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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 28, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-16699
OVERHILL FARMS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 75-2590292
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2727 EAST VERNON AVENUE
VERNON, CALIFORNIA 90058
(Address of principal executive offices)
(323) 582-9977
(Registrant's telephone number, including area code)
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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of February 2, 2004, there were 14,805,556 shares of the issuer's common
stock, $.01 par value, outstanding.
OVERHILL FARMS, INC.
FORM 10-Q
QUARTER ENDED DECEMBER 28, 2003
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Condensed Balance Sheets as of December 28, 2003 (unaudited)
and September 28, 2003 2
Condensed Statements of Operations for the Three Months Ended
December 28, 2003 and December 29, 2002 (unaudited) 4
Condensed Statements of Cash Flows for the Three Months Ended
December 28, 2003 and December 29, 2002 (unaudited) 5
Notes to Condensed Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 22
Item 4. Controls and Procedures 23
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 24
Item 2. Changes in Securities and Use of Proceeds 24
Item 3. Defaults Upon Senior Securities 24
Item 6. Exhibits and Reports on Form 8-K 24
SIGNATURES 27
EXHIBITS FILED WITH THIS FORM 10-Q 28
- 1 -
OVERHILL FARMS, INC.
CONDENSED BALANCE SHEETS
ASSETS
December 28, September 28,
2003 2003
-------------- --------------
(Unaudited) (Note 2)
Current assets:
Cash $ 850,254 $ 513,622
Accounts receivable, net of allowance for doubtful
accounts of $111,469 12,935,622 10,027,543
Inventories 11,299,558 11,059,923
Prepaid expenses and other 935,491 1,077,392
Deferred income taxes 733,758 733,758
-------------- --------------
Total current assets 26,754,683 23,412,238
-------------- --------------
Property and equipment, at cost 21,357,588 21,286,746
Less accumulated depreciation (8,429,831) (8,035,416)
-------------- --------------
12,927,757 13,251,330
-------------- --------------
Other assets:
Excess of cost over fair value of net assets acquired 12,188,435 12,188,435
Deferred financing costs, net of accumulated amortization
of $53,776 and $4,934,968 793,290 2,507,028
Deferred income taxes 3,776,692 2,522,239
Other 2,614,223 2,300,857
-------------- --------------
19,372,640 19,518,559
-------------- --------------
Total assets $ 59,055,080 $ 56,182,127
============== ==============
The accompanying notes are an integral part
of these condensed financial statements.
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OVERHILL FARMS, INC.
CONDENSED BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
December 28, September 28,
2003 2003
------------- -------------
(Unaudited) (Note 2)
Current liabilities:
Accounts payable $ 6,188,697 $ 7,434,945
Accrued liabilities 3,533,364 3,322,554
Current maturities of long-term debt 883,094 813,649
------------- -------------
Total current liabilities 10,605,155 11,571,148
Long-term debt, less current maturities 50,848,395 44,950,438
------------- -------------
Total liabilities 61,453,550 56,521,586
------------- -------------
Shareholders' equity (deficit):
Series A Preferred stock, $0.01 par value, authorized
50,000,000 shares, issued and outstanding, 23.57 shares -- --
Common stock, $0.01 par value, authorized 100,000,000
shares, issued and outstanding 14,805,556 shares 148,056 148,056
Additional paid-in capital 9,573,562 9,573,562
Warrants to purchase common stock 400 400
Retained earnings (accumulated deficit) (12,120,488) (10,061,477)
------------- -------------
Total shareholders' equity (deficit) (2,398,470) (339,459)
------------- -------------
Total liabilities and shareholders' equity (deficit) $ 59,055,080 $ 56,182,127
============= =============
The accompanying notes are an integral part
of these condensed financial statements.
- 3 -
OVERHILL FARMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
-------------------------------
December 28, December 29,
2003 2002
------------- -------------
Net revenues $ 30,393,606 $ 38,309,691
Cost of sales 25,797,635 34,001,913
------------- -------------
Gross profit 4,595,971 4,307,778
Selling, general and administrative expenses 3,078,595 3,880,859
------------- -------------
Operating income 1,517,376 426,919
------------- -------------
Other expenses:
Interest expense (1,744,590) (1,089,258)
Amortization of deferred financing costs (360,536) (324,675)
Debt extinguishment expenses (2,778,374) --
Other 51,114 (92,543)
------------- -------------
Total other expenses (4,832,386) (1,506,476)
------------- -------------
Loss before income taxes (3,315,010) (1,079,557)
Income tax benefit 1,256,000 433,313
------------- -------------
Net loss $ (2,059,010) $ (646,244)
============= =============
Net loss per share, basic and diluted $ (.14) $ (.06)
============= =============
The accompanying notes are an integral part
of these condensed financial statements.
