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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the quarterly period ended August 30, 2003

          OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the transaction period from                 to                

Commission File Number: 0-7277

PIERRE FOODS, INC.

North Carolina
(State or other jurisdiction of incorporation or organization)

56-0945643
(I.R.S. Employer Identification No.)

9990 Princeton Road
Cincinnati, Ohio 45246
(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (513) 874-8741

     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.

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

PIERRE FOODS, INC.

INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

     See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

See accompanying notes to unaudited consolidated financial statements.

4

PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Retained Earnings

(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

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See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Retained Earnings

(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

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See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

See accompanying notes to unaudited consolidated financial statements.

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See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

     The financial information as of March 1, 2003, included in these financial statements has been derived from the audited consolidated financial statements included in that report. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of August 30, 2003 and March 1, 2003, the results of operations for the thirteen weeks and twenty-six weeks ended August 30, 2003 and August 31, 2002, and the cash flows of the Company for the twenty-six weeks ended August 30, 2003 and August 31, 2002. The thirteen week period ended August 30, 2003 is referred to as “second quarter 2004” and the thirteen week period ended August 31, 2002 is referred to as “second quarter 2003.” Financial statement presentation used for the year-to-date period ended August 31, 2002 (“fiscal 2003”) have been reclassified, where applicable, to conform to financial statement presentation used for the year-to-date period ended August 30, 2003 (“fiscal 2004”).

     The Company reports the results of its operations using a 52-53 week basis. In line with this, each quarter of the fiscal year will contain 13 weeks except for the infrequent fiscal years with 53 weeks.

     The results of interim operations for fiscal 2004 are not necessarily indicative of the results to be expected for the full fiscal year. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s March 1, 2003 audited consolidated financial statements and notes thereto.

2. Inventories

     A summary of inventories, by major classifications, follows:

3. Intangible Assets

     In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 142 (“SFAS 142”) “Goodwill and Other Intangible Assets,” which was effective for the fiscal year beginning March 3, 2002. SFAS 142 required, among other things, the discontinuance of goodwill amortization. In addition, the standard included provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. Upon the Company’s adoption of SFAS 142 on March 3, 2002, the Company ceased amortizing goodwill and indefinite-lived intangibles. Prior to the Company’s adoption of SFAS 142, Goodwill and other intangible assets were being amortized using the straight line method over a period of 30 years. Also effective March 3, 2002, the Company reclassified the value of its assembled workforce to goodwill.

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     As prescribed under SFAS 142, the Company tested goodwill for impairment during fiscal 2003 using a two-step process. The Company utilized a valuation technique based on market values of publicly-traded equity, as adjusted, plus publicly-owned subordinated notes, which were determined in conjunction with the Management Buyout in fiscal 2003. At the date of adoption management determined that the entire carrying amount of the goodwill balance was impaired. The carrying amount, $29,019,571, was written-off as the Cumulative Effect of an Accounting Change, net of income taxes of $10,415,037 in the statement of operations for the quarter ended June 1, 2002.

4. Long-Term Debt

     Effective August 13, 2003, the Company terminated its five-year variable-rate $50 million revolving credit facility. Existing debt issuance costs related to the Company’s former $50 million facility in the amount of $1.2 million were written off and charged to interest expense in conjunction with the termination of this facility. A prepayment penalty in the amount of $1 million was paid to the former lender and charged to interest expense, also in conjunction with the termination of this facility. Also effective August 13, 2003, the Company obtained a three year variable rate $40 million revolving credit facility from a new lender, which includes a $5 million real estate term loan subline, a $5 million equipment term loan subline and a $7.5 million letter of credit subfacility. Funds available under this facility are available for working capital requirements, permitted investments and general corporate purposes. Borrowings under the facility bear interest at floating rates based upon the interest rate option selected from time to time by the Company and are secured by a first-priority security interest in substantially all of the Company’s assets. In addition, the Company is required to satisfy certain financial covenants regarding cash flow and capital expenditures.

