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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
(MARK ONE)
XX ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -- EXCHANGE ACT OF 1934 /FEE REQUIRED/
FOR THE FISCAL YEAR ENDED: June 24, 1995
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- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 /NO FEE REQUIRED/
FOR THE TRANSITION PERIOD FROM ___________________ TO ______________________
COMMISSION FILE NUMBER: 0-12800
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VIE DE FRANCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-0948383
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
85 South Bragg Street, Suite 600, Alexandria, VA 22312
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 750-9600 x350
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per Share
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(TITLE CLASS)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /_/
The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing sale price of the Common Stock on August
31, 1995 as reported on the NASDAQ National Market System, was approximately
$24,568,000. Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
As of August 31, 1995, there were 13,780,793 shares outstanding of the
Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following document are incorporated by reference in Parts III
and IV of this Form 10-K Report:
- - Proxy Statement for Registrant's 1995 Annual Meeting of Stockholders to be
filed - Items 10, 11, 12 and 13.
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PART I
ITEM 1. BUSINESS
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company is currently engaged in only one industry segment as of June
24, 1995. Accordingly, no segment data is included in the Consolidated
Financial Statements for fiscal year ending June 24, 1995.
GENERAL
The Company is a leading manufacturer in the United States of food
products for the food service industry using the sous vide food processing
technology. The Company opened a USDA-approved food processing plant in
Alexandria, Virginia in May 1990 and began operating another plant in Norway in
August 1994. Sous vide is an advanced system of food preparation, developed in
France, which cooks meats, seafood, poultry, sauces and vegetables over time
using low heat. Before the cooking process begins, the product is
vacuum-sealed in special plastic pouches that better maintain the food's flavor
and moisture in comparison to other methods of cooking. Following the
completion of the cooking process, the product can be either frozen or
refrigerated for distribution. Currently, all of the Company's products are
frozen. The Company also works with equipment manufacturers to provide
efficient computer controlled reheating equipment to its sous vide food service
providers who effectively convert their operations into sous vide kitchens and
improve customer satisfaction through better and consistent product quality,
while realizing reductions in their food and labor costs as a result of this
technology.
Vie de France was incorporated in the State of Delaware in 1974. Its
principal executive offices are located at 85 South Bragg Street, Suite 600,
Alexandria, VA 22312 and its telephone number at that location is (703)
750-9600.
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BACKGROUND
The Company commenced operations in 1972 as a wholesale producer of French
bread for daily delivery to the Washington, DC area. The Company expanded its
markets throughout the 1970s. In fiscal year 1979, the Company began offering
its product through Company-owned retail bakeries where the products could be
freshly baked throughout the day. During the 1980s, the Company expanded its
frozen dough product line and developed processes to facilitate the baking of
these products at the point-of-sale. As of May 1994, the Company owned and
operated 31 retail units. The Company sold the Bakery Division and the
Restaurant Division to Vie de France Yamazaki, Inc. in 1991 and 1994,
respectively.
The Company began development of the sous vide business in 1987, in
conjunction with research performed previously by Nouvelle Carte France, a
French company. As a result of the growth in the application of sous vide in
Europe, the Board authorized the establishment of the Vie de France Culinary
Corporation for the express purpose of the research and development of sous
vide for the U.S. market. This Company was formed in 1987, and was later
merged into Vie de France Corporation. In 1989, construction began on a 30,000
square foot plant in Alexandria, Virginia designed to manufacture its sous vide
product line under the trade name Vie de France Culinary. The Culinary plant
began operations in May 1990. The plant has since expanded to 50,000 square
feet.
During fiscal years 1991 through 1995, the Culinary Division successfully
built its sous vide sales volume from zero to over $2.0 million in fiscal year
1991, $4.6 million in fiscal year 1992, $8.2 million in fiscal year 1993, $12.1
million in fiscal year 1994 and $15.0 million in fiscal year 1995. In 1992,
the Company started a national direct sales organization to continue to
increase sales. The Company is focusing its sales efforts on wholesale
customers in the hotel industry and national/regional restaurant chains, as
well as large-volume food providers such as the airline and transportation
industries.
In order to reduce costs, increase quality and increase production
capacity, the Company is pursuing the development and construction of single
product sous vide production plants located adjacent to, or in the proximity of
suppliers of raw materials. One such plant, located in Norway, began
production in August 1994. The Company currently has capacity in its plants to
support near term sales growth.
PRODUCTS
The Company offers a wide range of sous vide products including entrees,
side dishes, and sauces. The entree items consist of a variety of seafood,
pork, beef and poultry items. Side dishes and sauces range from vegetables and
rice to cream or tomato-based sauces. The products are sealed in either single
or multi-serving packaging and then case-packed. Single-pack items offer the
greatest flexibility to the customer, while multi-pack packaging provides
increased efficiency and economy for large-volume banquets.
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During fiscal year 1995, the Company began packaging its products for retail
consumption. The Company is currently testing this market with a line of
products being sold through outlets such as Sam's Club, a division of Wal-Mart
Stores, Inc.
DISTRIBUTION
The Culinary Division distributes its products in a frozen state to
customers nationwide and internationally primarily to Asian markets. The
Company expects to expand distribution into the European markets in fiscal year
1996 in conjunction with last year's opening of the Norwegian production
facility. Its products are stored in a number of regional frozen warehouses as
well as at the Alexandria, Virginia plant. Major regional food service
distributors, including Sage Distribution, Kraft Food Service and Sysco Food
Service, purchase the product from the Company and re-sell to food service
providers. Export products are transported in frozen containers via ship.
RAW MATERIAL STATUS
The Company buys its raw materials from a number of suppliers at market
prices. While these prices may fluctuate during the year, the Company does not
believe that availability poses a material risk to its business. The majority
of product sales are subject to price revision to reflect shifts in the price
of raw materials.
PATENTS AND TRADEMARKS AND OTHER ITEMS IMPORTANT TO OPERATING SEGMENTS
The Company believes that its Vie de France trademark is important to its
business success. Accordingly, it takes the necessary steps to protect it.
The Company and Vie de France Yamazaki, Inc. entered into a Trademark and
Service Mark License Agreement in 1991 and, in conjunction with the sale of the
Restaurant Division, amended and restated this agreement. The Company holds no
patents that are essential for its continued operations.
CUSTOMER DEPENDENCY
Food service distributors continued to be the leading market segment for
the Company with fiscal year 1995 sales representing approximately 59% of total
net sales. In fiscal year 1995, sales to food service distributors
representing Hyatt Hotels and Marriott Hotels accounted for 32% and 21% of
total net sales, respectively. Sales to the airline industry in fiscal year
1995 represented 29% of total net sales, which was comprised of sales to five
national/international carriers and one regional carrier. In fiscal years 1994
and 1993, sales to food service distributors representing Marriott hotels
amounted to 55% and 68% of total net sales, respectively. In fiscal year 1994,
sales to food service distributors representing Hyatt hotels amounted to 16% of
total net sales. Sales to distributors serving the airline industry
represented 17% and 11% of total net sales in fiscal years 1994 and 1993
respectively. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Sales and Gross Margins."
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SEASONALITY
Culinary sales are seasonally impacted by the hotel banquet industry,
which peaks in September through December and March through June.
COMPETITION
The Company considers itself to be a leader in the sous vide segment of
the food service industry. At present, limited competition exists within the
frozen wholesale component of this segment. However, other firms exist within
the retail and refrigerated components of the sous vide segment. As such, the
Culinary Division primarily competes for sales against the traditional forms of
food preparation, rather than against other sous vide suppliers. The Company
offers value-added products, but must offer these products in a price range
that makes it economically advantageous for its users to convert from
traditional methods of food preparation. The Company believes its products can
compete against these traditional methods in price and product performance, as
well as convenience. The Company also provides a full product line of items to
further compete against traditional kitchens. In addition, it offers
implementation and menu development services, as well as equipment, to its
customers as another means of building sales. The Company depends upon its
pricing structure, menu items, and customer service programs as a means of
maintaining its leadership position within the sous vide industry.
RESEARCH & DEVELOPMENT
For continuing operations, the Company invested $94,000, $95,000 and
$67,000 in research and development activities in fiscal years 1995, 1994 and
1993, respectively. The Company invests in development on an ongoing basis in
order to maintain the vitality of its product lines and to build sales.
REGULATION
The Company is subject to various Federal, state and local laws affecting
its business, including health, sanitation and safety regulations. The
Culinary-U.S. plant operates under USDA supervision over the handling and
labeling of its products. The Company believes its operations comply in all
material respects with applicable laws and regulations.
The Company's Norwegian plant meets European Community standards and
regulations. The Norwegian product, along with certain raw materials, are
subject to import regulations.
EMPLOYEES
The Company employs approximately 110 people including full-time and
part-time workers and corporate staff.
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ITEM 2. PROPERTIES
The Company leases its offices and its two manufacturing facilities. The
Culinary-U.S. plant, located in Alexandria, Virginia, is approximately 50,000
square feet. The Culinary-Norway plant, located in Hjelmeland, Norway, is
approximately 20,000 square feet.
