PIERRE FOODS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| August 30, 2003 | March 1, 2003 | ||||||||||
ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | 146,977 | $ | 274,329 | |||||||
| Certificates of deposit of special purpose entity | 1,240,000 | 1,240,000 | |||||||||
| Accounts receivable, net | 24,759,993 | 23,654,358 | |||||||||
| Inventories | 34,644,667 | 32,584,777 | |||||||||
| Refundable income taxes | 1,507,333 | 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 | 1,758,015 | 3,264,746 | |||||||||
| Total current assets | 66,699,511 | 63,826,565 | |||||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 60,562,108 | 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 | 1,920,139 | 2,950,109 | |||||||||
| Other | 333,788 | 369,500 | |||||||||
| Total other assets | 48,339,681 | 49,405,363 | |||||||||
| Total Assets | $ | 175,601,300 | $ | 168,781,011 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Current installments of long-term debt | $ | 377,155 | $ | 369,467 | |||||||
| Trade accounts payable | 6,531,221 | 9,422,256 | |||||||||
| Accrued interest | 3,039,959 | 3,056,662 | |||||||||
| Accrued payroll and payroll taxes | 5,706,695 | 5,929,464 | |||||||||
| Accrued promotions | 3,016,592 | 2,280,788 | |||||||||
| Accrued taxes (other than income and payroll) | 899,725 | 561,642 | |||||||||
| Other accrued liabilities (includes related party liabilities of $4,527,040 and $425,330 in fiscal 2004 and fiscal 2003, respectively) | 5,685,580 | 1,490,086 | |||||||||
| Total current liabilities | 25,256,927 | 23,110,365 | |||||||||
| LONG-TERM DEBT, less current installments | 136,494,023 | 130,387,174 | |||||||||
| OBLIGATION OF SPECIAL PURPOSE ENTITY | 5,440,710 | 5,591,813 | |||||||||
| OTHER LONG-TERM LIABILITIES | 514,219 | 693,750 | |||||||||
| SHAREHOLDERS’ EQUITY: | |||||||||||
| Common stock – Class A, 100,000 shares authorized, issued and outstanding at August 30, 2003 and March 1, 2003 | 29,438,172 | 29,438,172 | |||||||||
| Retained earnings (deficit) | (16,542,751 | ) | (15,440,263 | ) | |||||||
| Note receivable – related party | (5,000,000 | ) | (5,000,000 | ) | |||||||
| Total shareholders’ equity | 7,895,421 | 8,997,909 | |||||||||
| Total Liabilities and Shareholders’ Equity | $ | 175,601,300 | $ | 168,781,011 | |||||||
PIERRE FOODS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Thirteen Weeks Ended | |||||||||||||||
| August 30, 2003 | August 31, 2002 | ||||||||||||||
| REVENUES, NET: | $ | 81,248,052 | $ | 61,843,102 | |||||||||||
| COSTS AND EXPENSES: | |||||||||||||||
| Cost of goods sold (includes related party transactions totaling $1,089,235 and $1,013,356 in fiscal 2004 and fiscal 2003, respectively) | 58,209,167 | 40,979,098 | |||||||||||||
| Selling, general and administrative expenses (includes related party transactions totaling $7,568,055 and $6,449,381 in fiscal 2004 and fiscal 2003, respectively) | 18,964,282 | 17,309,562 | |||||||||||||
| (Gain) loss on disposition of property, plant and equipment, net | 632 | (13,000 | ) | ||||||||||||
| Depreciation | 1,164,222 | 978,693 | |||||||||||||
| Total costs and expenses | 78,338,303 | 59,254,353 | |||||||||||||
| OPERATING INCOME | 2,909,749 | 2,588,749 | |||||||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||
| Interest expense | (5,883,160 | ) | (3,615,736 | ) | |||||||||||
| Other income, net — (including interest) (includes related party income of $192,484 in fiscal 2003) | — | 213,616 | |||||||||||||
| Other expense, net | (5,883,160 | ) | (3,402,120 | ) | |||||||||||
| LOSS BEFORE INCOME TAX BENEFIT | (2,973,411 | ) | (813,371 | ) | |||||||||||
| INCOME TAX BENEFIT | 1,727,688 | 142,233 | |||||||||||||
| NET LOSS | $ | (1,245,723 | ) | $ | (671,138 | ) | |||||||||
| NET LOSS PER COMMON SHARE – BASIC AND DILUTED | $ | (12.46 | ) | $ | (6.71 | ) | |||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED | 100,000 | 100,000 | |||||||||||||
PIERRE FOODS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Twenty-Six Weeks Ended | |||||||||||
| August 30, 2003 | August 31, 2002 | ||||||||||