     As of August 30, 2003, the Company had borrowings under this new facility of $21.1 million and borrowing availability of approximately $15.1 million. As of August 31, 2002, the Company had borrowings under its former $50 million credit facility of $16.2 and borrowing availability of approximately $3.6 million. In addition, at August 30, 2003 and August 31, 2002, the Company was in compliance with the financial covenants under each of the facilities (see—Item 5 “Other Information”).

     The Company’s Chairman and Vice Chairman agreed to guarantee payment of the former $50 million facility in exchange for guarantee fees to be paid annually in advance, equal to 1.5% each of the amount committed for lending under the former facility. The Company’s Chairman and Vice Chairman were not required to guarantee payment under the new $40 million credit facility.

5. Common Stock

     On July 26, 2002, PF Management, Inc. closed its management buyout of the Company. This going-private transaction resulted in the exchange of each share of common stock owned by a person other than PF Management for the right to receive $2.50 in cash. There were 5,781,480 shares issued and outstanding immediately before the closing. Of that amount, 2,151,268 shares were owned by persons other than PF Management. After the closing, the Company amended and restated its Articles of Incorporation to authorize the issuance of up to 100,000 shares of Class A common stock as the only authorized class of capital stock of the Company. All 100,000 shares of authorized common stock have been issued to PF Management. All per share amounts have been retroactively restated for all periods presented to reflect the transaction.

6.     Comprehensive Income

     Total comprehensive loss is comprised solely of net loss in fiscal 2004 and fiscal 2003. Comprehensive loss was $1,934,115 and $671,138 for the second quarter 2004 and the second quarter 2003, respectively; and $1,557,880 and $19,389,274 for fiscal 2004 and fiscal 2003, respectively.

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7. Supplemental Cash Flow Disclosures - Cash Paid (Received) During the Period

8. Recently Issued Accounting Guidance.

     In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149 (“SFAS 149”), — “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” The Statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities under Statement of Financial Accounting Standards No. 133. SFAS 149 is effective for all contracts entered into or modified after June 30, 2003. This Statement is not expected to have an impact on the Company’s financial statements.

     In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150 (“SFAS 150”), —“Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement requires certain freestanding financial instruments to be reported as liabilities by their issuers. The provisions of SFAS 150, which also include a number of new disclosure requirements, are effective for instruments entered into or modified after May 31, 2003 and pre-existing instruments as of the beginning of the first interim period that commences after June 15, 2003. This Statement is not expected to have an impact on the Company’s financial statements.

9. Related Party Transactions

     At August 30, 2003, there were no significant changes in related party transactions from those described at March 1, 2003. However, as described in Part II, Item 5 of this report, Item 13 of the 10-K for the fiscal year ended March 1, 2003, as well as in Note 17 “Subsequent Events” in the Company’s annual report for the year ended March 1, 2003, on March 8, 2004 the Company and the Trustee under the Company’s Indenture executed a Fourth Supplemental Indenture and, pursuant to the terms of the Fourth Supplemental Indenture, the Company terminated substantially all of its related party transactions.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Second Quarter 2004 Compared to Second Quarter 2003

     Revenues, net. Net revenues increased by $19.4 million, or 31.4%. The increase in net revenues was primarily due to the substantial development of national business with an existing customer, increased retail business with an existing customer, short term co-packing operations and an increase in sales of existing product lines.

     Cost of goods sold. Cost of goods sold increased by $17.2 million, or 42.0%. As a percentage of revenues, cost of goods sold increased from 66.3% to 71.6%. This increase primarily was due to a change in product mix to lower margin products, offset by lower fixed overhead due to increased production as a result of the Cincinnati plant expansion.

     Selling, general and administrative. Selling, general and administrative expenses increased by $1.7 million, or 9.6%, primarily due to an increase in distribution expense on higher product volumes. As a percentage of revenues, selling, general and administrative expenses decreased from 28.0% to 23.3%.