- 4 -
OVERHILL FARMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months Ended
-----------------------------
December 28, December 29,
2003 2002
------------ ------------
Operating Activities:
Net loss $(2,059,010) $ (646,244)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,001,167 640,761
Provision for doubtful accounts -- 172,870
Noncash debt extinguishment expenses 2,558,374 --
Deferred tax benefit (1,256,000) (433,313)
Changes in:
Accounts receivable (2,908,079) (2,549,439)
Inventories (239,635) 75,516
Prepaid expenses and other (171,464) 124,432
Accounts payable (1,246,248) 2,892,841
Accrued liabilities 205,183 211,844
------------ ------------
Net cash provided by (used in) operating activities (4,115,712) 489,268
------------ ------------
Investing Activities:
Net additions to property and equipment (70,842) (2,960,036)
------------ ------------
Net cash used in investing activities (70,842) (2,960,036)
------------ ------------
The accompanying notes are an integral part
of these condensed financial statements.
- 5 -
OVERHILL FARMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
For the Three Months Ended
-----------------------------
December 28, December 29,
2003 2002
------------ ------------
Financing Activities:
Net borrowings on line of credit arrangements $ -- $ 4,272,943
Proceeds from borrowings on long-term debt 5,000,000 --
Principal payments on long-term debt (81,276) (310,725)
Deferred financing costs (395,538) (540,282)
Net advances to or on behalf of former Parent -- (946,168)
------------ ------------
Net cash provided by financing activities 4,523,186 2,475,768
------------ ------------
Net increase in cash 336,632 5,000
Cash at beginning of period 513,622 8,115
------------ ------------
Cash at end of period $ 850,254 $ 13,115
============ ============
Supplemental Schedule of Cash Flow Information:
Cash paid during the period for:
Interest $ 1,336,500 $ 960,299
Income taxes $ -- $ --
The accompanying notes are an integral part
of these condensed financial statements.
- 6 -
OVERHILL FARMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
The Company, effective upon the completion of its spin-off from its former
Parent in October 2002, netted a total of approximately $11.5 million,
consisting of all accrued income taxes due to and the unpaid receivable due from
its former Parent, against retained earnings (accumulated deficit).
During the three months ended December 29, 2002, the Company issued a total of
2,937,987 shares of its common stock, for nominal consideration, in connection
with the exercise of warrants and dilution protection rights granted to its
senior subordinated lender.
The accompanying notes are an integral part
of these condensed financial statements.
- 7 -
OVERHILL FARMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 28, 2003
(UNAUDITED)
1. NATURE OF BUSINESS AND ORGANIZATIONAL MATTERS
Overhill Farms, Inc. (the "Company" or "Overhill Farms") is a producer
of high-quality entrees, plated meals, meal components, soups, sauces,
and poultry, meat and fish specialties. From May 5, 1995 through
October 29, 2002, the Company was a majority-owned subsidiary of
TreeCon Resources, Inc., formerly Overhill Corporation and Polyphase
Corporation (the "former Parent"). On October 29, 2002, TreeCon
Resources, Inc. distributed to its shareholders, in the form of a
tax-free dividend, all of its ownership of Overhill Farms.
In October 2002, in connection with the above mentioned spin-off
transaction, the Company's Board of Directors authorized a
12,010-shares-for-1 stock split. Share and per share data as of and for
all periods presented herein have been restated to reflect the stock
split.
2. BASIS OF PRESENTATION
The financial statements for periods ended prior to September 28, 2003
were consolidated to include the accounts of Overhill Farms and its
wholly-owned subsidiary, Overhill L.C. Ventures, Inc., which was
liquidated during fiscal 2003. All material intercompany accounts and
transactions were eliminated. Certain prior year amounts have been
reclassified to conform to the current period presentation.