The Company's Norway plant operates under a twenty-year capital lease
whereby the Company will own the facility at the end of the lease term.
The Company owns substantially all of the equipment used in its facilities.
Lease commitments and future minimum lease payments are shown in Note 8 to
the Consolidated Financial Statements, which is included in this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company is engaged in ordinary and routine litigation incidental to
its business, but management does not believe that any amounts it may be
required to pay by reason thereof will have a material effect on the Company's
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
COMMON STOCK
The Company's Common Stock is traded in the over-the-counter market on the
NASD National Market System under the symbol VDEF. The following table sets
forth for the quarters indicated the high and low sales prices per share as
reported on the National Market System:
Year ended June 24, 1995 High Low
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.500 $ 3.375
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.250 3.000
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.375 3.000
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.125 2.875
Year ended June 25, 1994
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.625 $ 3.375
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.875 3.375
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.750 4.125
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.750 3.875
As of September 15, 1995 there were 817 holders of record of the Company's
Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA
FIVE YEAR SUMMARY
(in thousands, except per share amounts)
1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------
Net sales . . . . . . . . . . . . . . . . . . . . $ 15,707 $12,786 $9,377 $ 6,147 $ 4,676
Loss from continuing operations . . . . . . . . . (706) (476) (341) (1,982) (2,232)
Net income (loss) . . . . . . . . . . . . . . . . 24 7,934 261 (2,105) (4,022)
Loss from continuing operations per share . . . . (.05) (.03) (.03) (.15) (.17)
Net income (loss) per share . . . . . . . . . . . .00 .58 .02 (.16) (.30)
Total assets . . . . . . . . . . . . . . . . . . 29,912 30,964 19,862 20,855 33,434
Long term debt, excluding current maturities . . 2,247 0 0 0 0
Stockholders' equity . . . . . . . . . . . . . . 24,482 24,431 16,016 15,755 19,503
Dividends per share . . . . . . . . . . . . . . . -- -- -- 0.12 --
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fiscal year 1995 represents a year in which the Company's operations
were dedicated to developing and improving its sous vide food manufacturing
business. As part of its strategy to open new markets and reduce its cost of
raw materials, the Company established and opened its second plant, in Norway,
which is the world's pre-eminent source of salmon. The current year results
reflect continued improvement in both sales and earnings for its U.S.
operations offset, however, by losses associated with the Norwegian operations.
These results, when taken together with investment income and a gain associated
with discontinued operations, produced a profitable fiscal year 1995.
SALES AND GROSS MARGINS
The Company's sales of sous vide products are generally to hotels,
airlines, and other food service providers who order through their distributor
networks. In fiscal year 1993, the Company's customer base included Marriott
hotels along with one airline. In fiscal year 1994, a second national hotel
chain, Hyatt hotels, became a significant customer. Total food service sales
represented 71% of total net sales, with airline customers representing
approximately 17% of total net sales. During fiscal year 1995, the Company's
hotel sales amounted to 59% of total
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net sales, with Hyatt and Marriott representing 32% and 21% of total net sales
respectively. As of June 24, 1995, approximately 104 Hyatt and 90 Marriott
properties were using sous vide products. The Company has also significantly
expanded its sales to the airline industry, now selling to six major airlines.
The Company expanded its sales within the foodservice market by adding
a national health care chain, Unicare, to its customer base. In addition, it
also began to sell to the retail market, through the introduction of a specific
product line developed for Sam's Club, a division of Wal-Mart Stores, Inc.
This effort began during the fourth quarter of fiscal year 1995, and thus, does
not represent any significant volume of sales in fiscal year 1995. The Company
believes that its sales to Sam's Club and other retail channels can reach
significant levels in the upcoming fiscal year. As a result of the exposure
stemming from these two new accounts, the Company has received inquiries from a
number of prospective customers. Discussions and recipe development work are
currently underway with these prospective customers.
A comparison of net sales, gross margin percentages and losses from
operations follows:
YEAR ENDED
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
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Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,707,000 $ 12,786,000 $ 9,377,000
Gross margin percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 30% 23% 22%
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,447,000) $ (1,205,000) $ (1,172,000)
Fiscal year 1995 sales increased by 23% over fiscal year 1994 to
$15,707,000 from $12,786,000. This increase is attributed to substantial
growth within the airline segment. Sales to Hyatt increased during fiscal year
1995, offsetting a decrease of sales to Marriott. During fiscal year 1994, as
compared to fiscal year 1993, total sales increased by 36% to $12,786,000 from
$9,377,000. This growth is primarily attributable to the expansion of sales to
Hyatt and airline customers.
Gross margin as a percentage of total net sales increased to 30% from
23% in fiscal year 1995 versus fiscal year 1994 due primarily to lower raw
material costs during the year along with increased labor productivity. These
improvements were offset, somewhat, due to the start-up effects of the Norway
plant. Gross margin improved by one percentage point in 1994 versus 1993 due
to the benefits associated with higher volume in the Alexandria, Virginia
plant. The Company expects the gross margin to further improve as its
Norwegian subsidiary builds its sales volume. Over the long term, a further
reduction of costs will be realized from the construction of highly efficient
mono-product facilities that are closer to the source of that product's raw
materials, along with the purchasing leverage created from increased volumes.
The Company has successfully expanded its product line and manufactures
seafood, beef, poultry, vegetable and sauce products packaged in bulk or
multiple servings suitable for banquet
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or larger food service situations as well as single portion packs suitable for
restaurant or individual service.
SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES
A comparison of selling, distribution and general administrative costs
follows:
YEAR ENDED
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
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Selling and distribution costs . . . . . . . . . . . . . . . . . . . . . . . $ 2,183,000 $ 1,344,000 $ 1,171,000
General administrative costs . . . . . . . . . . . . . . . . . . . . . . . . 3,038,000 2,235,000 1,904,000
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$ 5,221,000 $ 3,579,000 $ 3,075,000
========= ========= =========
Selling, distribution and administrative costs increased as a
percentage of net sales to 33% from 28%. For fiscal year 1995, these costs
increased by 46% as compared to the prior year, to $5,221,000 from $3,579,000.
This increase is due to the selling expenses associated with Norway, for which
there were few outside sales, additional sales personnel in the United States
who are just beginning to generate sales, and residual corporate costs that
still are present within the Company, but were partially allocable to the
former Restaurant Division in prior years. These costs decreased as a
percentage of net sales from 33% to 28% in fiscal year 1994 compared to fiscal
year 1993, as the rate of sales growth offset the rate of real dollar growth in
this expense category.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased by $356,000 to $1,053,000 for
fiscal year 1995 versus $697,000 for fiscal year 1994. This increase is
attributable to the depreciation associated with the Norway plant. For fiscal
year 1994 as compared to fiscal year 1993, depreciation and amortization
increased by $79,000 from 1993's level of $618,000.
NONOPERATING INCOME AND EXPENSE
Investment income consists of returns earned on funds received from the
sale of the Restaurant Division together with interest income associated with a
$4.9 million collateralized European bank deposit, which earns interest at a
rate which the Company believes to be in excess of the prevailing short-term
interest rates in the United States.
Interest expense relates to the borrowings, including a capital lease,
associated with the Company's Norwegian subsidiary. At June 24, 1995, the
Company, through its Norwegian subsidiary, had borrowings of approximately $3.0
million, bearing interest at rates ranging from 7.25% to 10.0%. It is
anticipated that these borrowings will remain outstanding during the upcoming
fiscal year.
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PROVISION FOR TAXES
The provision for income taxes in fiscal year 1995 relates primarily to
the difference between fiscal year 1994's estimated income tax accrual for
continuing operations and that same year's actual income expense computed
during fiscal year 1995. The net effect of a variety of timing differences for
fiscal year 1994 resulted in additional income, and therefore, additional
income tax. The impact of this difference is reflected in the current year's
operating results.
In fiscal year 1994, the gain generated by the sale of the Restaurant
Division resulted in the Company fully utilizing its available net operating
loss tax carryforwards of approximately $2.3 million. As part of the
accounting for the sale of the former Restaurant Division, income taxes were
allocated between results from continuing operations, loss from discontinued
operations and the gain on sale of discontinued operations based on the taxable
income or loss of each component. As a result, $116,000 was recorded as a tax
benefit from continuing operations. In addition, a tax benefit of $687,000 and
a tax provision of $4,438,000 were recorded against discontinued operations and
gain on disposal of discontinued operations, respectively, which amounts to a
total net tax provision of $3,635,000 charged against fiscal year 1994
earnings.
Because of the Company's operating losses, no net provision for income
taxes was recorded in fiscal year 1993. In fiscal year 1993, a tax benefit of
$135,000 was recorded against the loss from continuing operations, a provision
of $258,000 was recorded against income from discontinued operations, and an
extraordinary gain of $123,000 related to the use of net operating loss
carryforwards fully offset the net income tax provision.
DISCONTINUED OPERATIONS
(Loss) income from discontinued operations reflects the operating
results attributable to the operations of the former Restaurant Division, net
of income tax effects, in fiscal years 1995, 1994, and 1993. The loss for
fiscal year 1994 also includes the estimated costs to settle a recent claim by
the Environmental Protection Agency related to the former Bakery Division
(which was sold in 1991) of $250,000.