     Depreciation. Depreciation expense increased by $0.2 million, or 19.0%, due primarily to capital expenditures associated with the fiscal 2003 and fiscal 2004 Cincinnati plant expansions.

     Other expense, net. The primary component of net other expense for second quarter 2004 and second quarter 2003 is interest expense. Interest expense consists primarily of interest on fixed and variable rate long-term debt, in addition to expense incurred due to the early extinguishment of the Company’s $50 million revolving loan in second quarter 2004. Net other expense increased by $2.5 million or 72.9% in second quarter 2004 primarily due to the write-off of loan commitment fees and a prepayment penalty associated with the early extinguishment of that credit facility and due to increased borrowings under the revolving credit facility, both of which were charged to interest expense (see -— “Liquidity and Capital Resources” below for further discussion on the change in credit facilities).

     Income taxes. The effective tax rate for second quarter 2004 was 35.0% compared to 17.5% for second quarter 2003. The increase in the effective tax rate is due primarily to the effects of permanent differences and compensation deduction limitations in fiscal 2003.

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Results of Operations

Fiscal 2004 Compared to Fiscal 2003

     Revenues, net. Net revenues increased by $39.0 million, or 31.5%. The increase in net revenues was primarily due to the substantial development of national business with an existing customer, increased retail business with an existing customer, short term co-packing operations and an increase in sales of existing product lines.

     Cost of goods sold. Cost of goods sold increased by $33.2 million, or 40.9%. As a percentage of revenues, cost of goods sold increased from 65.7% to 70.3%. The increase primarily was due to a change in product mix to lower margin products, offset by lower fixed overhead due to increased production as a result of the Cincinnati plant expansion.

     Selling, general and administrative. Selling, general and administrative expenses increased by $4.2 million, or 12.0%, primarily due to an increase in distribution expense on higher product volumes. As a percentage of revenues, selling, general and administrative expenses decreased from 28.2% to 24.0%.

     Depreciation. Depreciation expense increased by $0.3 million, or 17.7%, due primarily to capital expenditures associated with the fiscal 2003 and fiscal 2004 Cincinnati plant expansions.

     Other expense, net. The primary component of net other expense for fiscal 2004 and fiscal 2003 is interest expense. Interest expense consists primarily of interest on fixed and variable rate long-term debt, in addition to expense incurred due to the early extinguishment of the Company’s $50 million revolving credit loan in fiscal 2004. Net other expense increased by $2.7 million or 41.2% in fiscal 2004 due to increased borrowings under the revolving credit facility and due to the write-off of loan commitment fees and a prepayment penalty associated with the change in credit facilities and early extinguishment of that credit facility, both of which were charged to interest expense (see -— “Liquidity and Capital Resources” below for further discussion on the change in credit facilities).

     Income taxes. The effective tax rate for fiscal 2004 was 35.3% compared to 20.0% for fiscal 2003. The increase in the effective tax rate is due primarily to the effects of permanent differences and compensation deduction limitations in fiscal 2003.

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Critical Accounting Policies and Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require the Company to make estimates and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and the impact of those events cannot be determined with certainty, the actual results will inevitably differ from the Company’s estimates. Such differences could be material to the financial statements.

     The Company believes its application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, the Company’s application of accounting policies has been appropriate, and actual results have not differed materially from those determined using necessary estimates.

     The following critical accounting policies affect the Company’s more significant judgments and estimates used in the preparation of its financial statements.

     Revenue Recognition. Revenue from sales of food processing products is recorded at the time title transfers. Standard shipping terms are FOB destination, therefore title passes at the time the product is delivered to the customer. Revenue is recognized as the net amount to be received after deductions for estimated discounts, product returns and other allowances. These estimates are based on historical trends and expected future payments (see also Promotions below).