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended December 28,
2003 are not necessarily indicative of the results that may be expected
for the year ended September 26, 2004 or for any other period.
The condensed balance sheet at September 28, 2003 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial
statements.
For further information, refer to the financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended September 28, 2003.
- 8 -
3. INVENTORIES
Inventories are summarized as follows:
December 28, September 28,
2003 2003
------------ ------------
Raw ingredients 4,353,263 4,414,292
Finished product 5,598,934 5,313,593
Packaging 1,347,361 1,332,038
------------ ------------
$11,299,558 $11,059,923
============ ============
4. LONG-TERM DEBT
At September 28, 2003, the Company was not in compliance with certain
of the financial and other covenants of its agreements with Levine
Leichtman Capital Partners II, L.P. ("LLCP") and Pleasant Street
Investors, LLC ("Pleasant Street"). Effective October 31, 2003, the
Company reached agreement with each of LLCP and Pleasant Street wherein
the lenders waived specified events of default by the Company under the
then existing agreements and further agreed to a refinancing of all
indebtedness owing by the Company to LLCP and Pleasant Street as
described below.
On October 31, 2003, the Company entered into debt refinancing
arrangements with LLCP and Pleasant Street in order (1) to obtain an
aggregate of $5.0 million of additional funds to finance the Company's
accounts receivable, to build up its inventory levels and for other
working capital purposes, (2) to reduce the base rates of interest on
and extend the maturity dates of the note held by LLCP and the loans
made by Pleasant Street, (3) to amend the financial covenants and
certain other provisions contained in the relevant investment documents
with respect to LLCP and the relevant loan documents with respect to
Pleasant Street and (4) to obtain waivers of specified events of
default under then existing agreements with LLCP and Pleasant Street.
The Company issued to LLCP a second amended and restated secured senior
subordinated note due October 31, 2006 in the stated principal amount
of $28.858 million in exchange for the surrender by LLCP of the
existing $24.658 million senior subordinated note and $4.2 million in
additional cash funds. The replacement note has a base rate of interest
that was reduced from 15% to 13.5%, subject to increase upon the
occurrence of any interest rate event, as defined in the purchase
documents, or event of default, and a maturity date that was extended
from October 31, 2004 to October 31, 2006. The Company paid LLCP an
amendment fee of $184,800 and a new capital fee of $168,000.
Also as part of the October 31, 2003 debt refinancing, the Company and
Pleasant Street amended their existing loan and security agreement to
amend the financial covenants and various other provisions. Pleasant
Street waived certain specified events of default. In addition,
Pleasant Street made an additional term loan to the Company in the
principal amount of $800,000 and surrendered the note evidencing the
existing Term A Loan in exchange for a second amended and restated
senior Term A note in the principal amount of $17.8 million. The annual
- 9 -
interest rate on the in-formula portion of the Term A Loan was reduced
from 10% to 5.5%. The annual interest rate on the $5.0 million Term B
Loan was reduced from 15% to 12%. The interest rates on the Term A Loan
and Term B Loan are subject to increase upon the occurrence of any
interest rate event, as defined in the loan documents, or event of
default as provided in the notes that evidence those loans. The
maturity dates of the Term A Loan and the Term B Loan were extended to
October 31, 2006 from November 30, 2003 and January 30, 2004,
respectively. The Term B Loan was modified to be a monthly amortizing
term loan. The prepayment terms of the Term A Loan and the Term B Loan
were modified to provide, among other things, that the Company will
make mandatory prepayments of annual excess cash flow, if any. The
Company paid Pleasant Street an amendment fee of $35,200 and a new
capital fee of $32,000.
The October 31, 2003 debt refinancing has been recorded as a debt
extinguishment. Accordingly, unamortized costs associated with the LLCP
and Pleasant Street debt that existed at October 31, 2003, along with
new amendment fees paid to LLCP and Pleasant Street, were expensed on
October 31, 2003. The unamortized costs included original issue debt
discounts of $809,635, unamortized financing fees and expenses of
$1,173,519 and unamortized cost of warrants issued to LLCP in September
of 2002 of $575,220. The total expense recognized in connection with
the October 31, 2003 debt extinguishment, including the amendment fees
of $184,800 and $35,200 referred to in the preceding paragraphs,
amounted to $2,778,374.