Gain from discontinued operations for the current year relates to the
reduction of reserves previously established for the former Restaurant
Division. In the third quarter of fiscal year 1995, the Company reduced its
reserves by $213,000, and by an additional $517,000 in the fourth quarter.
These reductions were possible due to the expiration of certain contingent
liabilities.
The gain on the sale of the Restaurant Division in fiscal year 1994 is
net of income taxes of $4.4 million. Net proceeds on the sale amounted to
$17.6 million, after transaction and related direct disposal costs of
approximately $2.8 million. In addition, Yamazaki assumed certain outstanding
liabilities of the Division.
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IMPACT OF INFLATION AND THE ECONOMY
Inflation has from time to time had a material impact on the Company's
expenses. Inflation in labor and ingredient costs can significantly affect the
Company's operations. Many of the Company's employees are paid hourly rates
related to, but generally higher than the federal minimum rates.
The Company's sales pricing structure allows for the fluctuation of raw
material prices. As a result, market price variations do not significantly
affect the gross margin realized on product sales. Customer sensitivity to
price changes can influence the overall sales of individual products.
LIQUIDITY AND CAPITAL RESOURCES
The Company has experienced a decline in its liquidity over the past
year. The combined total of the cash and short-term investment balances was
$14,210,000 and $17,887,000 at June 24, 1995 and June 25, 1994, respectively.
Additionally, the Company held investments of $2,025,000 and $5,050,000 at June
24, 1995 and June 25, 1994, respectively, with maturities greater than one
year. In addition, the Company holds one preferred stock investment of
$500,000 at June 24, 1995. This decrease in liquidity is a direct result of
the increased working capital requirements for the Company along with an
increase in the Notes Receivable to a related party.
Cash used by operations amounted to $6,056,000 and $990,000 in fiscal
years 1995 and 1994 respectively, as compared to cash provided of $1,513,000
for fiscal year 1993. The use of cash in fiscal year 1995 resulted primarily
from the payment of income taxes related to the sale of the former Restaurant
Division, along with increases in inventory, receivables, and notes receivable.
The use of cash in fiscal year 1994 resulted primarily from increases in
inventory and receivables relating to increased sales volumes, as well as
income tax payments. Fiscal year 1993 cash generated by operations primarily
reflects the receipt of a $1,500,000 income tax refund. Cash in the amount of
$1,095,000 was provided by investing activities, representing a decrease in
investments needed to finance capital expenditures of $1,490,000 and increases
in inventories and receivables. Cash in the amount of $7,487,000 was generated
by investing activities in fiscal year 1994, including $17,600,000 of cash
generated from the sale of the Restaurant Division, which was partially offset
by cash expenditures totaling $3,117,000 for property additions for both
continuing and discontinuing operations. Fiscal year 1995's investments in
capital projects included, approximately $400,000 to complete construction of
the Norway plant, $250,000 for a new packaging line at the Alexandria, Virginia
facility and approximately $450,000 for other equipment at Alexandria. Fiscal
year 1996 equipment costs of approximately $900,000 are expected for the
Alexandria facility with less than $100,000 expected for the Norway facility.
Cash in the amount of $1,344,000 was generated by financing activities,
representing the debt acquired by the Norway subsidiary, offset by $890,000 in
repayments. Cash in the amount of $448,000 was generated through the exercise
of stock options during fiscal year 1994, while no financing activities took
place during fiscal year 1993.
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The Company continues to evaluate the possibility of establishing
additional production facilities in order to increase efficiencies. One such
way would be to produce sous vide products closer to the source of supply and
as a means to enter new markets. The cost of such facilities ranges from
approximately $1,000,000 to $5,000,000, depending upon the nature of the
product and the production volume desired. Local governments may provide
subsidies and other assistance in connection with such facilities. It is
possible that the Company may use some of its cash resources to fund these
efforts.
The Company's Norwegian subsidiary has secured a working capital
commitment for its liquidity needs in Norway in the form of an overdraft
facility. As of June 24, 1995, $603,000 was outstanding under this overdraft
facility. Subsequent to year-end, the subsidiary reduced its overdraft
facility balance, and can borrow up to $600,000 under this commitment.
The Company has on deposit $4.9 million with a European bank. This
deposit is denominated in U.S. dollars and earns a rate of return in excess of
the prevailing short-term rates in the United States. This deposit has been
pledged as collateral to the bank so that the bank may loan funds to a French
subsidiary of Setucaf S.A., a French company which is 21% owned by Food
Research Corporation, the majority stockholder of the Company. This deposit is
redeemable on thirty days notice without penalty. The Company believes no
material risk to principal is associated with this deposit.
FUTURE PROSPECTS
In fiscal 1996 the Company intends to build upon the broader sales base
established in fiscal 1995. While modest growth is expected in sales to the
hotel industry, the Company believes that double-digit sales growth is
possible within the airline industry, and anticipates substantial sales gains
in the health care and retail segments. The Company will continue to explore
and develop its emerging markets and formats that show promise of generating
significant sous vide sales. Although the course of the European business is
difficult to forecast, it is management's expectation that its Norwegian
operations will reduce its losses substantially in fiscal 1996. If so, the
Company will move towards, and may attain, overall operating profitability
during the coming year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is included at Item 14(a)(1)
and (2).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required under this Item 10 with respect to directors
and nominees for director is shown in the Proxy Statement to be filed under
Regulation 14A, under the caption "Election of Directors", and such information
is incorporated herein by reference.
EXECUTIVE OFFICERS
The following list and narrative sets forth the name and age of each
present executive officer of the Company who is not also a director or director
nominee, all positions held by the person with the Company, the year in which
the person first became an officer, and the principal occupations of each
person during the past five years.
NAME AGE OFFICE HELD WITH COMPANY SINCE
- ---- --- ------------------------ -----
Alan V. Esenstad 37 Vice President, Finance; Chief Financial Officer; 1991
Secretary and Treasurer. 1992
Arthur J. Stouffs 52 Vice President, Culinary Sales. 1990
Mr. Esenstad was appointed to the position of Vice President, Finance,
Secretary and Treasurer in June 1992. He was previously appointed Chief
Financial Officer and Director of Finance and Accounting in July 1991. He
served as Controller of Vie de France Corporation from July 1989 to June 1991.
He was Director of Accounting for the Company's former Bakery Division from
July 1988 to June 1989. He came to the Company in August 1987 as the Manager
of Cost and Financial Analysis for the Bakery Division and worked in that
position until June 1988. Prior to joining the Company, Mr. Esenstad was a
Financial Manager for Martin Marietta Corporation from 1983 to July 1987. Mr.
Esenstad is a Certified Public Accountant and holds a MBA degree in finance.
Mr. Stouffs has served in the capacity of Vice President of Culinary
Sales since 1990, and was appointed an officer of the Company in 1994.
Previously Mr. Stouffs held various positions in the Company's former Bakery
Division including Director of Operations and Director of Sales - National
Accounts from 1980 through 1990.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this Item 11 is shown in the Proxy
Statement to be filed under Regulation 14A, under the caption "Executive
Compensation", and such information, except for the information required by
Item 402(k) and Item 402(l) of Regulation S-K, is incorporated herein by
reference.
13
15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required under this Item 12 is shown in the Proxy
Statement to be filed under Regulation 14A, under the caption "Voting
Securities and Principal Holders Thereof", and such information is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required under this Item 13 is shown in the Proxy
Statement to be filed under Regulation 14A, under the caption "Certain
Transactions", and such information is incorporated herein by reference.
14
16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Index to Financial Statements
Page
----
(1) Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheets - June 24, 1995 and June 25, 1994 . . . . . . . . . . . . . . F-2
Consolidated Statements of Operations - Fiscal Years Ended
June 24, 1995, June 25, 1994, and June 26, 1993 . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Changes in Stockholders' Equity - Fiscal
Years Ended June 24, 1995, June 25, 1994, and June 26, 1993 . . . . . . . . . . . . . F-4
Consolidated Statements of Cash Flows - Fiscal Years Ended
June 24, 1995, June 25, 1994 and June 26, 1993 . . . . . . . . . . . . . . . . . . . . F-5
Notes to Consolidated Financial Statements - June 24, 1995 . . . . . . . . . . . . . . . F-6
(2) Financial Statement Schedules:
Schedule I--Marketable Securities and Other Investments . . . . . . . . . . . . . . . . F-16
Schedule II--Amounts Receivable from Related Parties . . . . . . . . . . . . . . . . . . F-17
Schedule V--Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . F-18
Schedule VI--Accumulated Depreciation and Amortization of
Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19
Schedule VIII--Valuation and Qualifying Accounts and Reserves . . . . . . . . . . . . . . F-20
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
15
17
(3) Exhibits:
The following exhibits are incorporated in this report by reference
from identically numbered exhibits to the Company's Amendment to its
Annual Report for the year ended June 27, 1992 on Form 8 dated
February 26, 1993:
Exhibit
No. Description of Exhibit
------ ----------------------
3-A The Certificate of Incorporation of the Company,
as amended to date.
