnings per common share - diluted $ .21 $ .19 ============ ===========
See accompanying notes to unaudited consolidated condensed financial statements. 3 FRESH FOODS, INC. AND SUBSIDIARIES --------------------------------------------- Consolidated Condensed Statements of Operations and Retained Earnings Forty Weeks Ended December 5, 1998 and Thirty-Six Weeks Ended November 7, 1997 (Unaudited)
1998 1997 ------------- ------------- Operating revenues: Food processing $ 109,634,458 $ 47,218,488 Restaurant operations and franchising (includes related party transactions totaling $77,367 in 1998 and $212,945 in 1997) 77,521,877 64,953,934 ------------- ------------- Total operating revenues 187,156,335 112,172,422 ------------- ------------- Costs and expenses: Cost of goods sold (includes related party transactions totaling $278,757 in 1998 and $318,945 in 1997) 102,483,579 65,763,835 Restaurant operating expenses (includes related party transactions totaling $2,768,820 in 1998 and $2,796,455 in 1997) 35,492,818 27,784,021 Selling, general and administrative expenses (includes related party transactions totaling $2,127,537 in 1998 and $1,249,947 in 1997) 30,886,766 9,279,763 Depreciation and amortization 6,348,111 3,110,891 ------------- ------------- Total costs and expenses 175,211,274 105,938,510 ------------- ------------- Operating income 11,945,061 6,233,912 ------------- ------------- Other income (expense): Other income (including interest) (includes related party transactions totaling $117,075 in 1998 and $100,975 in 1997) 485,980 496,697 Net gain (loss) on dispositions and sales of assets (includes related party transactions totaling $878 in 1998 and $477,299 in 1997) (994,988) 553,565 Interest expense (includes related party transactions totaling $29,709 in 1998 and $79,454 in 1997) (8,454,239) (1,246,150) Other expense (includes related party transactions totaling $50,818 in 1998 and $109,159 in 1997) (769,188) (363,561) ------------- ------------- Net other expense (9,732,435) (559,449) ------------- ------------- Earnings before income taxes and extraordinary item 2,212,626 5,674,463 Income tax provision 932,401 2,148,778 ------------- ------------- Earnings before extraordinary item 1,280,225 3,525,685 Extraordinary loss from early extinguishment of debt (net of income tax benefit of $45,719) (62,774) -- ------------- ------------- Net earnings $ 1,217,451 $ 3,525,685 ============= ============= Retained earnings: Balance at beginning of period $ 9,662,258 $ 7,143,090 Net earnings 1,217,451 3,525,685 ------------- ------------- Balance at end of period $ 10,879,709 $ 10,668,775 ============= ============= Earnings before extraordinary item - basic $ 0.22 $ 0.63 Extraordinary loss from early extinguishment of debt (.01) -- ------------- ------------- Net earnings per common share - basic $ 0.21 $ 0.63 ============= ============= Earnings before extraordinary item - diluted $ 0.21 $ 0.58 Extraordinary loss from early extinguishment of debt (.01) -- ------------- ------------- Net earnings per common share - diluted $ 0.20 $ 0.58 ============= =============
See accompanying notes to unaudited consolidated condensed financial statements. 4 FRESH FOODS, INC. AND SUBSIDIARIES -------------------------------------------- Consolidated Condensed Statements of Cash Flows Forty Weeks Ended December 5, 1998 and Thirty-Six Weeks Ended November 7, 1997 (Unaudited)
1998 1997 ------------- ----------- Cash flows from operating activities: Net earnings $ 1,217,451 $ 3,525,685 ------------- ----------- Adjustments to reconcile net earnings to net cash provided by operating activities: Extraordinary loss from extinguishment of debt (before tax benefit of $45,719) 108,493 - Depreciation and amortization 6,348,111 3,110,891 Depreciation on properties leased to others 212,166 154,841 Increase in deferred income taxes 420,048 3,499 Provision for losses on receivables 126,753 19,244 Net (gain) loss on disposition and write-down of assets 994,988 (553,565) Other non-cash adjustments to earnings 410,471 619,481 Changes in operating assets and liabilities (net of effect from purchase of restaurant companies and Pierre) providing (using) cash: Marketable equity securities (6,978) (4,908) Receivables (3,087,978) (2,469,842) Inventories 1,140,208 (1,581,200) Income taxes refundable, prepaid expenses and other (581,411) (5,646) Trade accounts payable and other accrued liabilities (1,386,227) 1,103,236 ------------- ----------- Total adjustments 4,698,644 396,031 ------------- ----------- Net cash provided by operating activities 5,916,095 3,921,716 ------------- ----------- Cash flows from investing activities: Purchase of net assets of Pierre Foods (123,460,948) Proceeds from sales of assets to others 74,144 2,164,064 Proceeds from sales of assets to related parties 13,746 950,000 Decrease in related party notes receivables 250,000 179,452 Decrease in other notes receivable 214,577 396,953 Deposits, net of refunds (41,016) 4,868 Capital expenditures to related parties (1,802,185) (1,017,851) Capital expenditures - others (10,678,199) (6,974,432) ------------- ----------- Net cash used in investing activities (135,429,881) (4,296,946) ------------- ----------- Cash flows from financing activities: Proceeds from issuance of senior notes 115,000,000 -- Net borrowing under revolving credit agreement 38,102,085 -- Proceeds from issuance of long-term debt 1,700,000 Principal payments on long-term debt (12,560,741) (3,165,928) Net proceeds (repayments) under short-term borrowing agreements (5,105,144) 1,267,136 Loan origination fees (4,782,088) -- Repurchase of common stock (1,983,750) Proceeds from exercise of stock options 74,750 496,200 ------------- ----------- Net cash provided by (used in) financing activities 130,728,862 (1,686,342) ------------- ----------- Net increase (decrease) in cash and cash equivalents 1,215,076 (2,061,572) Cash and cash equivalents at beginning of period 2,818,071 4,275,031 ------------- ----------- Cash and cash equivalents at end of period $ 4,033,147 $ 2,213,459 ============= ===========