In conjunction with the October 31, 2003 debt refinancing, the Company,
James Rudis and LLCP amended an investor rights agreement among them
pursuant to which the Company granted to LLCP the right to designate
for nomination and election up to three members of the Company's Board
of Directors, together with the right to fill the next available
vacancy created on the Board of Directors after October 31, 2003, which
could result in LLCP having up to four LLCP representatives on the
Board at any time. In addition, the parties extended through 2006 the
time period during which annual consulting fees of $180,000 will be
payable to LLCP, agreed that the Company would be liable for any breach
by Mr. Rudis of his liabilities and obligations under the agreement and
included a provision obligating Mr. Rudis to resign, and he did timely
resign, from all of his positions at TreeCon Resources, Inc., the
Company's former Parent, no later than December 31, 2003.
On October 31, 2003, the Company and LLCP also terminated the Company's
equity repurchase option that provided, among other things, that the
Company had the right, under certain conditions, to repurchase from
LLCP, in whole but not in part, all shares of the Company's common
stock owned by LLCP or issuable to LLCP upon the exercise of warrants
or conversion of preferred stock. In addition, the Company entered into
amended employment arrangements with Mr. Rudis and Mr. John Steinbrun
pursuant to which salaries were adjusted and the terms of the
agreements extended. Also, LLCP and Pleasant Street amended their
intercreditor and subordination agreement with respect to the
indebtedness, liabilities and obligations owed by the Company to each.
The Company believes, based upon forecasted performance for fiscal year
2004, that it is probable that the Company will be in compliance with
all of its revised financial and other covenant requirements.
Accordingly, and as a result of the refinancing of the obligations
described above, all principal amounts payable to LLCP and to Pleasant
- 10 -
Street, other than currently scheduled principal payments, have been
classified as long-term liabilities in the accompanying condensed
balance sheet as of December 28, 2003. In the future, the failure of
the Company to achieve certain revenue, expense and profitability
levels could result in a violation of the amended financial covenants
under its financing arrangements, which would cause the interest rates
on the above loans to increase substantially and could further result
in acceleration of maturity of the loans, both of which could adversely
affect the Company's financial condition, results of operations or cash
flows.
5. PER SHARE DATA
The following table sets forth the calculation of net loss per share
for the periods presented:
For the Three Months Ended
-------------------------------
December 28, December 29,
2003 2002
------------- -------------
Numerator:
Net loss attributable to common shareholders $ (2,059,010) $ (646,244)
============= =============
Denominator:
Denominator for basic earnings per share -
Weighted average shares 14,805,556 10,084,669
------------- -------------
Effect of dilutive securities:
Warrants -- --
Series A Preferred Stock -- --
------------- -------------
Dilutive potential common shares -- --
------------- -------------
Denominator for diluted earnings loss per share 14,805,556 10,084,669
============= =============
Net loss per share - basic and diluted: $ (.14) $ (.06)
============= =============
At December 28, 2003 and December 29, 2002, options to purchase 672,000
shares and 472,000 shares, respectively, were excluded from the
calculation of per share amounts in both years, as their effect, if
any, would be antidilutive. Warrants to purchase 200 shares and
preferred stock convertible into 283,076 shares were also excluded from
the calculation of per share amounts in both years, as their effect, if
any, would be antidilutive.
6. STOCK OPTIONS
The Company accounts for stock-based awards to employees using the
intrinsic value method as prescribed by Accounting Principles Board
Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees" and
provides the pro forma disclosure provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, compensation expense for stock options
issued to employees is recorded on the date of grant only if the
current market price of the underlying stock exceeds the exercise
price.