3-B The By-Laws of the Company, as amended to date.
The following exhibits are incorporated in this report by reference
from an identically numbered exhibit to the Company's Annual Report
on Form 10-K for the year ended June 29, 1991:
10.46 The Company's Proxy Statement for a Special
Meeting of Stockholders, dated June 7, 1991,
together with a conformed copy of the Asset
Purchase Agreement between Vie de France
Corporation and Vie de France Bakery Yamazaki,
Inc. dated May 7, 1991.
The following exhibits are incorporated in this report by reference
from the Company's two Registration Statements on Form S-8, dated
April 5, 1993:
10.52 The Company's 1986 Stock Option Plan, as amended.
10.53 The Company's 1992 Stock Option Plan.
The following exhibits are incorporated in this report by reference
from an identically numbered exhibit to the Company's Annual Report
on Form 10-K for the year ended June 25, 1994:
10.54 The Company's Proxy Statement for a Special
Meeting of Stockholders, dated April 28, 1994,
together with a conformed copy of the Asset
Purchase Agreement between Vie de France
Corporation and Vie de France Bakery Yamazaki,
Inc. dated March 4, 1994.
10.55 Lease dated March 30, 1989 and as amended,
between the Company and Duke-Shirley Industrial
Development, LP, with respect to the lease of
property at 4106 Wheeler Avenue, Alexandria VA.
10.56 Management contract between the Company and Food
Investors Corporation dated October 27, 1993,
with respect to payment in reimbursement of
expenses and other costs incurred by Food
Investors Corporation on the behalf of the
Company.
16
18
10.57 Letter of intent, dated August 2, 1994, between
the Company's Norwegian subsidiary, Vie de
France Norway AS and Hjelmeland Municipality,
Norway, with respect to the lease of the property
at Hjelmeland Municipality.
The following exhibits are filed as exhibits to this report in the
indicated sections.
10.58 Fourth and Fifth Amendments, dated January 30,
1995 and April 7, 1995, respectively, to lease
dated March 30, 1989 between the Company and
Duke-Shirley Industrial Development, LP, with
respect to the lease of property at 4106 Wheeler
Avenue, Alexandria VA.
10.59 Lease dated February 24, 1995 between the Company
and Hjelmeland Municipality with respect to the
lease of property at Hjelmeland, Norway.
10.60 Management contract between the Company and Food
Investors Corporation dated July 31, 1995, with
respect to payment in reimbursement of expenses
and other costs incurred by Food Investors
Corporation on the behalf of the Company.
10.61 Loan agreement dated October 18, 1993 between
Vie de France Norway AS, a wholly-owned
subsidiary of Vie de France Corporation and Den
norske Bank, and related documents, with respect
to borrowings made by the subsidiary.
23 Consent of Independent Accountants.
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
(c) Exhibits:
Exhibits required to be filed in response to this paragraph of Item
14 are listed above in subparagraph (a)(3).
(d) Financial Statement Schedules:
Schedules and reports thereon by independent accountants required to
be filed in response to this paragraph of Item 14 are listed in Item
14(a)(2).
17
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
VIE de FRANCE CORPORATION
(Registrant)
By: /s/ Stanislas Vilgrain
------------------------
Stanislas Vilgrain
President
and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ---------------------------------- ------------------------------- -------------------------
/s/ Jean-Louis Vilgrain Chairman of the Board September 22, 1995
- ---------------------------------- -------------------------
Jean-Louis Vilgrain
/s/ Stanislas Vilgrain President, September 22, 1995
- ---------------------------------- Chief Executive Officer -------------------------
Stanislas Vilgrain
/s/ Richard M. Tolbert Director September 22, 1995
- ---------------------------------- -------------------------
Richard M. Tolbert
/s/ Bruno Goussault Director September 22, 1995
- ---------------------------------- -------------------------
Bruno Goussault
Director
- ---------------------------------- -------------------------
Alexandre Vilgrain
/s/ Alan V. Esenstad Chief Financial Officer September 22, 1995
- ---------------------------------- (Principal Financial and Accounting Official) -------------------------
Alan V. Esenstad
18
20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Vie de France Corporation
In our opinion, the consolidated financial statements listed in the index
appearing under items 14(a)(1) and (2) present fairly, in all material
respects, the financial position of Vie de France Corporation and its
subsidiaries at June 24, 1995 and June 25, 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
June 24, 1995, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ PRICE WATERHOUSE LLP
Washington, D.C.
August 25, 1995
F-1
21
VIE DE FRANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 24, JUNE 25,
1995 1994
------------- --------------
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,314,380 $ 8,931,476
Short-term investment, related party . . . . . . . . . . . . . . . . . . . . . . . . . 4,900,000 4,900,000
Investments, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,995,298 4,055,365
Accounts receivable trade, less allowance for
doubtful accounts of $5,000 and $2,000 . . . . . . . . . . . . . . . . . . . . . . . 1,645,741 1,413,675
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,349,798 1,403,051
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,990 181,473
Current portion of notes receivable, related party . . . . . . . . . . . . . . . . . . 1,551,438 525,076
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688,646 452,939
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,564,291 21,863,055
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,025,258 5,050,388
Fixed assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,970,945 3,812,195
Note receivable, related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516,646
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 834,371 238,697
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,911,511 $ 30,964,335
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,486,035 $ 1,418,963
Accrued payroll and related liabilities . . . . . . . . . . . . . . . . . . . . . . . . 517,773 622,166
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 734,368
Reserves for store closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194,900 533,832
Other accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,838 727,960
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,989 3,230,280
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,182,903 6,533,201
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,247,048
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,429,951 6,533,201
---------- ----------
Stockholders' equity
Common stock - $.01 par value, 20,000,000 shares
authorized, 14,034,620 and 14,008,370 shares issued and
13,778,543 and 13,752,293 shares outstanding . . . . . . . . . . . . . . . . . . . . 140,346 140,084
Class B stock - $.01 par value, 175,000 shares authorized,
none issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,269,214 21,219,416
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,502,775 4,478,575
Less cost of 256,077 shares held in treasury . . . . . . . . . . . . . . . . . . . . . (1,439,844) (1,439,844)
Translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,069 32,903
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,481,560 24,431,134
---------- ----------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . . . $ 29,911,511 $ 30,964,335
========== ==========
See accompanying notes to consolidated financial statements.
F-2
22
VIE DE FRANCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED
-------------------------------------------
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
------------- -------------- -------------
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,706,949 $ 12,785,517 $ 9,377,125
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,046,221 9,830,243 7,297,668
----------- ---------- -----------
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,660,728 2,955,274 2,079,457
Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . 5,220,961 3,579,452 3,074,921
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 1,052,632 697,204 617,650
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (166,238) (116,452) (441,541)
----------- ---------- -----------
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . (1,446,627) (1,204,930) (1,171,573)
----------- ---------- -----------
Nonoperating income
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,255,793 616,279 697,376
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . (192,482) (3,183) (1,713)
Foreign exchange loss, net . . . . . . . . . . . . . . . . . . . . . . . (15,733)
----------- ---------- -----------
Net nonoperating income . . . . . . . . . . . . . . . . . . . . . . . 1,047,578 613,096 695,663
----------- ---------- -----------
Loss from continuing operations before income taxes
and extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . (399,049) (591,834) (475,910)
Income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . . . (306,751) 116,000 135,000
----------- ---------- -----------
Loss from continuing operations before extraordinary item . . . . . . . . . . (705,800) (475,834) (340,910)
----------- ---------- -----------
Discontinued operations, net of taxes
(Loss) income from discontinued operations . . . . . . . . . . . . . . . (813,365) 478,889
Gain on sale of discontinued operations . . . . . . . . . . . . . . . . . 730,000 9,223,466
----------- ---------- -----------
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . 730,000 8,410,101 478,889
----------- ---------- -----------
Income before extraordinary item . . . . . . . . . . . . . . . . . . . . . . 24,200 7,934,267 137,979
Extraordinary item, use of net operating loss carryforwards . . . . . . . . . 123,000
----------- ---------- -----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,200 $ 7,934,267 $ 260,979
=========== ========== ===========
Earnings per common share:
Continuing operations before extraordinary item . . . . . . . . . . . . . $ (0.05) $ (0.03) $ (0.03)
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . 0.05 0.61 0.04
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01
----------- ---------- -----------
Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00 $ 0.58 $ 0.02
=========== ========== ===========
Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . 13,767,852 13,676,762 13,567,793
See accompanying notes to consolidated financial statements.