     Goodwill and Other Intangible Assets. During fiscal 2003, upon adoption of SFAS 142, the Company determined that the entire carrying amount of the goodwill balance was impaired. The carrying amount, $29,019,571, was written-off at March 3, 2002 as the Cumulative Effect of an Accounting Change, net of income taxes of $10,415,037 in the statement of operations. See Note 2 –Summary of Significant Accounting Policies – for further discussion.

     Promotions. Promotional expenses associated with rebates, marketing promotions and special pricing arrangements are recorded as a reduction of revenues or selling expense at the time the sale is recorded. Certain of these expenses are estimated based on expected future payments to be made under these programs. The Company believes the estimates recorded in the financial statements are reasonable estimates of the Company’s liability.

     Concentration of Credit Risk and Significant Customers. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents and trade receivables. The Company places its cash equivalents with high credit quality financial institutions. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The Company encounters a certain amount of credit risk as a result of a concentration of receivables among a few significant customers. Sales to the Company’s largest customer were approximately 22.2% and 22.5% of revenues for the three and six-month periods ended August 30, 2003, respectively. Accounts receivable at August 30, 2003 included receivables from the Company’s largest customer totaling $2.4 million.

     Going Concern Assumption. Significant assumptions underlie the belief that the Company anticipates that its fiscal 2004 cash requirements for working capital and debt service will be met through a combination of funds provided by operations and borrowings under its $40 million credit facility, including, among other things, that there will be no material adverse developments in the business, liquidity or significant capital requirements of the Company.

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Liquidity and Capital Resources

     Net cash provided by operating activities was $2.1 million for fiscal 2004, as compared to net cash used in operating activities of $9.3 million for fiscal 2003. The primary components of the net cash provided by operating activities were 1) an increase in trade accounts payable and other accrued liabilities of $2.1 million and 2) the write-off of deferred loan fees of $1.2 million in conjunction with the termination of the Company’s $50 million revolving credit facility; offset by 3) an increase in inventory of $2.1 million; and 4) an increase in accounts receivable of $1.1 million.

     Net cash used in investing activities was $7.3 million for fiscal 2004, compared to $8.8 million for fiscal 2003. Significant capital expenditures for a plant expansion and various plant improvements occurred in both fiscal 2004 and fiscal 2003.

     Net cash provided by financing activities was $5.1 million for fiscal 2004, compared to $13.6 million for fiscal 2003. The decrease in cash provided by financing activities was due primarily to the repayment of the revolving credit agreement with the former lender offset by the net borrowings under the new revolving credit agreement.

     Effective August 13, 2003, the Company terminated its five-year variable-rate $50 million revolving credit facility. Existing debt issuance costs related to the Company’s former $50 million facility in the amount of $1.2 million were written off and charged to interest expense in conjunction with the termination of this facility. A prepayment penalty in the amount of $1 million was paid to the former lender and charged to interest expense, also in conjunction with the termination of this facility. Also effective August 13, 2003, the Company obtained a three year variable rate $40 million revolving credit facility from a new lender, which includes a $5 million real estate term loan subline, a $5 million equipment term loan subline and a $7.5 million letter of credit subfacility. Funds available under this facility are available for working capital requirements, permitted investments and general corporate purposes. Borrowings under the facility bear interest at floating rates based upon the interest rate option selected from time to time by the Company and are secured by a first-priority security interest in substantially all of the Company’s assets. The interest rate for borrowings under the new facility at August 13, 2003 was 5% (prime plus 1%). In addition, the Company is required to satisfy certain financial covenants regarding cash flow and capital expenditures.

     As of August 30, 2003, the Company had borrowings under this new facility of $21.1 million and borrowing availability of approximately $15.1 million. As of August 31, 2002, the Company had borrowings under its former $50 million credit facility of $16.2 and borrowing availability of approximately $3.6 million. In addition, at August 30, 2003 and August 31, 2002, the Company was in compliance with the financial covenants under each of the facilities (see —Item 5 “Other Information”).