- 11 -
For purposes of pro forma disclosures, the estimated fair value of the
options, based on the Black-Scholes option pricing model, is amortized
to expense over the options' vesting periods. The following is the pro
forma information had the fair value method under SFAS No. 123, as
amended by SFAS No. 148, been adopted (in thousands, except per share
amounts):
For the Three Months Ended
-------------------------------------
December 28, 2003 December 29, 2002
----------------- -----------------
Net loss, as reported $ (2,060) $ (646)
Deduct: Total stock-based employee
compensation expense determined under
fair value based methods for all
awards, net of related tax effects $ -- $ (396)
Pro forma net loss $ (2,060) $ (1,042)
Net loss per share, basic and diluted
As reported $ (0.14) $ (0.06)
Pro forma $ (0.14) $ (0.10)
7. INCOME TAXES
Due to operating losses for the three months ended December 28, 2003,
the Company has provided a tax benefit, and recorded an increase in its
deferred tax asset on the accompanying condensed balance sheet at
December 28, 2003, of $1,256,000. The Company has not recorded a
valuation allowance against any of its deferred tax assets, since it is
believed that such assets are more likely than not to be recoverable
through estimated future profitable operations. The Company currently
expects to improve on its current operating results, returning to
profitable operating results, primarily through (a) improved gross
margins achieved by streamlining additional costs and continuing to
leverage its new consolidated manufacturing and storage facilities to
improve manufacturing efficiency, (b) growing revenues from profitable
product lines and (c) reducing future interest costs on outstanding
debt as a result of the recently completed refinancing of our
indebtedness. Failure by the Company to successfully improve margins,
grow revenues and/or maintain anticipated savings on future interest
costs, and return to profitable operating results in the near term,
could adversely impact the Company's expected realization of some or
all of its deferred tax assets and could require the Company to record
a valuation allowance against some or all of such assets, which could
adversely affect the Company's financial position and results of
operations.
- 12 -
8. CONTINGENCIES
LEGAL PROCEEDINGS
From time to time, the Company is involved in various lawsuits, claims
and proceedings related to the conduct of its business. Management does
not believe that the disposition of any pending claims is likely to
adversely affect the Company's financial condition, results of
operations or cash flows.
CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of trade receivables. The Company
performs ongoing credit evaluations of its customers' financial
condition and generally requires no collateral from its customers.
For the three months ended December 28, 2003 and December 29, 2002,
revenues from airline-related customers, a group that is subject to
certain business risks, accounted for approximately 20.5% and 20.4% of
total net revenues, respectively. Additionally, accounts receivable
from airline-related customers accounted for approximately 26.6% of the
total accounts receivable balance at each of December 28, 2003 and
December 29, 2002.
- 13 -
ITEM 2. MANAGEMENT'S DISCUSSION AND OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FORWARD-LOOKING STATEMENTS
The following discussion and analysis should be read in conjunction with our
condensed financial statements and notes to condensed financial statements
included elsewhere in this document. This report, and our condensed financial
statements and notes to our condensed financial statements contain
forward-looking statements, which generally include the plans and objectives of
management for future operations, including plans and objectives relating to our
future economic performance and our current beliefs regarding revenues we might
earn if we are successful in implementing our business strategies.
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations or beliefs, including, but not
limited to, statements concerning our operations and financial performance and
condition. For this purpose, statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements include statements which
are predictive in nature, which depend upon or refer to future events or
conditions, which include words such as "expects," "anticipates," "intends,"
"plans," "believes," "estimates," or similar expressions. In addition, any
statements concerning future financial performance (including future revenues,
earnings or growth rates), ongoing business strategies or prospects, and
possible future company actions, which may be provided by management, are also
forward-looking statements. We caution that these statements by their nature
involve risks and uncertainties, and actual results may differ materially
depending on a variety of important factors, including, among others:
o the impact of competitive products and pricing;
o market conditions such as the increase in the market price of
raw chicken that has occurred in late January and early
February 2004 as a result of the Asian bird flu outbreak in
Indochina, and weather patterns that may affect the cost of
raw material as well as the market for our products;
o changes in our business environment, including actions of
competitors and changes in customer preferences, as well as
disruptions to our customers' businesses, such as the Southern
California grocery strike that began in October 2003;
o the occurrence of acts of terrorism, such as the events of
September 11, 2001, or acts of war;
o changes in governmental laws and regulations, including income
taxes;
o market demand for new and existing products; and
o other factors as may be discussed in this report and other
reports we file with the Securities and Exchange Commission,
including those described in Item 7 of our annual report on
- 14 -
Form 10-K for the fiscal year ended September 28, 2003 under
the heading "Risk Factors Related to Our Business and
Industry."
OVERVIEW
Our strategy is to be the leading developer and manufacturer of value-added food
products and provider of custom prepared foods. We intend to create superior
value for our stockholders by continuing to execute our growth and operating
strategies. We employ the following corporate strategies:
o diversify our customer base, focusing on sectors with
attractive growth characteristics, such as foodservice and
retail;
o invest in and operate efficient production facilities;
o provide customer service-oriented distribution;
o offer a broad range of products to customers in multiple
channels of distribution; and
o continue to pursue growth through strategic acquisitions and
investments.