F-3
23
VIE DE FRANCE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Total
Additional Retained Stock-
Par Paid-In Earnings Treasury Translation holders'
Value Capital (Deficit) Stock Adjustment Equity
---------- ------------- -------------- ------------- ------------ --------------
Balance, June 27, 1992 $ 138,239 $ 20,773,182 $ (3,716,671) $ (1,439,844) $ 15,754,906
1993 net income 260,979 260,979
------- ---------- ---------- ---------- ---------- ----------
Balance, June 26, 1993 138,239 20,773,182 (3,455,692) (1,439,844) 16,015,885
Stock options exercised 1,845 446,234 448,079
1994 net income 7,934,267 7,934,267
Translation adjustment $ 32,903 32,903
------- ---------- ---------- ---------- ---------- -----------
Balance, June 25, 1994 140,084 21,219,416 4,478,575 (1,439,844) 32,903 24,431,134
Stock options exercised 262 49,798 50,060
1995 net income 24,200 24,200
Translation adjustment (23,834) (23,834)
------- ---------- ---------- ---------- ----------- -----------
Balance, June 24, 1995 $ 140,346 $ 21,269,214 $ 4,502,775 $ (1,439,844) $ 9,069 $ 24,481,560
======= ========== ========== ========== =========== ===========
See accompanying notes to consolidated financial statements.
F-4
24
VIE DE FRANCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED
--------------------------------------------
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
------------- -------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,200 $ 7,934,267 $ 260,979
Adjustments to reconcile net income to
net cash (used) provided by operating activities:
Gain on sale of discontinued operations . . . . . . . . . . . . . . (730,000) (9,717,013)
Depreciation and amortization, including
discontinued operations . . . . . . . . . . . . . . . . . . . . . 1,052,632 1,738,344 1,601,691
Gain on disposal of fixed assets . . . . . . . . . . . . . . . . . (9,032) (66,610)
Change in translation adjustment . . . . . . . . . . . . . . . . . (23,834) 32,903
Changes in assets and liabilities, net of
effects of discontinued operations:
(Increase) decrease in accounts receivable trade, net . . . . . . (232,066) (686,992) 9,631
Increase in inventory . . . . . . . . . . . . . . . . . . . . . . (946,747) (355,577) (177,150)
Decrease (increase) in prepaid expenses . . . . . . . . . . . . . 62,483 131,774 (191,159)
(Increase) decrease in notes receivable, related party . . . . . (1,543,008) 323,275 (325,798)
Change in other assets, net . . . . . . . . . . . . . . . . . . . (365,008) (154,740) (18,100)
Increase (decrease) in accounts payable
and accrued expenses . . . . . . . . . . . . . . . . . . . . . 362,072 38,895 (359,345)
Decrease in accrued payroll and related liabilities . . . . . . . (44,393) (213,588) (737,208)
Decrease in reserve for store closings . . . . . . . . . . . . . (306,683)
(Decrease) increase in other accrued taxes . . . . . . . . . . . (237,371) 316,733 (26,748)
Change in income taxes, net . . . . . . . . . . . . . . . . . . . (3,128,291) (368,895) 1,542,526
---------- --------- ---------
Net cash (used) provided by operating activities . . . . . . . . . (6,056,014) (989,646) 1,512,709
---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale (purchase) of investments, net . . . . . . . . . . . . . . . . . 3,085,197 (7,105,753)
Investment in preferred stock . . . . . . . . . . . . . . . . . . . . (500,000)
Proceeds from sale of discontinued operations,
net of transaction costs . . . . . . . . . . . . . . . . . . . . . . 17,625,294
Restaurant dispositions . . . . . . . . . . . . . . . . . . . . . . . 64,046 (114,728)
Proceeds on disposal of fixed assets . . . . . . . . . . . . . . . . . 19,683 111,368
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (1,489,912) (3,116,670) (898,545)
----------- ---------- ---------
Net cash provided (used) by investing activities . . . . . . . . 1,095,285 7,486,600 (901,905)
----------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to debt . . . . . . . . . . . . . . . . . . . . . . . . . . 2,183,995
Reductions of debt . . . . . . . . . . . . . . . . . . . . . . . . . . (890,422)
Proceeds from issuance of stock . . . . . . . . . . . . . . . . . . . 50,060 448,079
----------- ---------- ---------
Net cash provided by financing activities . . . . . . . . . . . . . 1,343,633 448,079
----------- ---------- ---------
Net (decrease) increase in cash and cash equivalents . . . . . . . (3,617,096) 6,945,033 610,804
Cash and cash equivalents, beginning of period . . . . . . . . . . . 8,931,476 1,986,443 1,375,639
----------- ---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . . . . $ 5,314,380 $ 8,931,476 $ 1,986,443
=========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 152,640 $ 0 $ 0
Income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . 3,485,762 317,754 (1,542,526)
Non-cash activities:
Facility purchased under capital lease . . . . . . . . . . . . . . . $ 1,687,843
See accompanying notes to consolidated financial statements.
F-5
25
VIE DE FRANCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The financial statements include the consolidated accounts of Vie de
France Corporation and its subsidiaries (collectively "the Company"). All
significant intercompany transactions have been eliminated in the financial
statements.
Fiscal Year
The Company utilizes a 52/53 week fiscal year which ends on the last
Saturday in June. Fiscal years 1995, 1994 and 1993 contained 52 weeks.
Revenue Recognition
The Company recognizes revenue at the time products are shipped to
customers.
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with an original
maturity of three months or less.
Investments
Effective June 25, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments
in Debt and Equity Securities," which expands the use of fair value accounting
for those securities, but retains the use of the amortized cost method for
investments in debt securities which management has the positive intent and
ability to hold to maturity. The Company has segregated its investments into
the following two categories:
Held-to-Maturity
Securities held-to-maturity, for which management has both the ability and
intent to hold to maturity, are carried at amortized cost.
Available for Sale
Securities available for sale include securities which could be sold in
response to changes in interest rates or general liquidity needs. Such
securities are carried at fair value with unrealized gains or losses
recorded as a separate component of equity.
F-6
26
Inventory
Inventories are valued at the lower of cost, determined by the first-in,
first-out method, or market. A reserve has been provided for obsolete or
unsalable items.
Inventory consisted of:
JUNE 24, JUNE 25,
1995 1994
----------------- -----------------
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 193,000 $ 184,000
Frozen product & other finished goods . . . . . . . . . . . . . . . . . 1,975,000 1,204,000
Packing materials & supplies . . . . . . . . . . . . . . . . . . . . . 227,000 112,000
--------------- ---------------
2,395,000 1,500,000
Less obsolescence reserve . . . . . . . . . . . . . . . . . . . . . . . (45,000) (97,000)
--------------- ---------------
$ 2,350,000 $ 1,403,000
=============== ===============
Fixed Assets
Machinery, equipment, furniture and fixtures are depreciated using the
straight-line method over estimated useful lives which range from two to eight
years. Leasehold improvements are amortized using the straight-line method
over the terms of the leases which range from four to twenty years.
Expenditures for maintenance and repairs are charged to expense, and
renewals and improvements are capitalized. For continuing operations,
maintenance and repairs charged to expense amounted to $373,000 in 1995,
$313,000 in 1994 and $172,000 in 1993.
The components of fixed assets were as follows:
JUNE 24, JUNE 25,
1995 1994
----------------- -----------------
Machinery & equipment . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,276,000 $ 3,424,000
Furniture & fixtures . . . . . . . . . . . . . . . . . . . . . . . . . 181,000 164,000
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . 2,211,000 1,976,000
Building under capital lease . . . . . . . . . . . . . . . . . . . . . 1,691,000
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . 82,000 706,000
--------------- ---------------
9,441,000 6,270,000
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . (3,470,000) (2,458,000)
--------------- ---------------
$ 5,971,000 $ 3,812,000
=============== ===============
F-7
27
Income Taxes
The Company accounts for certain income and expense items differently for
financial reporting purposes than for income tax reporting purposes. Deferred
income taxes are provided in recognition of these temporary differences.
As of the beginning of fiscal year 1994, the Company adopted Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes". The cumulative effect of adopting SFAS 109 was insignificant as of
June 27, 1993 since the resulting deferred tax asset was fully offset by a
valuation allowance.
Earnings Per Share
Net income per share is computed on the basis of the weighted average
number of shares of stock and dilutive stock outstanding during each period.
Foreign Currency Translation
The statement of operations of the Company's Norwegian subsidiary (the
"Subsidiary") has been translated to U.S. dollars using the average currency
exchange rates in effect during the year. The Subsidiary's balance sheet has
been translated using the currency exchange rate as of the end of the fiscal
year. The impact of currency exchange rate changes on the translation of the
Subsidiary's balance sheet has been charged directly to stockholders' equity.
NOTE 2 - INVESTMENTS
The Company's investments consisted of:
JUNE 24, JUNE 25,
1995 1994
-------------------------------- -------------------------------
Cost Fair Value Cost Fair Value
--------- ---------- -------- ----------
European bank deposit . . . . . . . . . . . . . . . . . . $ 4,900,000 $ 4,900,000 $ 4,900,000 $ 4,900,000
U.S. Government and agencies . . . . . . . . . . . . . . 4,025,000 4,027,000 5,985,000 5,961,000
Corporate debt . . . . . . . . . . . . . . . . . 1,995,000 1,998,000 3,004,000 2,992,000
Fixed income mutual fund . . . . . . . . . . . . . . . . 117,000 117,000
-------------- -------------- ------------- -------------
Total investments . . . . . . . . . . . . . . . 10,920,000 10,925,000 14,006,000 13,970,000
Less non-current portion . . . . . . . . . . . . . . . . 2,025,000 2,030,000 5,050,000 5,017,000
--------------- --------------- -------------- -------------
Current portion . . . . . . . . . . . . . . . . $ 8,895,000 $ 8,895,000 $ 8,956,000 $ 8,953,000
============== ============== ============== =============
The Company's short-term investment portfolio includes a European bank
deposit of $4.9 million at June 24, 1995, which is pledged as collateral in
connection with a loan made to a related party. The deposit is carried at cost
which approximates market at June 24, 1995 and June 25, 1994.