     The Company has budgeted approximately $8.8 million for capital expenditures for the remainder of fiscal 2004. These expenditures are primarily for the routine food processing capital improvement projects and other miscellaneous expenditures. The Company believes that funds from operations and funds from the new $40 million credit facility, as well as the Company’s ability to enter into capital or operating leases, will be adequate to finance these capital expenditures.

     If the Company continues its historical revenue growth trend as expected, then the Company will be required to raise and invest additional capital for additional plant expansion projects to provide operating capacity to satisfy increased demand. Management believes that future cash requirements for these plant expansion projects would need to be met through other long-term financing sources, such as an increase in borrowing availability under the new $40 million credit facility, the issuance of industrial revenue bonds or equity investment. The incurrence of additional long-term debt is governed and restricted by the Company’s existing debt instruments. Furthermore, there can be no assurance that additional long-term financing will be available on advantageous terms (or any terms) when needed by the Company.

     The Company anticipates continued sales growth in key market areas. As noted above, however, this growth will require future capital expansion projects to increase existing plant capacity to satisfy increased demand. Sales growth, improved operating performance and expanded plant capacity - none of which is assured - will be necessary for the Company to continue to service existing debt.

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Seasonality

     Except for sales to school districts, which represent approximately 21% of total sales and which decline during the early spring and summer and early January, there is no significant seasonal variation in sales.

Management Buyout

     On July 26, 2002, the Company’s shareholders approved the Amended and Restated Agreement and Plan of Share Exchange dated as of December 20, 2001, and amended as of June 20, 2002 and the management buyout of the Company was completed on July 26, 2002.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As discussed in its annual report for the fiscal year ended March 1, 2003, the Company is exposed to market risks stemming from changes in interest rates, foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in the Company’s financial condition, results of operations and cash flows. The Company owned no derivative financial instruments or nonderivative financial instruments held for trading purposes at August 30, 2003 or March 1, 2003. Certain of the Company’s outstanding nonderivative financial instruments at August 30, 2003 are subject to interest rate risk, but not subject to foreign currency or commodity price risk.

     The Company’s major market risk exposure is potential loss arising from changing interest rates and its impact on long-term debt. The Company’s policy is to manage interest rate risk by maintaining a combination of fixed and variable rate financial instruments in amounts and with maturities that management considers appropriate. The risks associated with long-term debt at August 30, 2003 have not changed materially since March 1, 2003. Of the long-term debt outstanding at August 30, 2003, the $115.0 million of Senior Notes accrued interest at a fixed rate, while the $21.1 million of outstanding borrowings under the revolving credit facility and the $5.4 million of obligation of special purpose entity accrued interest at variable rates. A rise in prevailing interest rates could have adverse effects on the Company’s financial condition and results of operations. A 25 basis point increase in the reference rates for the Company’s average variable rate debt outstanding during fiscal 2004 would have decreased net income for that period by approximately $21,326.

Cautionary Statement As To Forward Looking Information

     Certain statements made in this document are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from expected results. These risks and uncertainties include: substantial leverage and insufficient cash flow from operations; restrictions imposed by the Company’s debt instruments; management control; restriction of payment of dividends; competitive considerations; government regulation; general risks of the food industry; adverse changes in food costs and availability of supplies; dependence on key personnel; potential labor disruptions and other factors, risks and uncertainties identified in Exhibit 99.1 to our Annual Report on Form 10-K filed with the SEC on March 9, 2004 and in our other filings with the SEC. This list of risks and uncertainties is not exhaustive. Also, new risk factors emerge over time. Investors should not place undue reliance on the predictive value of forward-looking statements.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     The Company’s President and Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of Company’s disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) as of the end of the period covered by this report. Based upon that evaluation, the Company’s President and Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s reports filed or submitted under the Exchange Act. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