In evaluating our financial condition and operating performance, we look for
evidence of progress toward our primary goals: meeting profitability goals on a
customer-by-customer basis, realizing the cost efficiencies made possible by our
new manufacturing facility, and growing profitable sales in order to further
utilize the increased manufacturing capacity provided by our new facility.
Progress towards these goals is apparent in the increase in gross profit to
15.1% in the first quarter of fiscal 2004 as opposed to 11.2% in the first
quarter of fiscal 2003. Sales have actually declined, in some cases due to
external factors such as the Southern California grocery strike, and in other
cases due to our decision not to aggressively bid on business that did not meet
our profitability goals.
CRITICAL ACCOUNTING POLICIES
Management's discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates. Our significant accounting policies are described in the notes to the
audited financial statements that are included in our 2003 annual report on Form
10-K for the year ended September 28, 2003. Management believes the following
critical accounting policies are related to its more significant estimates and
assumptions used in the preparation of our financial statements.
CONCENTRATIONS OF CREDIT RISK. Our financial instruments that are exposed to
concentrations of credit risk consist primarily of trade receivables. We perform
ongoing credit evaluations of our customers' financial condition and generally
- 15 -
require no collateral from our customers. Our allowance for doubtful accounts is
calculated based primarily upon historical bad debt experience and current
market conditions. Until fiscal 2003, bad debt expense and accounts receivable
write-offs, net of recoveries, have historically been immaterial as we generally
transact the substantial portion of our business with large, established food or
service related businesses. However, a bankruptcy or other significant financial
deterioration of any significant customers could impact their future ability to
satisfy their receivables with us.
For the first quarters of fiscal 2004 and 2003, our revenues from
airline-related customers, a group that is subject to certain business risks,
accounted for approximately 20.5% and 20.4% of total net revenues, respectively.
Additionally, accounts receivable from airline-related customers accounted for
approximately 26.6% of the total accounts receivable balance at each of December
28, 2003 and December 29, 2002.
INVENTORIES. Inventories, which include material, labor and manufacturing
overhead, are stated at the lower of cost, which approximates the first-in,
first-out (FIFO) method, or market. We use a standard costing system to estimate
our FIFO cost of inventory at the end of each reporting period. Historically,
standard costs have been materially consistent with actual costs. We determine
the market value of our raw ingredients, finished product and packaging
inventories based upon references to current market prices for such items as of
the end of each reporting period and record a write-down of inventory standard
cost to market, when applicable. We periodically review our inventory for excess
items, and we establish a valuation reserve based upon the age of specific items
in inventory and the expected recovery from the disposition of the items.
A reserve is established for the estimated aged, surplus, spoiled or damaged
products, and discontinued inventory items and components. The amount of the
reserve is determined by analyzing inventory composition, expected usage,
historical and projected sales information, and other factors. Changes in sales
volume due to unexpected economic or competitive conditions are among the
factors that could result in materially different amounts for this item.
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED. The excess of cost over
fair value of net assets acquired (goodwill) is evaluated annually for
impairment in accordance with FASB Statement No. 142, "Goodwill and Other
Intangible Assets" (SFAS 142). We have one reporting unit and estimate fair
value based on a variety of market factors, including discounted cash flow
analysis, market capitalization, and other market-based data. No impairment of
goodwill was recorded during fiscal 2003. At December 28, 2003, we had goodwill
of $12,200,000. A deterioration of our operating results and the related cash
flow effect could decrease the estimated fair value of our business and, thus,
cause our goodwill to become impaired and cause us to record a charge against
operations in an amount representing the impairment.