See accompanying notes to unaudited consolidated condensed financial statements. 5 FRESH FOODS, INC. AND SUBSIDIARIES --------------------------------------------- Notes to Consolidated Condensed Financial Statements (Unaudited) 1. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly the financial position as of December 5, 1998 and February 27, 1998, the results of operations for the fiscal quarters ended December 5, 1998 and November 7, 1997 and the cash flows for the forty weeks ended December 5, 1998 and the thirty-six weeks ended November 7, 1997. As a result of the change in the number of weeks in the fiscal quarter ended December 5, 1998 as compared to the prior year quarter ended November 7, 1997 (described in Note 5) and the acquisition of Pierre (described in Note 9), the two quarters are not comparable. The audited financial statements for the fiscal year ended February 27, 1998 should be read in conjunction with these unaudited quarterly financial statements. 2. The results of operations for the forty weeks ended December 5, 1998 are not necessarily indicative of the results to be expected for the full year. 3. Financial statements for fiscal 1998 have been reclassified, where applicable, to conform to financial statement presentation used in fiscal 1999. Amounts for the fiscal quarter and year to date ended November 7, 1997 have been restated to reflect the merger with Sagebrush, Inc. which was completed on January 30, 1998 and accounted for as a pooling of interests under Accounting Principles Board Opinion No. 16. In addition, amounts for the fiscal quarter and year to date ended December 5, 1998 include the results of operations for Pierre from the acquisition date of June 9, 1998 through December 5, 1998. 4. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share", which was required to be adopted for both interim and year-end financial statement periods ending December 15, 1997. The Company adopted this new method of computing earnings per share and restated earnings per share for all prior periods. The following is a reconciliation between basic and diluted earnings (loss) per share before extraordinary item:
Earnings (Loss) before Extraordinary Per Share Item Shares Amount -------------- -------------- ---------- Quarter Ended December 5, 1998 Earnings per common share - basic $ 1,237,199 5,914,174 $ 0.21 Stock-based compensation awards -- 92,021 -- -------------- -------------- ---------- Earnings per common share - diluted $ 1,237,199 6,006,195 $ 0.21 ============== ============== ========== Quarter Ended November 7, 1997 Earnings per common share - basic $ 1,169,211 5,575,510 $ 0.21 Stock-based compensation awards -- 509,407 (0.02) -------------- -------------- ----------- Earnings per common share - diluted $ 1,169,211 6,084,917 $ 0.19 ============== ============== =========== Year to Date Ended December 5, 1998 Earnings per common share - basic $ 1,280,225 5,908,018 $ 0.22 Stock-based compensation awards -- 194,908 (0.01) -------------- -------------- ----------- Earnings per common share - diluted $ 1,280,225 6,102,926 $ 0.21 ============== ============== =========== Year to Date Ended November 7, 1997 Earnings per common share - basic $ 3,525,685 5,578,420 $ 0.63 Stock-based compensation awards -- 486,063 (0.05) -------------- ------------- ----------- Earnings per common share - diluted $ 3,525,685 6,064,483 $ 0.58 ============== ============= ===========
6 5. The Company reports the results of its operations using a 52-53 week basis. As a result of the Pierre acquisition, described in Note 9, the Company changed its interim fiscal periods to conform with standard food processing industry interim periods. In line with this, each quarter of the 52 week fiscal year will contain 13 weeks except for the infrequent fiscal years with 53 weeks. In order to adopt this interim calendar, the Company's existing operations contain forty weeks this fiscal year to date, as compared to thirty-six weeks in the previous fiscal year to date, and thirteen weeks in the quarter ended December 5, 1998, as compared to twelve weeks in the quarter ended November 7, 1997. The effect of the additional weeks in 1998 increased revenue by $24,372,479, increased operating income by $2,466,818, increased net income by $684,946 and increased earnings per basic and diluted share by $.12 and $.11, respectively, for the year to date ended December 5, 1998. The effect of the additional week in the quarter ended December 5, 1998 increased revenue by $4,185,923, increased operating income by $535,423, increased net income by $98,863 and increased earnings per basic and diluted share by $.02 and $.02, respectively, for the year to date ended December 5, 1998. 6. A summary of inventories, by major classifications, follows:
December 5, February 27, 1998 1998 --------------- ------------- Restaurants $ 809,270 $ 876,863 Food processing Raw materials 6,741,834 2,786,546 Work in process 1,034,218 1,574,767 Finished goods 18,903,720 2,123,171 --------------- ------------- Totals $ 27,489,042 $ 7,361,347 =============== =============
7. Supplemental cash flow disclosures - cash paid during the period ended:
December 5, 1998 November 7, 1997 ----------------- ---------------- Interest $ 7,706,595 $ 1,105,499 ================= ================ Income taxes $ 362,110 $ 1,620,824 ================= ================