| REVENUES, NET: | $ | 162,727,921 | $ | 123,721,531 | |||||||
| COSTS AND EXPENSES: | |||||||||||
| Cost of goods sold (includes related party transactions totaling $2,529,440 and $2,200,157 in fiscal 2004 and fiscal 2003, respectively) | 114,429,082 | 81,231,933 | |||||||||
| Selling, general and administrative expenses (includes related party transactions totaling $15,408,207 and $12,748,123 in fiscal 2004 and fiscal 2003, respectively) | 39,061,557 | 34,886,063 | |||||||||
| Loss on disposition of property, plant and equipment, net | 632 | 10,408 | |||||||||
| Depreciation | 2,314,979 | 1,967,360 | |||||||||
| Total costs and expenses | 155,806,250 | 118,095,764 | |||||||||
| OPERATING INCOME | 6,921,671 | 5,625,767 | |||||||||
| OTHER INCOME (EXPENSE): | |||||||||||
| Interest expense | (9,330,640 | ) | (7,033,251 | ) | |||||||
| Other income, net — (including interest) (includes related party income of $387,484 in fiscal 2003) | — | 426,558 | |||||||||
| Other expense, net | (9,330,640 | ) | (6,606,693 | ) | |||||||
| LOSS BEFORE INCOME TAX BENEFIT AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE | (2,408,969 | ) | (980,926 | ) | |||||||
| INCOME TAX BENEFIT | 1,539,481 | 196,186 | |||||||||
| LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE | (869,488 | ) | (784,740 | ) | |||||||
| CUMULATIVE EFFECT OF ACCOUNTING CHANGE (net of income tax benefit of $10,415,037 in fiscal 2003) | — | (18,604,534 | ) | ||||||||
| NET LOSS | $ | (869,488 | ) | $ | (19,389,274 | ) | |||||
| NET INCOME PER COMMON SHARE – BASIC AND DILUTED | |||||||||||
| Loss before cumulative effect of accounting change | $ | (8.70 | ) | $ | (7.85 | ) | |||||
| Cumulative effect of accounting change | — | (186.05 | ) | ||||||||
| Net loss | $ | (8.70 | ) | $ | (193.90 | ) | |||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED | 100,000 | 100,000 | |||||||||
PIERRE FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Twenty-Six Weeks Ended | ||||||||||||
| August 30, 2003 | August 31, 2002 | |||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net loss per common share, basic and diluted | $ | (869,488 | ) | $ | (19,389,274 | ) | ||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||
| Cumulative effect of accounting change | — | 18,604,534 | ||||||||||
| Depreciation | 2,314,979 | 1,967,360 | ||||||||||
| Amortization of deferred loan origination fees | 416,637 | 339,420 | ||||||||||
| Loss on disposition of property, plant and equipment, net | 632 | 10,408 | ||||||||||
| Decrease in other assets | 35,716 | 35,717 | ||||||||||
| Decrease in other long-term liabilities | (179,531 | ) | (166,433 | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Receivables | (1,105,635 | ) | (1,876,550 | ) | ||||||||
| Inventories | (2,059,890 | ) | (9,852,094 | ) | ||||||||
| Refundable income taxes, prepaid expenses and other current assets | 165,225 | (1,938,712 | ) | |||||||||
| Trade accounts payable and other accrued liabilities | 2,138,874 | 2,995,353 | ||||||||||
| Total adjustments | 1,727,007 | 10,119,003 | ||||||||||
| Net cash provided by (used in) operating activities | 857,519 | (9,270,271 | ) | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
| Proceeds from sales of property, plant and equipment | 500 | 43,000 | ||||||||||
| Capital expenditures | (7,329,138 | ) | (8,828,745 | ) | ||||||||
| Net cash used in investing activities | (7,328,638 | ) | (8,785,745 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Net borrowings under revolving credit agreement | $ | 6,023,936 | $ | 16,249,527 | ||||||||
| Principal payments on long-term debt | (60,502 | ) | (93,061 | ) | ||||||||
| Loan origination fees | 613,333 | (1,583,467 | ) | |||||||||
| Distributions by special purpose leasing entity | (233,000 | ) | (1,009,196 | ) | ||||||||
| Net cash provided by financing activities | 6,343,767 | 13,563,803 | ||||||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (127,352 | ) | (4,492,213 | ) | ||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 274,329 | 4,577,982 | ||||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 146,977 | $ | 85,769 | ||||||||
