PIERRE FOODS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| May 31, 2003 | March 1, 2003 | ||||||||||
ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | 589,252 | $ | 274,329 | |||||||
| Certificates of deposit of special purpose entity | 1,240,000 | 1,240,000 | |||||||||
| Accounts receivable, net | 22,073,627 | 23,654,358 | |||||||||
| Inventories | 35,733,426 | 32,584,777 | |||||||||
| Refundable income taxes | — | 165,829 | |||||||||
| Deferred income taxes | 2,642,526 | 2,642,526 | |||||||||
| Prepaid expenses and other current assets (includes prepayments to related parties of $375,000 at March 1, 2003 | 1,703,883 | 3,264,746 | |||||||||
| Total current assets | 63,982,714 | 63,826,565 | |||||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 59,066,828 | 55,549,083 | |||||||||
| OTHER ASSETS: | |||||||||||
| Trade name, net | 38,808,636 | 38,808,636 | |||||||||
| Note receivable – related party | 993,247 | 993,247 | |||||||||
| Deferred income taxes | 6,283,871 | 6,283,871 | |||||||||
| Deferred loan origination fees, net | 2,761,963 | 2,950,109 | |||||||||
| Other | 351,641 | 369,500 | |||||||||
| Total other assets | 49,199,358 | 49,405,363 | |||||||||
| Total Assets | $ | 172,248,900 | $ | 168,781,011 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Current installments of long-term debt | $ | 352,899 | $ | 369,467 | |||||||
| Trade accounts payable | 7,021,684 | 9,422,256 | |||||||||
| Accrued interest | 6,147,287 | 3,056,662 | |||||||||
| Accrued payroll and payroll taxes | 7,322,326 | 5,929,464 | |||||||||
| Accrued promotions | 2,379,473 | 2,280,788 | |||||||||
| Income taxes payable | 22,378 | — | |||||||||
| Accrued taxes (other than income and payroll) | 774,701 | 561,642 | |||||||||
| Other accrued liabilities (includes related party liabilities of $1,466,124 and $425,330 at May 31, 2003 and March 1, 2003, respectively) | 2,845,856 | 1,490,086 | |||||||||
| Total current liabilities | 26,866,604 | 23,110,365 | |||||||||
| LONG-TERM DEBT, less current installments | 130,068,455 | 130,387,174 | |||||||||
| OBLIGATION OF SPECIAL PURPOSE ENTITY | 5,520,863 | 5,591,813 | |||||||||
| OTHER LONG-TERM LIABILITIES | 604,834 | 693,750 | |||||||||
| SHAREHOLDERS’ EQUITY: | |||||||||||
| Common stock – Class A, 100,000 shares authorized, issued and outstanding at May 31, 2003 and March 1, 2003 | 29,438,172 | 29,438,172 | |||||||||
| Retained earnings (deficit) | (15,250,028 | ) | (15,440,263 | ) | |||||||
| Note receivable – related party | (5,000,000 | ) | (5,000,000 | ) | |||||||
| Total shareholders’ equity | 9,188,144 | 8,997,909 | |||||||||
| Total Liabilities and Shareholders’ Equity | $ | 172,248,900 | $ | 168,781,011 | |||||||
PIERRE FOODS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Thirteen Weeks Ended | ||||||||||||
| May 31, 2003 | June 1, 2002 | |||||||||||
| REVENUES, NET: | $ | 81,479,869 | $ | 61,878,429 | ||||||||
| COSTS AND EXPENSES: | ||||||||||||
| Cost of goods sold (includes related party transactions totaling $1,440,205 and $1,186,801 in fiscal 2004 and fiscal 2003, respectively) | 56,219,915 | 40,252,835 | ||||||||||
| Selling, general and administrative expenses (includes related party transactions totaling $7,840,152 and $6,298,742 in fiscal 2004 and fiscal 2003, respectively) | 20,097,275 | 17,576,501 | ||||||||||
| Loss on disposition of property, plant and equipment, net | — | 23,408 | ||||||||||
| Depreciation | 1,150,757 | 988,667 | ||||||||||
| Total costs and expenses | 77,467,947 | 58,841,411 | ||||||||||
| OPERATING INCOME | 4,011,922 | 3,037,018 | ||||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||
| Interest expense | (3,447,480 | ) | (3,417,515 | ) | ||||||||
| Other income, net — (including interest) (includes related party income of $195,000 in fiscal 2003) | — | 212,942 | ||||||||||
| Other expense, net | (3,447,480 | ) | (3,204,573 | ) | ||||||||
| INCOME (LOSS) BEFORE INCOME TAX (PROVISION) BENEFIT AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE | 564,442 | (167,555 | ) | |||||||||
| INCOME TAX (PROVISION) BENEFIT | (188,207 | ) | 53,953 | |||||||||
| INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | 376,235 | (113,602 | ) | |||||||||
| CUMULATIVE EFFECT OF ACCOUNTING CHANGE (net of income tax benefit of $10,415,037 in fiscal 2003) | — | (18,604,534 | ) | |||||||||
| NET INCOME (LOSS) | $ | 376,235 | $ | (18,718,136 | ) | |||||||
| NET INCOME PER COMMON SHARE – BASIC AND DILUTED | ||||||||||||
| Income (loss) before cumulative effect of accounting change | $ | 3.76 | $ | (1.14 | ) | |||||||
| Cumulative effect of accounting change | — | (186.05 | ) | |||||||||
| Net income (loss) per common share – basic and diluted | $ | 3.76 | $ | (187.19 | ) | |||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED | 100,000 | 100,000 | ||||||||||
PIERRE FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Thirteen Weeks Ended | ||||||||||||
| May 31, 2003 | June 1, 2002 | |||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net income (loss) | $ | 376,235 | $ | (18,718,136 | ) | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
| Cumulative effect of accounting change | — | 18,604,534 | ||||||||||
| Depreciation | 1,150,757 | 988,667 | ||||||||||
| Amortization of deferred loan origination fees | 210,646 | 137,150 | ||||||||||
| Loss on disposition of property, plant and equipment, net | — | 23,408 | ||||||||||
| Decrease in other assets | 17,858 | 17,859 | ||||||||||
| Decrease in other long-term liabilities | (88,916 | ) | (82,428 | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Receivables | 1,580,731 | 2,958,845 | ||||||||||
| Inventories | (3,148,649 | ) | (7,533,296 | ) | ||||||||
| Refundable income taxes, prepaid expenses and other current assets | 1,726,692 | (478,199 | ) | |||||||||
| Trade accounts payable and other accrued liabilities | 3,772,807 | 2,816,561 | ||||||||||
| Total adjustments | 5,221,926 | 17,453,101 | ||||||||||
| Net cash provided by (used in) operating activities | 5,598,161 | (1,265,035 | ) | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Proceeds from sales of property, plant and equipment | — | 30,000 | ||||||||||
| Capital expenditures | (4,668,501 | ) | (1,957,817 | ) | ||||||||
| Net cash used in investing activities | (4,668,501 | ) | (1,927,817 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Net borrowings under revolving credit agreement | (312,320 | ) | 659,319 | |||||||||
| Principal payments on long-term debt | (93,917 | ) | (100,893 | ) | ||||||||
| Loan origination fees | (22,500 | ) | (1,558,611 | ) | ||||||||
| Distributions by special purpose leasing entity | (186,000 | ) | (320,594 | ) | ||||||||
| Net cash used in financing activities | (614,737 | ) | (1,320,779 | ) | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 314,923 | (4,513,631 | ) | |||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 274,329 | 4,577,982 | ||||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 589,252 | $ | 64,351 | ||||||||