During the first quarter of fiscal 1998, the Company purchased fixed assets and inventories of certain commonly controlled franchised units in exchange for cash, the assumption of current and long-term liabilities, the issuance of long-term notes, and the forgiveness of a note receivable. Also, as part of the same transaction, the Company issued 98,750 shares of common stock in exchange for a non-competition agreement. Specific amounts relating to items purchased and consideration given are set forth in Note 8. 8. On March 1, 1997, the Company acquired fourteen franchised restaurants from various corporations predominantly owned by a former executive officer of the Company for a total purchase price of $3,767,500 payable as follows: $500 in cash; $352,780 in assumed current liabilities; $476,720 in assumed long-term liabilities; $125,000 in forgiveness of a note receivable from seller; $2,012,500 in common stock of the Company; and a two year 5% promissory note in the amount of $800,000. As part of this transaction, 223,611 shares of common stock were issued to the selling corporations. In addition, costs associated with the acquisition totaling $64,707 were capitalized as part of the transaction. The acquisition price is allocated as follows: $1,203,413 to fixed assets, $2,477,481 to excess of cost over fair value of net assets of businesses acquired and $151,313 to restaurant inventories. In addition, existing lease agreements for eleven of the restaurant properties were assigned to the Company. Also the Company signed new lease agreements on the remaining three properties. The new leases are classified as operating leases. Also as part of this transaction, the former executive officer, who was also the single largest franchisee of the Company, entered into a fifteen-year non-competition agreement with the Company in exchange for 98,750 shares of common stock valued at $888,750 on the date of the agreement. These shares are restricted securities and their resale is subject to certain conditions. 7 These shares are restricted securities and their resale is subject to certain conditions. 9. On June 9, 1998, the Company purchased certain of the net operating assets of the Pierre Foods Division ("Pierre") of Hudson Foods, Inc. ("Hudson"), a wholly owned subsidiary of Tyson Foods, for $122 million and assumed certain of Hudson's liabilities, consisting principally of trade payables and other accrued short-term liabilities. The acquisition was accounted for using the purchase method of accounting. The purchase price, which totaled $123.3 million including the capitalized costs of the acquisition, has been allocated to the net underlying assets based on preliminary estimates of fair values. The Company does not believe that the final purchase price allocation will differ significantly from the preliminary purchase price allocation recorded at December 5, 1998. Excess purchase price over fair market value of the underlying assets of $80,581,219 was allocated to goodwill and other intangible assets, including tradenames and assembled workforce, and is being amortized on a straight-line basis over lives ranging from fifteen to thirty years. The purchase was financed by the proceeds of an offering of $115.0 million aggregate principal amount of the Company's 10 3/4% Senior Notes Due 2006 (the "Senior Notes") and an initial borrowing under a new five-year, $75.0 million, revolving bank credit facility (the "Bank Facility"), with availability subject to a borrowing base formula. In addition, borrowings under the Bank Facility were used to extinguish all existing indebtedness of the Company for borrowed money, with the exception of outstanding industrial revenue bonds and certain capital lease obligations. The Senior Notes are unsecured obligations of the Company, unconditionally guaranteed on a senior unsecured basis by all existing subsidiaries of the Company. Interest on the Senior Notes is payable on June 1 and December 1 of each year, commencing December 1, 1998. The Senior Notes mature on June 1, 2006, unless previously redeemed, and are not subject to any sinking fund requirement. The Bank Facility provides for a revolving line of credit under which the Company may borrow up to an amount equal to the lesser of $75.0 million or a borrowing base (comprised of eligible accounts receivable, inventory, machinery and equipment and real property). Borrowings under the Bank Facility will bear interest at floating rates based upon the interest rate option selected from time to time by the Company. The borrowings are secured by a first priority security interest in substantially all of the personal property of the Company and its subsidiaries, together with all real property included in the borrowing base. On September 5, 1998, the Company completed a reorganization, consisting of a series of stock and asset transfers, mergers and liquidations among and involving the parent corporation and its subsidiaries, designed to simplify the corporate structure. As a result of this reorganization, Fresh Foods, Inc. is a holding company with no assets or operations other than investments in its subsidiaries. All subsidiaries of Fresh Foods, Inc. are wholly owned, directly or indirectly, by Fresh Foods, Inc., and serve as subsidiary guarantors of the Bank Facility and Senior Notes and as such have unconditionally guaranteed the notes on a joint and several basis. In addition, all guarantors of the Bank Facility and Senior Notes are subsidiaries of Fresh Foods, Inc. As a result of the September 5, 1998 reorganization, separate financial statements of the subsidiary guarantors are not presented because (a) the subsidiary guarantors have jointly and severally guaranteed the Senior Notes on a full and unconditional basis, (b) the aggregate assets, liabilities, earnings and equity of the subsidiary guarantors are substantially equivalent to the assets, liabilities, earnings and equity of the parent on a consolidated basis and (c) management has determined that such information is not material to investors. The following unaudited pro forma consolidated results of operations assume the Pierre acquisition occurred as of the beginning of each year: 8 (In Thousands, Except Per Share Data)