The U.S. Government and agencies and corporate debt securities have stated
maturities within one year of $3,995,000 and $3,938,000 as of June 24, 1995 and
June 25, 1994, respectively. These securities have stated maturities greater
than one year of $2,025,000 and $5,050,000 as of June 24, 1995 and June 25,
1994, respectively. These investments were classified as held-to-maturity in
accordance with SFAS 115 at June 24, 1995 and June 25, 1994.
F-8
28
The Company classified the fixed income mutual fund as available for sale
at June 25, 1994 in accordance with SFAS 115. The fair market value of the
mutual fund at June 25, 1994 approximated cost, and accordingly, there was no
impact on stockholders' equity.
In addition to the above investments, during fiscal year 1995 the Company
made a $500,000 investment in a start-up entity devoted to the development of a
chain of frozen food retail outlets. This investment has been classified in
Other assets. Subsequent to year-end, the Company approved a second $500,000
investment in this entity.
NOTE 3 - INCOME TAXES
The sources of income before income taxes consisted of the following:
YEAR ENDED
---------------------------------------------------------
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
---------------- --------------- ----------------
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,142,000 $ 11,773,000 $ 261,000
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (811,000) (204,000)
--------- ---------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 331,000 $ 11,569,000 $ 261,000
========= ========== ========
The Company's income before income taxes consisted of the following:
YEAR ENDED
---------------------------------------------------------
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
---------------- --------------- ----------------
Continuing operations . . . . . . . . . . . . . . . . . . . . . . $ (399,000) $ (592,000) $ (476,000)
Discontinued operations . . . . . . . . . . . . . . . . . . . . . 730,000 12,161,000 737,000
-------- ---------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 331,000 $ 11,569,000 $ 261,000
======== ========== =======
The composition of the provision for income taxes was:
YEAR ENDED
---------------------------------------------------------
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
---------------- --------------- ----------------
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . $ 285,000 $ 3,003,000 $ 103,000
State . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 632,000 20,000
------------ ----------- ------------
Total provision for income taxes . . . . . . . . . . . . . . . . $ 307,000 $ 3,635,000 $ 123,000
============ =========== ============
F-9
29
The provision for income taxes for fiscal years 1995 and 1994 has been
presented in the consolidated statements of income as continuing operations and
discontinued operations as follows:
JUNE 24, JUNE 25,
1995 1994
-------------- --------------
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 307,000 $ (116,000)
------- ---------
Discontinued operations:
Loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . (687,000)
Gain on sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . 4,438,000
-------- ---------
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . 3,751,000
-------- ---------
Total provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 307,000 $ 3,635,000
======== =========
The taxable gain recorded in fiscal year 1994 on the sale of discontinued
operations was reduced by the Company's available operating loss carryforwards
by $2,349,000. As a result, as of June 25, 1994 the Company had no available
unused net operating loss carryforwards.
The differences between amounts computed by applying the statutory federal
income tax rates to income from continuing operations and the total income tax
provision applicable to continuing operations were as follows:
YEAR ENDED
--------------------------------------------
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
------------- -------------- --------------
Federal tax benefit at statutory rates . . . . . . . . . . . . . . . . . . . $ (136,000) $ (201,000) $ (162,000)
Loss from foreign operations . . . . . . . . . . . . . . . . . . . . . . . . 252,000 69,000
Non-deductible items . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 20,000 21,000
Period effect of valuation allowance . . . . . . . . . . . . . . . . . . . . 156,000
State income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,000 7,000 6,000
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,000) (11,000)
----------- ------------ ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 307,000 $ (116,000) $ (135,000)
=========== ============ ============
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The deferred tax assets
at June 24, 1995 are fully offset by a valuation allowance of approximately
$602,000 due to uncertainties surrounding the ultimate realizability of the
assets.
F-10
30
The significant components of deferred tax assets as of June 24, 1995 were as
follows:
Deferred tax assets:
Gain on sale of discontinued operations . . . . . . . . . . . . $ 67,000
Unit closings . . . . . . . . . . . . . . . . . . . . . . . . . 55,000
Reserve for EPA claim . . . . . . . . . . . . . . . . . . . . . 84,000
Inventory adjustment . . . . . . . . . . . . . . . . . . . . . . 228,000
Other accrued taxes . . . . . . . . . . . . . . . . . . . . . . 58,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000
-------
Total deferred tax assets . . . . . . . . . . . . . . . . . . . 602,000
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . (602,000)
-------
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . $ 0
=======
NOTE 4 - DISCONTINUED OPERATIONS
During the third and fourth quarters of fiscal year 1995, the Company
reduced its reserves related to the sale of the former Restaurant Division.
This reduction was possible due to the expiration of certain contingent
liabilities.
In March 1994, the Board of Directors of the Company approved the sale of
substantially all of the net assets of the Restaurant Division pursuant to an
asset purchase agreement entered into with Vie de France Bakery Yamazaki, Inc.,
a subsidiary of Yamazaki Baking Company, Ltd., a Japanese company. Effective
May 25, 1994, the Company completed the sale for approximately $20.4 million in
cash, which resulted in a gain of approximately $9.2 million, net of income
taxes of $4.4 million. The gain on sale of discontinued operations is stated
net of operating pre-tax losses from March 4, 1994 to the sale date of May 25,
1994 of approximately $469,000.
Operating results of the Restaurant Division for fiscal year 1994 up to
the measurement date of March 4, 1994 consisted of a pre-tax loss of
approximately $1,250,000 which is reported in the Consolidated Statements of
Operations under the caption "(Loss) income from discontinued operations."
Also reported under the caption "(Loss) income from discontinued operations"
are $250,000 in additional expenses associated with a claim made in 1994 by the
U.S. Environmental Protection Agency relating to an ammonia leak at one of the
Company's former bakery locations which was reported as a discontinued
operation in 1991.
YEAR ENDED
-------------------------------------------------
JUNE 24, JUNE 25, JUNE 26,
1995 1994 1993
--------------- ---------------- --------------
Net sales - Restaurant Division . . . . . . . . . . . . . . . . . . . . . $ $ 24,604,000 $ 28,628,000
=========== ========== ==========
Income (loss) from discontinued operations, before
income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 730,000 $ (1,500,000) $ 737,000
Tax benefit (provision) . . . . . . . . . . . . . . . . . . . . . . . . . 687,000 (258,000)
----------- ---------- -----------
Income (loss) from discontinued operations . . . . . . . . . . . . . . . $ 730,000 $ (813,000) $ 479,000
=========== ========== ===========
F-11
31
NOTE 5 - LONG-TERM DEBT
Long-term debt, net of current maturities, at June 24, 1995 was as follows:
Principal
Lender Description Maturity Outstanding
------ ----------- -------- -----------
Den norske Bank Overdraft Facility Six months, renewable $ 603,000
Den norske Bank Term Loan February 28, 2000 378,000
SND Term Loan February 1, 2004 312,000
Hjelmeland Kommune Capital Lease June 1, 2014 1,688,000
---------
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,981,000
Non-current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734,000
---------
$2,247,000
=========
Borrowings under the Den norske Bank ("DnB") Overdraft Facility are
limited to a percentage of the Subsidiary's inventories and receivables, up to
a maximum of $1,000,000 with a floating interest rate equal to the prevailing
Norwegian overnight funds rate plus two percentage points.
The term loan from DnB has a stated interest rate of 7.25% and will be
repaid through ten semi-annual payments of principal and interest beginning
August 30, 1995 and ending February 28, 2000. As part of the terms for this
loan, the Company has guaranteed the repurchase of certain assets of the
Subsidiary in the amount of $426,000.
Statens Narings-OgDistriktutvikiingsfond ("SND"), a governmental
development agency in Norway, issued to the Subsidiary an eight-year term loan
whose terms require the establishment of a working plant facility. The loan
has a variable interest rate which at June 24, 1995 was 10.0%, and will be
repaid through sixteen semi-annual payments of principal and interest
beginning August 1, 1996 and ending February 1, 2004.
The Subsidiary entered into a twenty-year capital lease obligation with an
initial principal amount of $1,691,000 and with quarterly payments of $49,000.
At the end of the lease term, ownership of the facility will revert to the
Subsidiary. The Company has issued no guarantees with respect to this lease.
During fiscal year 1995, the Subsidiary was not in compliance with certain
of the covenants set forth by DnB. Subsequent to year-end, DnB agreed to
temporarily waive such covenants in exchange for certain guarantees on the part
of the Company. These included a guaranty in the form of a renewable six-month
stand-by letter of credit issued by the Company in the amount of $600,000,
along with the subordination of a $300,000 loan from the Company to the
Subsidiary. Accordingly, DnB has agreed to maintain the overdraft facility and
waive its covenant requirements for as long as the stand-by letter of credit is
in effect, but has limited borrowings up to the amount of the guaranty of
$600,000.