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PART II. OTHER INFORMATION

ITEM 5. OTHER INFORMATION

     On November 6, 2002, the Company received a notice of default from Cede & Co., a nominee for the Depository Trust Company (“DTC”), as the recordholder for the beneficial owners of approximately $50.5 million in principal amount of the Company’s 10-3/4% Senior Notes due 2006 (the “Notes”). This notice alleged that the Company was in non-financial default of the Indenture governing the Notes. On November 21, 2002, the Company received a letter from Foothill Capital Corporation (“Foothill”), its lender at that time, stating that the Company was in technical default of its Loan and Security Agreement with Foothill due to the alleged default under the Indenture. However, Foothill continued to provide funds to the Company under the loan agreement, including providing the Company with the funds necessary to make the interest payment due to the Noteholders under the Indenture on December 2, 2002.

     On or about December 27, 2002, the Company received an acceleration notice given by DTC on behalf of the beneficial owners of approximately $45.0 million in principal amount of the Notes. This notice said that the due date of the Notes was being accelerated based on the Company’s failure to cure the alleged defaults described in the November 6 letter. On December 31, 2002, the Company sent a letter to all Noteholders, in care of U.S. Bank, National Association, the Indenture trustee (the “Trustee”), reiterating its position that the Company had violated no Indenture covenants and that there was therefore no basis for accelerating the Notes.

     On January 6, 2003, the Company received a letter from counsel to the Trustee requesting instructions from the Company with respect to action the Trustee should take in light of the alleged default under the Indenture, and asked the Company to provide information in response to the alleged default. The Company provided information in response to the alleged defaults. The Trustee subsequently requested additional information and the Company complied with that request. In reliance on two officers’ certificates from the Company, which the Trustee is entitled to rely on under the terms of the Indenture, that explained why the alleged covenant violations did not constitute an event of default, the Trustee took the position in February 2003 that no event of default had occurred under the Indenture.

     While the Company did not believe that it had violated the Indenture and therefore there was no basis for accelerating the Notes, in order to settle the dispute with certain noteholders, on August 1, 2003, the Company agreed in principle with a committee (the “Ad Hoc Committee”) representing holders of $53.2 million in principal amount of the Company’s Notes (approximately 46% of the outstanding Notes) to a restructuring of the Notes (the “Restructuring”). The Company and the Ad Hoc Committee subsequently engaged in negotiations regarding the terms of a Fourth Supplemental Indenture and other documents to effectuate the Restructuring. On January 30, 2004, the Company and the Ad Hoc Committee completed these negotiations and distributed consent solicitation materials to all noteholders of record on January 30, 2004.

     The Fourth Supplemental Indenture agreed upon by the Company and the Ad Hoc Committee and sent with the consent solicitation materials to the noteholders contained the following terms:

	•		an increase in the annual interest rate on the Notes to 12.25% through March 31, 2005, and 13.25% thereafter;
	•		a grant to the noteholders of liens on the assets of the Company and its subsidiaries, such liens being junior to the senior liens securing the Company’s current credit facility with Fleet Capital Corporation (“Fleet”);
	•		a repurchase right allowing all of the noteholders to require the Company to repurchase their Notes at par plus accrued interest on March 31, 2005;
	•		the payment of a portion of certain cash flow of the Company (referred to as “excess cash”) to reduce the principal amount of Notes outstanding at the end of the Company’s fiscal years;

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	•		the addition of restrictive covenants limiting the compensation payable to certain senior executives of the Company and limiting future related party transactions;
	•		the termination of all related party transactions, except for certain specifically-permitted transactions;
	•		the assumption by the Company of approximately $15.4 million of subordinated debt of PF Management;
	•		a requirement that the Company comply with certain corporate governance standards, appoint an independent director acceptable to the Company and the noteholders to its board and hire an independent auditor to monitor the Company’s compliance with the Indenture; and
	•		the payment of a cash consent fee payment (the “Consent Payment”) equal to 3% of the principal amount of Notes held by each noteholder that consented to the Restructuring.