Forty Thirty-Six Weeks Ended Weeks Ended December 5, 1998 November 7, 1997 ---------------- ----------------- Total operating revenues $ 216,034 $ 186,765 Operating income 12,075 9,680 Loss before extraordinary item (864) 2,017 Extraordinary loss (net of tax) (73) (117) Net earnings (loss) $ (937) $ 1,900 Net loss per common share - basic: Loss before extraordinary item $ (0.15) $ 0.36 Extraordinary loss (0.01) (0.02) ---------------- ----------------- Net loss $ (0.16) $ 0.34 ================ ================= Net loss per common share - diluted: Loss before extraordinary item $ (0.15) $ 0.33 Extraordinary loss (0.01) (0.02) ---------------- ----------------- Net loss $ (0.16) $ (0.31) ================ =================
10. Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", was issued in June 1997 and became effective for the Company in the current fiscal year. SFAS No. 130 requires disclosure of comprehensive income (which is defined as "the change in equity during a period excluding changes resulting from investments by shareholders and distributions to shareholders") and its components. Total comprehensive income, comprised of net earnings and unrealized holding gains (losses) on available-for-sale securities, was $1,224,634 and $1,178,260 for the quarters ended December 5, 1998 and November 7, 1997, and was $1,215,095 and $3,534,925 for the year to date periods ended December 5, 1998 and November 7, 1998, respectively. In June 1997, Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures About Segments of an Enterprise and Related Information," was issued. SFAS No. 131 redefines how operating segments are determined and requires disclosure of certain financial and descriptive information about a company's operating segments. The Company will be required to adopt this new standard for fiscal 1999. The Company has not yet completed its analysis of the effect of this new standard on its financial statement disclosures. In March 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (the "AICPA") issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides guidance on the types of internal costs, including payroll and interest costs, which should be capitalized relative to development of software applications. The Company will be required to adopt this new statement for fiscal 1999. The Company has evaluated this statement and does not expect any material effect on the Company's financial statements. In April 1998, the Accounting Standards Executive Committee of the AICPA issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 provides guidance on the financial reporting of start-up costs and organization costs. It requires costs of start-up activities and organization costs to be expensed as incurred. The Company will be required to adopt this new statement for fiscal 2000. The Company is in the process of evaluating this statement and based on preliminary review, expects the cumulative effect of this statement to require a write-off of approximately $94,000 before any tax benefit. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company's operations are classified into two business segments: food processing operations, principally fully cooked meat and sandwich production; and restaurant operations, comprised of the Sagebrush, Western Steer, Prime Sirloin and Bennett's concepts. On June 9, 1998, the Company completed its acquisition of Pierre Foods. The inclusion of Pierre's operations and the additional three weeks of operations in the existing operations (see Note 5) results in increases in every revenue and expense category compared with prior year results for the comparable periods. Results for the fiscal quarters and year to date ended December 5, 1998 and November 7, 1997, are shown below:
Fiscal Quarter Ended Year to Date Ended ----------------------------- ---------------------------- (In millions) December 5, November 7, December 5, November 7, 1998 1997 1998 1997 ----------- ------------ ------------- ----------- Revenues: Food processing operations $ 48.3 $ 14.6 $ 109.6 $ 47.2 Restaurant operations 25.8 21.4 77.6 65.0 ----------- ------------ ------------- ----------- Total 74.1 36.0 187.2 112.2 ----------- ------------ ------------- ----------- Cost of goods sold: Food processing operations 30.1 12.6 73.5 41.9 Restaurant operations 9.9 8.0 29.0 23.9 ----------- ------------ ------------- ----------- Total 40.0 20.6 102.5 65.8 ----------- ------------ ------------- ----------- Restaurant operating expenses 12.0 9.3 35.5 27.8 Selling, general and administrative 13.1 3.2 30.9 9.3 Depreciation and amortization 2.6 1.1 6.4 3.1 ----------- ------------ ------------- ----------- Operating income 6.4 1.8 11.9 6.2 ----------- ------------ ------------- ----------- Other expense (4.3) 0.1 (9.7) (0.5) ----------- ------------ ------------- ----------- Earnings (loss) before income taxes and extraordinary item 2.1 1.9 2.2 5.7 Income tax provision (benefit) 0.9 0.7 0.9 2.2 ----------- ------------ ------------- ----------- Earnings (loss) before extraordinary item 1.2 1.2 1.3 3.5 Extraordinary loss (net of tax) -- -- (0.1) -- ----------- ------------ ------------- ----------- Net earnings (loss) $ 1.2 $ 1.2 $ 1.2 $ 3.5 =========== ============ ============= ===========