INCOME TAXES. Due to operating losses for the three months ended December 28,
2003, we have provided a tax benefit, and recorded an increase in our deferred
tax asset in the accompanying condensed balance sheet at December 28, 2003, of
$1,256,000. We have not recorded a valuation allowance against any of our
deferred tax assets, since we believe that such assets are more likely than not
to be recoverable through estimated future profitable operations. We currently
expect to improve on our current operating results, returning to profitable
- 16 -
operating results, primarily through (a) improved gross margins achieved by
streamlining additional costs and continuing to leverage our new consolidated
manufacturing and storage facilities to improve manufacturing efficiency, (b)
growing revenues from profitable product lines and (c) reducing future interest
costs on outstanding debt as a result of the recently completed refinancing of
our indebtedness. Failure to successfully improve margins, grow revenues and/or
maintain anticipated savings on future interest costs, and return to profitable
operating results in the near term, could adversely impact our expected
realization of some or all of our deferred tax assets and could require us to
record a valuation allowance against some or all of those assets, which could
adversely affect our financial position and results of operations.
RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities." Under
previous practices, certain entities were included in consolidated financial
statements based upon controlling voting interests or in other special
situations. Under Interpretation No. 46, certain previously unconsolidated
entities will be required to be included in consolidated financial statements of
the primary beneficiary, as defined. For variable interest entities, often
referred to as special purpose entities, created after January 31, 2003,
Interpretation No. 46 is effective immediately. Portions of Interpretation No.
46 have been delayed. We do not expect the adoption of the remaining provisions
of Interpretation No. 46 to have a material impact on our financial statements.
- 17 -
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 28, 2003 COMPARED TO THREE MONTHS ENDED DECEMBER 29,
2002
NET REVENUES. Net revenues for the three months ended December 28, 2003
decreased $7,916,000 (20.7%) to $30,394,000 from $38,310,000 for the three
months ended December 29, 2002. While we operate as a single business unit,
manufacturing various products on common production lines, revenue from similar
customers are grouped into the following natural categories: retail,
foodservice, airlines and weight loss.
Retail net revenues were $5,356,000 for the first quarter of fiscal 2004 as
compared to $9,283,000 for the first quarter of fiscal 2003, a decrease of
$3,927,000. Retail sales for the period were impacted by the Southern California
grocery strike, which continues as of the date of this report. Among our retail
customers, sales to Albertson's decreased by over $3,000,000 for the first
quarter as compared to the first quarter of fiscal 2003. Management continues to
believe that existing and new retail customers represent a near term opportunity
for growth. We have recently received orders from new grocery chain customers,
and we have expanded our penetration in the club store market.
Foodservice net revenues were $12,883,000 for the first quarter of fiscal 2004
as compared to $15,955,000 for the first quarter of fiscal 2003, a decrease of
$3,072,000. This reduction was principally the result of activity in two
customer accounts, one of which we decided not to re-bid aggressively based on
our profitability objectives, and a second of which reduced the number of
products offered to their customers. As with retail sales, we maintain our
belief that foodservice sales represent another growth opportunity. We have
retained additional sales personnel to focus on this market and have shifted
responsibilities internally to capitalize on this opportunity.
Airline net revenues were $6,239,000 for the first quarter of fiscal 2004 as
compared to $7,839,000 for the first quarter of fiscal 2003, a decrease of
$1,600,000. This was largely the result of our decision to limit our credit
exposure after United Airlines filed for bankruptcy protection in December 2002.
We are in the process of bidding for additional airline business from several
international carriers in an effort to increase current airline sales toward
historical levels.
Weight loss net revenues were $5,916,000 for the first quarter of fiscal 2004,
as compared to $5,233,000 for the first quarter of fiscal 2003, an increase of
$683,000.
GROSS PROFIT. Gross profit for the first quarter of fiscal 2004 increased to
$4,596,000 from $4,308,000 for the first quarter of fiscal 2003. The increase in
gross profit despite lower net revenues was the result of several positive
factors. Gross profit margin as a percentage of net revenues increased from
11.2% for the first quarter of fiscal 2003 to 15.1% for the first quarter of
fiscal 2004 due to (1) the realization of planned efficiencies in our new
production facility; (2) our efforts to increase profitability on new accounts
and management's decision to forgo business that did not meet our profitability
objectives; and (3) decreasing intracompany product transfers and reduced costs
resulting from the full utilization of our new on site cold storage facility.
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) for the first quarter of fiscal 2004 decreased
$802,000 (20.7%) to $3,079,000 (10.1% of net revenues) from $3,881,000 (10.1% of
net revenues) for the first quarter of fiscal 2003. The decrease in SG&A
reflects the fact that there were no bad debt write-offs in the three months
ended December 28, 2003, as compared to a write-off of $173,000 for United
Airlines in the quarter ended December 29, 2002. Additionally, outbound freight
decreased $575,000 due to reduced sales volume and better management of freight
costs.