     In consideration for the Restructuring, the Fourth Supplemental Indenture also provided that any and all existing defaults under the Indenture would be waived if holders of a majority in aggregate principal amount of the Notes approved the Restructuring. In addition, the consenting noteholders would waive any other claims they may have against the Company and its affiliates.

     The consent solicitation terminated at 5:00 P.M. Eastern time, on Monday, March 1, 2004. Consents of holders of $112.4 million in aggregate principal amount of the outstanding Notes, representing 97.74% of the outstanding Notes, consented to the Fourth Supplemental Indenture. In addition, the Company satisfied the other conditions to the closing of the Restructuring, as follows:

	•		paying the fees of the Ad Hoc Committee’s legal counsel and financial advisor;
	•		paying the fees of the Trustee and its legal counsel;
	•		obtaining executed Consents to Assignment and Assumption and Subordination from each creditor of PF Management whose debt was assumed by the Company;
	•		paying the Consent Payment to the Trustee (which payment will be disbursed by the Trustee to the noteholders who consented to the Restructuring); and
	•		delivering to the Trustee an officer’s certificate and an opinion of counsel concluding that all conditions precedent to the closing of the Restructuring and all covenants required under the Indenture had been satisfied.

     Accordingly, because consents of holders of a majority in aggregate principal amount of the Notes were received by the Company and the other conditions precedent to the closing of the Restructuring were satisfied, the Trustee and the Company executed the Fourth Supplemental Indenture on March 8, 2004 (the “Closing Date”). Concurrently with the execution of the Fourth Supplemental Indenture, the Company terminated all of its contracts with related parties, except the following related party relationships that are specifically permitted under the terms of the Fourth Supplemental Indenture:

	•		the Company will continue to compensate its directors and officers, subject to approval of such compensation by the Company’s board, including the independent director;
	•		the Company’s $5 million loan to Mr. James Richardson will remain outstanding until a Change of Control event (as defined in the Indenture) has occurred. Subject to the lien of Fleet, the note underlying this loan will be pledged to the Trustee as collateral for the Notes;
	•		the Company will continue to lease its Hickory, North Carolina office from a related party for aggregate annual rent payments of not more than $116,000; and

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•

the guarantees of value and validity of the collateral securing the Company’s credit facility with Fleet given by Messrs. James Richardson and David Clark will remain outstanding.

     As a result of the termination of all other related party transactions, subsequent to March 8, 2004, the Company will perform the purchasing and distribution services internally. Other related party services will be outsourced as necessary at comparable cost. In addition, certain executive compensation is limited, with provisions for bonuses based on EBITDA and cash payments made on the Senior Notes which could significantly increase the limitation.

     Also concurrently with the execution of the Fourth Supplemental Indenture, the Company assumed approximately $15.4 million of debt of PF Management and took title to an aircraft transferred from a related party subject to existing purchase money debt. Principal payments of the former PF Management debt will be approximately $4.8 million during fiscal year 2005, $3.6 million during fiscal year 2006 and $7.0 million during fiscal year 2007.

     As noted above, the Fourth Supplemental Indenture contains a waiver of all defaults of the Indenture through the Closing Date (the “Default Waivers”). In accordance with the terms of the Indenture, the Default Waivers bind all holders of Notes regardless of whether a particular holder consented to the Fourth Supplemental Indenture. The waiver of all other claims the consenting noteholders have against the Company and its affiliates, however, does not bind the noteholders that did not consent to the Fourth Supplemental Indenture.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

            See the Index to Exhibits provided elsewhere in this report.

     (b)  Reports on Form 8-K

            None

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PIERRE FOODS, INC.

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INDEX TO EXHIBITS

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     The Company hereby agrees to provide to the Commission, upon request, copies of long-term debt instruments omitted from this report pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K under the Securities Act.

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