Fiscal Quarter Ended December 5, 1998 Compared to Fiscal Quarter Ended November 7, 1997 Revenues. Revenues increased by $38.1 million, or 105.8%. The net effect of the Pierre acquisition accounted for $33.7 million of the sales increase. The remaining increase of $4.4 million was the result of increases in restaurant revenues. This increase in restaurant revenues was due to the additional one week of sales and the opening, following the fiscal quarter ended November 7, 1997, of fifteen Sagebrush restaurants, consisting of six new restaurants (including two former franchises) and nine conversions. The revenue effect of these new restaurants was offset somewhat by the closing of six non-Sagebrush restaurants. Cost of goods sold. Cost of goods sold increased by $19.4, or 94.2%. The Pierre acquisition accounted for $17.5 million of the increase. Cost of goods sold in the restaurant segment increased by $1.9 million, or 23.8%, due to the additional one week of sales, the operation of fifteen new restaurants in the quarter ended December 5, 1998, and an increase in the costs of beef, chicken and dairy products. Cost of goods sold in the food processing 10 segment decreased as a percentage of operating revenues of that segment from 86.3% to 62.3% due to the Company's acquisition of Pierre, which historically had a higher gross margin percentage than existing Company food processing operations. Restaurant operating expenses. Such expenses increased by $2.7 million, or 29.0%, as a result of the operation of additional restaurants and the additional week in the fiscal quarter ending December 5, 1998. As a percentage of restaurant revenues, restaurant operating expenses increased from 43.5% to 46.5%, due to the incurrence of costs associated with opening or converting a greater number of stores this fiscal quarter compared to the number of stores opened or converted in the prior fiscal quarter. Selling, general and administrative. Such expenses increased by $9.9 million, or 309.4%, as a result of the Company's acquisition of Pierre, which historically had a higher level of selling, general and administrative expenses than existing Company operations, and the additional week of operations. As a percentage of revenues, selling, general and administrative expenses increased from 8.9% to 17.7% due to the higher level of selling, general and administrative expenses relating to Pierre. Depreciation and amortization. Depreciation and amortization increased by $1.5 million, or 136.4%, due to the Pierre acquisition and the higher number of restaurants in operation. Operating income. Operating income increased by $4.6 million, or 255.6%, and increased as a percentage of revenues from 5.0% to 8.6%, for the reasons stated above. Other income (expense). Net other expense increased by $4.4 million from net other income of $106,000. This increase was due primarily to interest expense ($4.0 million) resulting from the borrowings used to finance the Pierre acquisition and, to a lesser extent, the nonrecurrence in the fiscal 1999 quarter of a net gain in the fiscal 1998 quarter on disposition and sale of excess real property. Earnings before income taxes and extraordinary items. Such earnings increased by $200,000 million, or 10.5%, for the reasons stated above. Income tax provision. The effective tax rate for the fiscal quarter ended December 5, 1998 was 42.1%, as compared to 37.6% for the prior year comparable quarter. Net earnings. Net earnings were flat for the reasons stated above. Year to Date Ended December 5, 1998 Compared to Year to Date Ended November 7, 1997 Revenues. Revenues increased by $75.0 million, or 66.8%. The net effect of the Pierre acquisition accounted for $62.4 million of the sales increase. The remaining increase of $12.6 was the result of an increase of in restaurant revenues. This increase in restaurant revenues was due to the additional four weeks of sales of $24,372,479 and the opening, since the beginning of fiscal 1998, of nineteen Sagebrush restaurants, consisting of nine new restaurants (including two former franchises) and ten conversions. The revenue effect of these nine new Sagebrush restaurants was offset somewhat by the closing of six non-Sagebrush restaurants. Cost of goods sold. Cost of goods sold increased by $36.7 million, or 55.8%. The Pierre acquisition accounted for $31.6 million of the increase. Cost of goods sold in the restaurant segment increased by $5.1 million, or 21.3%, due to the operation of additional restaurants and the additional four weeks in the fiscal period ended December 5, 1998, and increases in the costs of beef, chicken and dairy products. Cost of goods sold in the food processing segment decreased as a percentage of operating revenues of that segment from 88.8% to 67.1% due to the Company's acquisition of Pierre, which historically had a higher gross margin percentage than existing Company food processing operations. Restaurant operating expenses. Such expenses increased by $7.7 million, or 27.7%, as a result of the additional four weeks and the operation of additional restaurants in the latter period. As a percentage of restaurant revenues, restaurant operating expenses increased from 42.8% to 45.7% due to the 11 incurrence of costs associated with opening or converting a greater number of stores this fiscal quarter compared to the number of stores opened or converted in the prior fiscal quarter. Selling, general and administrative. Such expenses increased by $21.6 million, or 232.3%, as a result of the Company's acquisition of Pierre, which historically had a higher level of selling, general and administrative expenses than existing Company operations, and the additional four weeks of operations. As a percentage of revenues, selling, general and administrative expenses increased from 8.0% to 15.7% due to the higher level of selling, general and administrative expenses relating to Pierre. Depreciation and amortization. Depreciation and amortization increased by $3.3 million, or 106.5%, due to the Pierre acquisition and the higher number of restaurants in operation. Operating income. Operating income increased by $5.7 million, or 91.9%, and increased as a percentage of revenues from 5.5% to 6.4% for the reasons stated above. Other income (expense). Net other expense increased by $9.2 million from $500,000 due to (1) interest expense ($7.2 million) resulting from the borrowings used to finance the Pierre acquisition, (2) dispositions of certain fixtures and equipment deemed worthless as a result of the acquisition and integration of the Sagebrush operations, (3) dispositions of certain fixtures and equipment deemed worthless as a result of conversions of restaurants to the Sagebrush concept and (4) a disposition of computer software that management had determined not to utilize in the future due to the integration of Pierre into Fresh Foods. Earnings before income taxes and extraordinary item. Such earnings decreased by $3.3 million, or 57.8%, for the reasons stated above. Income tax provision. The effective tax rate for the fiscal year to date ended December 5, 1998 was 42.1%, as compared to 37.9% for the prior year comparable period. Such increase was due to the non-deductibility of certain costs incurred during fiscal 1998. Earnings before extraordinary item. Earnings before extraordinary item decreased by $2.3 million, or 65.7%, for the reasons stated above. Extraordinary loss. Extraordinary loss, net of tax, is the result of a $66,000 loss on write-off of loan fees due to early extinguishment of debt in fiscal 1998. Net earnings. Net earnings decreased by $2.3 million, or 65.7%, for the reasons stated above. LIQUIDITY AND CAPITAL RESOURCES The Company had working capital of $33.6 million at December 5, 1998, as compared to a deficit of $497,000 at February 27, 1998. Most of the increase in working capital was attributable to borrowings under the revolving line of credit used to finance part of the Pierre acquisition, restaurant conversions and construction, and operations. These borrowings are classified as long term debt on the balance sheet. The Company has traditionally financed its working capital needs through a combination of cash flow from operations and bank borrowings and, from time to time, sales of underutilized assets. During fiscal 1997, the Company entered into an agreement with a bank to provide a $6.0 million revolving credit facility, secured by a lien on inventory and receivables. The Company also obtained construction loans from a bank in amounts of up to $1.0 million per restaurant to finance the construction of new restaurants. Borrowings under these facilities were paid off with proceeds from the revolving bank facility as part of the Pierre acquisition. 12 On June 9, 1998, the Company completed the acquisition of Pierre Foods. The $122.0 million cash purchase price was financed by the proceeds of an offering of $115.0 million aggregate principal amount of the Company's 10 3/4% Senior Notes Due 2006 (the "Notes") and an initial borrowing under a new five-year, $75.0 million revolving Bank Facility, with availability subject to a borrowing base formula. In addition, borrowings under the Bank Facility were used to extinguish all existing debt of the Company, with the exception of outstanding industrial revenue bonds and certain capital lease obligations (see Note 11 to the unaudited consolidated condensed financial statements). The Bank Facility provides for a five-year revolving line of credit under which the Company may borrow up to an amount (including standby letters of credit up to $2.5 million) equal to the lessor of $75.0 million or a borrowing base (comprised of eligible accounts receivable, inventory, machinery and real property). The portion of the Bank Facility not used in connection with consummation of the Pierre acquisition may be used for working capital requirements, permitted acquisitions and general corporate purposes. Borrowings under the Bank Facility will bear interest at floating rates based upon the interest rate option selected from time to time by the Company. As of December 5, 1998, after giving effect to the Pierre acquisition and related financial transactions, the Company had approximately 38.8 million in outstanding borrowings under the revolving line of credit and approximately $15.4 million of additional availability under the Bank Facility. The Company anticipates that its cash requirements, including working capital, capital expenditures and required principal and interest payments due under the Bank Facility and interest payments due under the Notes, which represent significant liquidity requirements, will be met though a combination of funds provided by operations, borrowings under the Bank Facility and, depending upon stock market conditions and other factors, the net proceeds of a possible offering of its common stock. In addition, from time to time the Company expects to continue its practice of acquiring equipment with the proceeds of secured bank loans or capital or operating leases. Funding for capital expenditures has been obtained primarily through current earnings and term loans. Capital expenditures were $12.5 million for the fiscal year to date ended December 5, 1998, as compared to $8.0 million for the comparable period of fiscal 1998. The reason for the $4.5 million increase was the construction of six new Sagebrush restaurants and the conversion of nine restaurants to the Sagebrush concept during fiscal 1998 to date. The Company has budgeted approximately $16.1 million for capital expenditures in fiscal 1999, including expenditures for Pierre subsequent to the Pierre acquisition. These expenditures are being devoted to (i) restaurant conversions (nine) and the construction of seven new (including