SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 2, 1995 Commission File No. 0-15696
PIEMONTE FOODS, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0626121
(State of other jurisdiction of I.R.S. Employer
incorporation of organization) Identification
400 Auqusta Street, Greenville, South Carolina 29604
(Address of principal executive offices)
Registrant's telephone number, including area code: (803) 242-0424
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
--- ---
The number of shares of common stock outstanding as of September 30, 1995 was
1,450,878.
PIEMONTE FOODS, INC.
INDEX TO FORM 10-Q
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - September 2, 1995 and August
27, 1994
Consolidated Statements of Income for the first quarters ended
September 2, 1995 and August 27, 1994 and the three months then
ended.
Consolidated Statements of Cash Flows for the first quarters
ended September 2, 1995 and August 27, 1994 and the three
months then ended.
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
PIEMONTE FOODS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS Sept 2,1995 Aug 27,1994
CURRENT ASSETS
Cash 688,855 560,416
Accounts receivable, net 1,939,664 1,931,676
Inventories 1,785,796 1,720,929
Prepaid expenses 763,845 498,696
Deferred marketing costs 246,317 260,087
TOTAL CURRENT ASSETS 5,424,477 4,971,804
PROPERTY, PLANT AND EQUIPMENT, NET 4,811,853 4,831,754
DEFERRED CHARGES, INTANGIBLE AND OTHER ASSETS
Deferred marketing costs-noncurrent portion 56,457 260,087
Excess of cost over fair value of net assets
acquired 726,939 753,846
Investment in joint venture 50,000 0
Loan to joint venture 308,532 0
Other assets 130,603 114,323
1,272,531 1,128,256
TOTAL ASSETS 11,508,861 10,931,814
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt 609,131 445,560
Short term borrowings 500,000 500,000
Accounts payable, trade 1,672,146 1,577,472
Accrued promotional allowances 106,640 63,897
Accrued compensation and payroll taxes 159,158 123,322
Accrued property taxes 90,601 119,949
Other accrued expenses 61,716 149,871
Income taxes payable 0 0
TOTAL CURRENT LIABILITIES 3,199,392 2,980,071
LONG-TERM DEBT 1,204,941 778,120
DEFERRED INCOME TAXES 420,728 389,728
STOCKHOLDERS' EQUITY
Common stock 14,507 14,289
Capital in excess of stated value 2,056,571 1,978,413
Retained earnings 4,612,722 4,791,193
TOTAL STOCKHOLDERS' EQUITY 6,683,800 6,783,895
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 11,508,861 10,931,814
See accompanying Notes to Financial Statements
PIEMONTE FOODS, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the three months ending September 2,1995 and August 27,1994
Three Months Three Months
1995 1994
NET SALES 6,641,955 6,568,770
Operating Expenses
Cost of goods sold 5,681,005 5,182,574
Selling, general and administrative 1,301,710 1,425,072
6,982,715 6,607,646
OPERATING INCOME -340,760 -38,876
Other Expenses
Interest expense 39,210 33,279
Other expense (income) -1,550 -17,238
Sale of Assets 3,757
Interest income -11,125 -9,480
30,292 6,561
Income Before Income Taxes -371,052 -45,437
Provision for Income Taxes -148,000 -18,000
Net Income -223,052 -27,437
Average Number of Shares Outstanding 1,525,160 1,546,470
Net Income Per Share -0.15 -0.02
See accompanying Notes to Financial Statements
PIEMONTE FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ending September 2,1995 and August 27,1994.
Three Months Three Months
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income -223,052 -27,436
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 183,390 186,159
Decrease (increase) in
Receivables -160,891 234,155
Inventory 123,308 -293,034
Prepaid expenses -255,988 -205,838
Other assets 54,996 15,289
Increase (decrease) in
Accounts payable 293,066 441,442
Accrued liabilities -21,016 -164,280
Income tax payable 0 -26,430
Deferred income taxes 0 0
Net cash provided by operating activities -6,187 160,027
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment -203,119 -519,356
Loan to joint venture -308,532 0
Purchase of marketing services -38,650 -13206
Net cash used in investing activities -550,301 -532,562
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 11,659 13,358
Advances (repayments) of credit line 500,000 0
Repayment of long-term debt -152,283 -111,390
Net cash used in financing activities 359,376 -98,032
Net increase (decrease) in cash -197,112 -470,567
Cash, beginning of period 885,967 1,030,983
Cash, end of period 688,855 560,416
See accompanying Notes to Financial Statements
PIEMONTE FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 2, 1995
1. Principles of Consolidation
The accompanying financial statements include the accounts of Piemonte
Foods, Inc. and its wholly-owned subsidiaries, Piemonte Foods of Indiana,
Inc. and Origena, Inc. The consolidated balance sheet as of September 2,
1995 and the related statements of income and cash flows for the three
month period then ended are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such financial statements
have been included. Such adjustments consisted only of normal recurring
items.
The financial statements and notes are presented as permitted by Form 10-Q,
and do not contain certain information included in the company's
annual financial statements and notes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Working capital at the end of the First Quarter was $2.2 million.
Receivables and inventories are at the same levels as last year, with
prepaid expenses slightly higher due to income tax benefits from the
quarter's operations. Cash remains at an acceptable level.
During the quarter $200,000 was spent on capital improvements and $300,000
was advanced to the joint venture in Holland. Both were funded through
short-term debt with the intention of replacing the borrowings with longer-
term debt in the future. The company is in compliance with all restrictive
covenants imposed by its lender.
Concerning the joint venture bakery in Holland, all site work is done,
foundations poured and framework erected. The plant is expected to be in
operation in early 1996.
RESULTS OF OPERATIONS
Quarter Ended September 2, 1995 Compared to
Quarter Ended Auqust 27, 1994
Revenues for the First Quarter were $6.6 million, comparable to last year.
Cost of goods sold increased from 78.9% of sales last year to 85.5% this
year. The increase in costs is attributable to both commodity costs and
product mix. Commodity cost increases this year over last year amounted
to $180,000 for the quarter. Flour costs this summer have increased 29%
and are anticipated to remain high until June, 1996. In addition packaging
costs, specifically cardboard packaging, have increased 50 - 60% in the
last two years. Due to competitive pressures, these cost increases were
absorbed. After months of absorbing these costs, a general price increase
was implemented in September, 1995 to offset most of the cost increases.
It is also anticipated that cardboard costs may begin to decline in early
1996.
The mix of products sold during the quarter also affected cost of goods.
Last year the company was packing a product for a national customer that
carried high gross margins. That product is no longer packed, the volume
has been replaced, but with products producing $275,000 less margin.
In an ongoing effort to reduce costs, selling, general and administrative
expenses were reduced by $125,000.
The overall effect of margin decreases, offset by some cost decreases, is
a loss for the quarter of $223,000 compared to a loss last year of $27,000.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
No reports on Form 8-K were filed by the
Company during the quarter ended September 2, 1995.
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 hereunto duly authorized.
PIEMONTE FOODS, INC.
Date October 16, 1995
By s/John A. Lindsay
John A. Lindsay
Treasurer and Principal Financial
Officer