Maturities for the renewable overdraft facility the two term loans and
for the capital lease during the next five fiscal years on an aggregate basis
at June 24, 1995 were as follows: 1996 - $734,000; 1997 - $154,000; 1998 -
$158,000; 1999 - $162,000; 2000 - $166,000. The maturities for 1996 of
$734,000 include $603,000 borrowed under the overdraft facility, which the
company intends to renew rather than repay upon maturity.
No borrowings were outstanding at June 25, 1994.
F-12
32
NOTE 6 - STOCKHOLDERS' EQUITY
The Company's capital stock is divided into two classes: Common Stock and
Class B Stock. The Class B Stock, which is reserved for issuance to employees
under stock option plans, is identical in all respects to the Common Stock
except that the holders thereof have no voting rights unless otherwise required
by law.
No dividends were paid during fiscal years 1995, 1994 or 1993.
NOTE 7 - EMPLOYEE BENEFITS
The Company sponsors a qualified employee savings plan under which
employees who meet certain minimum age and service requirements are eligible to
participate. The Company matches one-third of the first 6% of eligible
employees' voluntary contributions to the plan. The Company expensed, as a
component of continuing operations, $11,000, $16,000 and $15,000 in fiscal
years 1995, 1994 and 1993, respectively, for contributions to the savings and
profit sharing plan.
In fiscal year 1994, the Company implemented a non-qualified employee
savings plan under which senior management employees are eligible to
participate. The Company matches one-third of the first 6% of eligible
employees' voluntary contributions to the plan. The Company's matching
contribution is limited to 6% of the combined contributions into both the
qualified and the non-qualified plan. The Company expensed, as a component of
continuing operations, $14,000 in both fiscal years 1995 and 1994 for this
plan.
During fiscal year 1993, the Company established, upon stockholder
approval, the 1992 Stock Option Plan which provides for up to 300,000 shares of
the Company's Common Stock to be made available to employees at various prices
as established by the Board of Directors at the date of grant. Upon the
adoption of the 1992 Stock Option Plan, two previous plans, the 1986 Stock
Option Plan and the 1982 Stock Option Plan, were terminated except with respect
to 373,000 options issued and outstanding under these plans. During fiscal
year 1995, the Company granted 77,000 options under the 1992 Stock Option Plan.
The outstanding options expire through fiscal year 2005.
F-13
33
Changes in outstanding options were as follows:
Price Range Shares
----------- ------
Outstanding at June 27, 1992 . . . . . . . . . . . . . . . . . . . $ 1.94-2.75 373,000
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . 2.38 79,500
Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . 1.63-2.75 (6,500)
---------------
Outstanding at June 26, 1993 . . . . . . . . . . . . . . . . . . . 1.63-2.75 446,000
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . 3.88-4.00 131,000
Options exercised . . . . . . . . . . . . . . . . . . . . . . . . 1.63-3.88 (184,500)
Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . 1.63-3.88 (13,375)
---------------
Outstanding at June 25, 1994 . . . . . . . . . . . . . . . . . . . 1.63-4.00 379,125
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . 3.50 77,000
Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . 1.94-3.88 (26,250)
Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . 1.94-3.88 (58,875)
---------------
Outstanding at June 24, 1995 . . . . . . . . . . . . . . . . . . . 1.63-4.00 371,000
===============
As of June 24, 1995, options to purchase 228,000 shares of common stock
were currently exercisable at prices ranging from $1.63 to $4.00 per share.
The exercise prices equal the fair market value of the stock at the date of
grant.
NOTE 8 - COMMITMENTS
The Company leases office and plant space under operating leases which
expire on various dates through 1999. Certain leases provide for escalations
in rent based upon increases in the lessor's annual operating costs or the
consumer price index. Future minimum lease payments under these agreements at
June 24, 1995 were as follows:
1996 . . . . . . . . . . . . . . . . . . . . . . . . . $ 396,000
1997 . . . . . . . . . . . . . . . . . . . . . . . . . 367,000
1998 . . . . . . . . . . . . . . . . . . . . . . . . . 380,000
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 331,000
---------
Total . . . . . . . . . . . . . . . . . . . . . . . $ 1,474,000
=========
Rent expense for continuing operations was $371,000, $458,000 and $454,000
for fiscal years 1995, 1994 and 1993, respectively.
NOTE 9 - TRANSACTIONS WITH RELATED PARTIES
The Company has a deposit with a European bank of $4.9 million at June 24,
1995 and at June 25, 1994, earning interest at a rate which the Company
believes to be in excess of the prevailing short-term interest rates in the
United States. This deposit is unrestricted and is available for the Company's
use on thirty days notice without penalty, if necessary. This deposit has been
pledged as collateral to the Bank with respect to funds loaned to a party
affiliated with the principal stockholder of the Company. The Company incurs
no costs as a result of the collateralization. The Company is unaware of any
debt covenants to which the above related party is in default.
F-14
34
At June 24, 1995 and June 25, 1994, loans outstanding to the majority
stockholder of the Company amounted to $2,068,000 and $525,000, which includes
accrued interest of $101,000 and $8,000 respectively. The loans have maturity
dates of up to two years and at June 24, 1995 and June 25, 1994, carried a
weighted-average interest rate of 8.0%.
NOTE 10 - SALES TO MAJOR CUSTOMERS
Food service distributors continued to be the leading market segment for the
Company with fiscal year 1995 sales representing approximately 59% of total net
sales. In fiscal year 1995, sales to food service distributors representing
Hyatt Hotels and Marriott Hotels accounted for 32% and 21% of total net sales,
respectively. Sales to the airline industry in fiscal year 1995 represented
29% of total net sales, which was comprised of sales to five
national/international carriers and one regional carrier. In fiscal years 1994
and 1993, sales to food service distributors representing Marriott hotels
amounted to 55% and 68% of total net sales, respectively. In fiscal year 1994,
sales to food service distributors representing Hyatt hotels amounted to 16% of
total net sales. Sales to distributors serving the airline industry
represented 17% and 11% of total net sales in fiscal years 1994 and 1993
respectively.
NOTE 11 - LITIGATION
The Company is engaged in ordinary and routine litigation incidental to
its business. Management does not anticipate that any amounts which it may be
required to pay by reason thereof will have a material effect on the Company's
financial position or results of operations.
F-15
35
SCHEDULE I
VIE de FRANCE CORPORATION
MARKETABLE SECURITIES AND OTHER INVESTMENTS
Number of Shares,
Units or Market Carrying
Name of Issuer Principal Amount Cost Value Amount
- -------------- ----------------- -------------- -------------- --------------
June 26, 1993
European bank deposit . . . . . . . . . . . . . . $ 6,900,000 $ 6,900,000 $ 6,900,000 $ 6,900,000
========== =========== ===========
June 25, 1994
European bank deposit . . . . . . . . . . . . . . $ 4,900,000 $ 4,900,000 $ 4,900,000 $ 4,900,000
U.S. Government and
agencies . . . . . . . . . . . . . . . . . . . $ 6,000,000 5,985,000 5,961,000 5,985,000
Corporate debt . . . . . . . . . . . . . . . . . $ 3,000,000 3,004,000 2,992,000 3,004,000
Fixed income mutual fund . . . . . . . . . . . . 11,195 117,000 117,000 117,000
---------- ----------- -----------
Total $ 14,006,000 $ 13,970,000 $ 14,006,000
========== =========== ===========
June 24, 1995
European bank deposit . . . . . . . . . . . . . . $ 4,900,000 $ 4,900,000 $ 4,900,000 $ 4,900,000
U.S. Government and
agencies . . . . . . . . . . . . . . . . . . . $ 4,025,000 4,025,000 4,027,000 4,025,000
Corporate debt . . . . . . . . . . . . . . . . . $ 1,995,000 1,995,000 1,998,000 1,995,000
--------- --------- ---------
Total $ 10,920,000 $ 10,925,000 $ 10,920,000
========== ========== ==========
F-16
36
SCHEDULE II
VIE de FRANCE CORPORATION
AMOUNTS RECEIVABLE FROM RELATED PARTIES
Balance at Balance at End of Period
Beginning ----------------------------
Name of Debtor of Period Additions Receipts Current Noncurrent
- ----------------------------- -------------- ---------------- ------------ ------------- -------------
Year ended June 26, 1993
Food Research Corporation $ 515,000 $ 325,000 (1) $ -0- $ 840,000 $ -0-
========= ======= ======== ======= =======
Year ended June 25, 1994
Food Research Corporation $ 840,000 $ 216,646 (2) $ (540,000) $ 516,646 $ -0-
========= ======== ======== ======= =======
Year ended June 24, 1995
Food Research Corporation $ 516,646 $1,450,000 (3) $ -0- $ 1,450,000 (4) $ 516,646 (4)
========= ========= ======== ========= =======
(1) Unsecured promissory notes in the amounts of $210,000 and $90,000
dated June 18, 1993, and a $25,000 unsecured promissory note dated June 16,
1993, all with maturity dates of September 10, 1994 and bearing interest at
12% per annum. The $25,000 note was repaid in July, 1994. The remaining two
notes totaling $300,000 were reissued in three month intervals bearing an
interest rate of 8% and subsequently consolidated into one overall note
dated July 1, 1994, including the total of $216,646 issued during fiscal
year 1994.