three former franchises) Sagebrush restaurants (approximately $10.0 million) and (ii) routine equipment upgrading and maintenance (approximately $1.0 million), (iii) the food processing segment (approximately $4.5 million), and (iv) other miscallaneous (approximately $.5 million). The Company's major market risk exposure is potential loss arising from changing interest rates and its impact on long-term debt. The Company's policy is to manage interest rate risk by maintaining a combination of fixed and variable rate financial instruments in amounts and with maturities that management considers appropriate. Of long-debt debt outstanding at December 5, 1998, $38.8 principal amount was accruing interest at a variable rate. A rise in prevailing interest rates could have adverse effects on the Company's financial condition and results of operations. SEASONALITY The Company considers its restaurant operations to be somewhat seasonal in nature, with stronger sales during the Christmas season and spring, weaker sales during the mid-summer and late winter. Except for sales to school districts, which decline significantly during the summer and early January, there is no seasonal variation in the Company's sales of food products. The Company's food production is steady throughout the year. 13 INFLATION The Company believes that inflation has not had a material impact on its results of operations for any of the periods reported herein. "YEAR 2000" ISSUES The "Year 2000" problem arose because many existing computer programs use only the last two digits to refer to a year. If not addressed, computer programs that are date sensitive may not have the ability to properly recognize dates in year 2000 and beyond. The result could be a temporary disruption of operations and the processing of transactions. The Company has developed a four phase approach to addressing this problem. Phase 1 was an analysis to identify the impact and costs relating to Year 2000, both in computer information systems and other equipment. Phase 2 was to create a comprehensive plan to address and fix any problems identified. Phase 3 is the actual implementation of the comprehensive plan and Phase 4 is addressing any unforeseen complications or issues not previously addressed. The Company has completed Phase 1 and Phase 2. Phase 3, relating to the Company's systems,both IT and non-IT were substantially complete at the end of 1998, with most of the systems complete. Testing of compliance is continuing. Additionally, as part of Phase 3, the Company has sent "Year 2000" questionnaires to vendors and other entities with which the Company conducts business in order to assess whether they are year 2000 compliant or have adequately addressed their system conversion requirements. More than half of all vendors and other entities and substantially all major vendors and other entities receiving questionnaires from the Company have responded. The vast majority of vendors and other entities responding have done so by offering assurances that they are either currently Year 2000 compliant or have a plan in place to be Year 2000 compliant in a timely manner. The Company plans to follow up on those vendors and other entities not responding as of yet by sending a second inquiry. The Company cannot predict how many, if any, of the responses it receives may prove later to be inaccurate or overly optimistic. As a result, the Company has begun developing, as part of Phase 3, contingency plans to address unanticipated interruptions or down time in both the Company's and third parties' systems and services. The costs to implement the Company's plan through December 5, 1998 were $228,275 and are being expensed as incurred. The estimated cost to complete Phase 3 is $142,000. These costs exclude the costs of purchasing Year 2000 compliant computer programs that would have been purchased in the ordinary course of business regardless of "Year 2000" concerns. As of December 5, 1998 the Company is on schedule to complete Phase 3 as planned. The Company is continuing to closely monitor adherence to the implementation plan and is currently satisfied that it will be adequately completed in the scheduled time frame. If the Company encounters unforeseen complications or issues not previously addressed in the comprehensive plan (Phase 4), additional resources from internal and external sources would be committed to complete the necessary conversions in the required time frame. Since the Company has no reason to believe that it will need to utilize these additional resources, no estimates as to their cost has been made at this time. NEW ACCOUNTING PRONOUNCEMENTS In June 1997, Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures About Segments of an Enterprise and Related Information," was issued. SFAS No. 131 redefines how operating segments are determined and requires disclosure of certain financial and descriptive information about a company's operating segments. The Company will be required to adopt this new standard for fiscal 1999. The Company has not yet completed its analysis of the effect of this new standard on its financial statement disclosures. In March 1998, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (the "AICPA") issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides guidance on the types of internal costs, including payroll and interest costs, which should be capitalized relative to development of software applications. The Company will be required to adopt this new statement for fiscal 2000. The Company has evaluated this statement and does not expect any material effect on the Company's financial statements. 14 In April 1998, the Accounting Standards Executive Committee of the AICPA issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 provides guidance on the financial reporting of start-up costs and organization costs. It requires costs of start-up activities and organization costs to be expensed as incurred. The Company will be required to adopt this new statement for fiscal 1999. The Company is in the process of evaluating this statement and based on preliminary review, expects the cumulative effect of this statement to require a write-off of approximately $94,000 before any tax benefit. CAUTIONARY STATEMENT AS TO FORWARD LOOKING INFORMATION Statements contained in this report as to the Company's outlook for sales, operations, capital expenditures and other amounts, including budgeted amounts and projections of future financial or economic performance of the Company, and statements of the Company's plans and objectives for future operations, are "forward looking" statements provided in reliance upon the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Important factors that could cause actual results or events to differ materially from those projected, estimated, assumed or anticipated in any such forward looking statements include, among others, the substantial leverage of the Company, restrictions to be imposed on the Company by the terms of its Bank Facility and Senior Notes, risks relating to the Company's ability to execute its business strategy following the Pierre acquisition, competitive considerations, government regulation and general risks of the food industry, the possibility of adverse changes in food costs, the availability of supplies, the Company's dependence on key personnel, potential labor disruptions and "Year 2000" issues. 15 PART II. OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits
Exhibit No. Description Page No. ----------- ----------- -------- 11 Computation of Per Share Earnings 19
(b) Reports on Form 8-K A Current Report on Form 8-K was filed on September 11, 1998, announcing the change in the Company's fiscal year. 16 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. FRESH FOODS, INC. Date January 19, 1999 By: /s/ James C. Richardson, ---------------- ------------------------------------- James C. Richardson, Jr. (Chief Executive Officer) Date January 19, 1999 By: /s/ James E. Harris ---------------- ------------------------------------ James E. Harris (Principal Financial Officer) 17 INDEX TO EXHIBITS For inclusion in Quarterly Report on Form 10-Q Quarter Ended December 5, 1998
Exhibit No. Page No. - ----------- -------- 11 Computation of Per Share Earnings 19
18 EX-11 2 COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 FRESH FOODS, INC. AND SUBSIDIARIES ------------------------------------------- Computation of Per Share Earnings
Quarters Ended Year to Date Ended ----------------------- -------------------------- December 5, November 7, December 5, November 7, 1998 1997 1998 1997 ---------- ---------- ----------- ----------- Computation of Earnings Per Common Share - Basic: Earnings (loss) before extraordinary item $1,237,199 1,169,211 1,280,225 3,525,685 Extraordinary loss from early extinguishment of debt (net of income tax benefit of $45,719) -- -- (62,774) -- ---------- ---------- ----------- ----------- Net earnings (loss) $1,237,199 $1,169,211 $ 1,217,451 $ 3,525,685 ========== ========== =========== =========== Actual outstanding shares at beginning of period 5,914,174 5,525,324 5,898,449 5,326,948 Add (deduct) weighted average shares applicable to: Common stock purchased -- -- -- (101,806) Common stock issued 50,186 9,569 353,278 ---------- ---------- ----------- ----------- Weighted average shares as adjusted 5,914,174 5,575,510 5,908,018 5,578,420 ========== ========== =========== =========== Earnings (loss) before extraordinary item - basic $ 0.21 $ 0.21 $ 0.22 $ 0.63 Extraordinary loss from early extinguishment of debt -- -- (0.01) -- ---------- ---------- ----------- ----------- Earnings (loss) per common share - basic $ 0.21 $ 0.21 $ 0.21 $ 0.63 ========== ========== =========== =========== Computation of Earnings Per Common Share - Diluted: Earnings (loss) before extraordinary item $1,237,199 $1,169,211 $ 1,280,225 $ 3,525,685 Extraordinary loss from early extinguishment of debt (net of income tax benefit of $45,719) -- -- (62,774) -- ---------- ---------- ----------- ----------- Net earnings (loss) $1,237,199 $1,169,211 $ 1,217,451 $ 3,525,685 ========== ========== =========== =========== Actual outstanding shares at beginning of period 5,914,174 5,525,324 5,898,449 5,326,948 Add (deduct) weighted average shares applicable to: Common stock purchased -- -- -- (101,806) Common stock issued -- 50,186 9,569 353,278 Common stock options exercised -- 49,685 3,963 71,291 Common stock options forfeited 884 -- 47,297 -- Common stock options outstanding 91,137 459,722 143,648 414,772 ---------- ---------- ----------- ----------- Weighted average shares as adjusted 6,006,195 6,084,917 6,102,926 6,064,483 ========== ========== =========== =========== Earnings (loss) before extraordinary item - diluted $ 0.21 $ 0.19 $ 0.21 $ 0.58 Extraordinary loss from early extinguishment of debt -- -- (0.01) -- ---------- ---------- ----------- ----------- Earnings (loss) per common share - diluted $ 0.21 $ 0.19 $ 0.20 $ 0.58 ========== ========== =========== ===========
19 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the 1999 third quarter 10-Q for Fresh Foods, Inc. and is qualified in its entirety by reference to such 10-Q. 9-MOS MAR-06-1999 DEC-05-1998 4,033,147 211,328 16,888,614 525,175 27,489,042 54,230,496 102,965,933 29,679,505 218,051,493 21,490,136 155,660,781 0 0 5,194,174 34,659,210 218,051,493 187,156,335 187,156,335 102,483,579 137,976,397 6,348,111 126,753 8,454,239 21,212,626 932,401 1,280,225 0 (62,774) 0 1,217,451 .21 .20
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