(2) Unsecured demand note in the amount of $150,000 dated January 31,
1994 and an unsecured demand note in the amount of $66,646 dated March 2,
1994, both bearing interest at 8% per annum. These notes, totaling $216,646,
were subsequently consolidated with the $300,000 also outstanding into one
unsecured promissory note dated July 1, 1994, bearing interest at 8% per
annum.
(3) Unsecured promissory notes in the amounts of $500,000, $450,000,
$250,000, and $250,000 dated June 29, 1994, September 30, 1994, November 7,
1994, and November 28, 1994, respectively, all bearing interest at 8% per
annum. Effective January 1, 1995, the Company consolidated the $500,000
note, along with the two $250,000 notes into one $1,000,000 note, bearing
interest at 8% per annum. The note in the amount of $516,646 pays interest
quarterly, while the remaining notes bear interest on a cumulative basis.
(4) Effective December 23, 1994, the Company entered into a Security
Agreement with Food Research Corporation ("FRC") whereby FRC has delivered
654,597 shares of Vie de France Corporation Common Stock to the Company to
serve as collateral for these notes.
F-17
37
SCHEDULE V
VIE de FRANCE CORPORATION
PROPERTY, PLANT AND EQUIPMENT
Balance at Balance
Beginning Additions at End
of Period to Costs Retirements Other of Period
----------- ------------ ------------- --------- -----------
Year ending June 26, 1993
Machinery and equipment . . $ 7,598,908 $ 603,353 $ (256,739) $ 97,608 (1) $ 8,043,130
Furniture and fixtures . . . 1,894,343 6,730 (58,706) 43,079 (1) 1,885,446
Leasehold improvements . . . 10,579,387 225,384 (189,015) 289,741 (1) 10,905,497
Building under capital lease -0- -0- -0- -0- -0-
Construction in Progress . . 182,426 -0- -0- 35,237 (2) 217,663
---------- ---------- ----------- -------- ----------
Totals . . . . . . . . . $20,255,064 $ 835,467 $ (504,460) $ 465,665 $21,051,736
========== ========= ========== ======= ==========
Year ending June 25, 1994
Machinery and equipment . . $ 8,043,130 $1,538,794 $ (6,157,881) $ -0- $ 3,424,043
Furniture and fixtures . . . 1,885,446 98,493 (1,819,285) -0- 164,654
Leasehold improvements . . . 10,905,497 711,619 (9,641,420) -0- 1,975,696
Building under capital lease -0- -0- -0- -0- -0-
Construction in Progress . . 217,663 -0- -0- 488,385 (2) 706,048
---------- ---------- ----------- -------- ----------
Totals . . . . . . . . . $21,051,736 $2,348,906 $(17,618,586) $ 488,385 $ 6,270,441
========== ========= =========== ======= =========
Year ending June 24, 1995
Machinery and equipment . . $ 3,424,043 $ 1,851,967 $ -0- $ -0- $ 5,276,010
Furniture and fixtures . . . 164,654 16,490 -0- -0- 181,144
Leasehold improvements . . . 1,975,696 235,029 -0- -0- 2,210,725
Building under capital lease -0- 1,691,176 -0- -0- 1,691,176
Construction in Progress . . 706,048 171,392 -0- (795,234) (2) 82,206
---------- ---------- ----------- --------- ----------
Totals . . . . . . . . . $ 6,270,441 $ 3,966,054 $ -0- $(795,234) $ 9,441,261
========= ========= ============ ======== =========
(1) Represents historical cost of assets reestablished on general ledger at
zero net book value (see Schedule VI for offset of full value.) Assets
had previously been removed from the general ledger pursuant to
designation as a disposition unit. This unit was later reinstated as
an operating unit.
(2) These amounts represent the net activity for projects remaining in
construction in progress at year-end.
F-18
38
SCHEDULE VI
VIE de FRANCE CORPORATION
ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
Balance at Balance
Beginning Additions at End
of Period to Costs Retirements Other of Period
------------ ------------ ------------- ---------- ----------
Year ending June 26, 1993
Machinery and equipment . . $ 5,033,683 $ 630,060 $ (243,845) $ 97,608 (1) $ 5,517,506
Furniture and fixtures . . . 1,350,291 83,988 (58,706) 43,079 (1) 1,418,652
Leasehold improvements . . . 7,922,916 555,453 (186,714) 289,741 (1) 8,581,396
Building under capital lease -0- -0- -0- -0- -0-
---------- ---------- ----------- ------- ---------
Totals . . . . . . . . . $ 14,306,890 $ 1,269,501 $ (489,265) $ 430,428 $15,517,554
========== ========= =========== ======= =========
Year ending June 25, 1994
Machinery and equipment . . $ 5,517,506 $ 687,809 $ (4,982,586) $ -0- $ 1,222,729
Furniture and fixtures . . . 1,418,652 117,576 (1,447,474) -0- 88,754
Leasehold improvements . . . 8,581,396 573,167 (8,007,800) -0- 1,146,763
Building under capital lease -0- -0- -0- -0- -0-
---------- --------- ----------- ------- -----------
Totals . . . . . . . . . $ 15,517,554 $ 1,378,552 $ (14,437,860) $ -0- $ 2,458,246
========== ========= =========== ======= ==========
Year ending June 24, 1995
Machinery and equipment . . $ 1,222,729 $ 710,095 $ -0- $ -0- $ 1,932,824
Furniture and fixtures . . . 88,754 22,328 -0- -0- 111,082
Leasehold improvements . . . 1,146,763 233,754 -0- -0- 1,380,517
Building under capital lease -0- 45,893 -0- -0- 45,893
---------- --------- ------------ ------- -----------
Totals . . . . . . . . . $ 2,458,246 $ 1,012,070 $ -0- $ -0- $ 3,470,316
========== ========= ============= ======= =========
(1) Represents historical accumulated depreciation and amortization related
to assets reestablished on the general ledger at zero net book value
(see Schedule V for reestablishment of cost). Assets had previously
been removed from the general ledger pursuant to designation as a
disposition unit. This unit was later reinstated as an operating unit.
F-19
39
SCHEDULE VIII
VIE de FRANCE CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Additions
--------------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
of Period Expenses Accounts Deductions of Period
------------ ----------- -------- -------------- -----------
Year ended June 26, 1993
Allowance for doubtful accounts $ 40,378 $ (14,494) $ (7,455)(1) $ 18,429
========= ======== ====== ==========
Provision for losses on unit closings 640,664 -0- (164,726)(2) 475,938
========= ======== ======== ==========
Allowance for obsolete inventory 61,676 (23,833) (11,343) 26,500
========= ======== ======== ==========
Year ended June 25, 1994
Allowance for doubtful accounts $ 18,429 $ -0- $ (16,552)(1) $ 1,877
========= ======== ======== ==========
Provision for losses on unit closings 475,938 323,835 (265,941)(2) 533,832
========= ======== ======== ==========
Allowance for obsolete inventory 26,500 87,774 (17,116) 97,158
========= ======== ======== ==========
Year ended June 24, 1995
Allowance for doubtful accounts $ 1,877 $ 3,543 $ (219)(1) $ 5,201
========= ======== ======== ==========
Provision for losses on unit closings 533,832 -0- (338,932)(3) 194,900
========= ======== ======== ==========
Allowance for obsolete inventory 97,158 (26,568) (25,356) 45,234
========= ======= ======== =========
(1) Writeoff of uncollectible customer accounts, net of recoveries.
(2) Writeoff of assets of closed units and related closing costs associated
with the former Restaurant Division.
(3) Lease termination costs associated with the former Restaurant Division.
F-20
40
VIE DE FRANCE CORPORATION
EXHIBIT INDEX
Exhibit Page
Number Exhibit Number
-------- ------- ------
10.58 Fourth and Fifth Amendments, dated January 30,
1995 and April 7, 1995, respectively, to lease
dated March 30, 1989 between the Company and
Duke-Shirley Industrial Development, LP, with
respect to the lease of property at 4106 Wheeler
Avenue, Alexandria VA.
10.59 Lease dated February 24, 1995 between the Company
and Hjelmeland Municipality with respect to the
lease of property at Hjelmeland, Norway.
10.60 Management contract between the Company and Food
Investors Corporation dated July 31, 1995, with
respect to payment in reimbursement of expenses
and other costs incurred by Food Investors
Corporation on the behalf of the Company.
10.61 Loan agreement dated October 18, 1993 between Vie de
France Norway AS, a wholly-owned subsidiary of Vie de
France Corporation and Den norske Bank, and related
documents, with respect to borrowings made by the
subsidiary.
23 Consent of Independent Accountants.
27 Financial Data Schedule