OPERATING INCOME. Operating income increased $1,090,000 (255.4%) to $1,517,000
for the first quarter of fiscal 2004 from $427,000 for the first quarter of
fiscal 2003. The increase in operating income for the period, on a lower revenue
base, is the result of improvements in gross margins and reductions in SG&A as
noted above. We intend to closely manage our cost structure with increased
emphasis on individual account profitability as we continue to develop
additional revenue opportunities.
OTHER EXPENSES. Other expenses for the first quarter of fiscal 2004, which
consist primarily of various financing-related charges, increased $3,326,000
(220.7%) to $4,832,000 from $1,506,000 for the first quarter of fiscal 2003. The
increase includes a $2,778,000 charge, substantially all noncash, for debt
extinguishment expenses related to the write-off of deferred financing costs and
debt issue costs in connection with the refinancing of substantially all
indebtedness in October 2003. The increase also includes an increase in interest
expense of $655,000 due to increases in borrowings and interest rates, and
$110,000 of increased amortization of original issue discount from the April
2003 refinancing.
INCOME TAX PROVISION (BENEFIT). Due to operating losses for the first quarter of
fiscal 2004, we have provided a tax benefit and recorded an increase in our
deferred tax asset in our condensed balance sheet at December 28, 2003 of
$1,256,000. A similar tax benefit of $433,000 was recorded for the first quarter
of fiscal 2003. The effective tax rates for both quarters were based upon the
estimated annual effective tax rates of approximately 37.9% in 2003 and 40.1% in
2002. We have not recorded a valuation allowance against any of our deferred tax
assets, since we believe that such assets are more likely than not to be
recoverable through estimated future profitable operations. If we fail to
successfully improve margins, grow revenues and/or maintain anticipated savings
on future interest costs, and return to profitable operating results in the near
term, it could adversely impact our expected realization of some or all of our
deferred tax assets and could require us to record a valuation allowance against
some or all of those assets, which could adversely affect our financial position
and results of operations.
NET LOSS. The net result for the first quarter of fiscal 2004 was a loss of
$2,059,000 ($.14 per share) as compared to a loss of $646,000 ($.06 per share)
for the first quarter of fiscal 2003.
We currently expect to improve on our current operating results, and return to
profitable operations, primarily through (a) improved gross margins achieved by
streamlining additional costs and continuing to leverage our new consolidated
manufacturing and storage facilities to improve manufacturing efficiency, (b)
growing revenues from profitable product lines and (c) reducing future interest
costs on outstanding debt due to the recent refinancing of our long and
short-term debt. As discussed in "Risk Factors Related to Our Business and
Industry," included in Item 7 of our 2003 annual report on Form 10-K, we may be
unable to improve our operating results if we suffer a decline in our
manufacturing efficiency, the loss of major customers, further declines in air
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travel, a continuation of the grocery strike, adverse changes in our operating
costs, or other adverse changes to our business. Our profitability may also be
adversely impacted by prolonged increases in raw material costs, such as the
increases in the market price of raw chicken that occurred in late January and
early February 2004 as a result of the Asian bird flu outbreak in Indochina, if
such raw material cost increases are not offset by increases in sales prices.
LIQUIDITY AND CAPITAL RESOURCES
Historically, principal sources of liquidity have been cash flows from
operations and existing financing arrangements. Our cash and cash equivalents
increased by $337,000 to $850,000 during the first quarter of fiscal 2004.
During the first quarter of fiscal 2004, our operating activities resulted in a
use of cash of approximately $4,116,000, as compared to cash provided of
$489,000 during the first quarter of fiscal 2003. During the current period,
operating losses and noncash expenses generally offset one another, with the use
of cash resulting primarily from a $2,908,000 increase in accounts receivable
and a $1,246,000 reduction of accounts payable. As of December 28, 2003, we had
working capital of approximately $16,150,000.
During the first quarter of fiscal 2004, our investing activities resulted in a
use of cash of approximately $71,000, as compared to a use of cash of $2,960,000
during the first quarter of fiscal 2003. The use of cash in the both years
consisted exclusively of additions to property and equipment. The prior year
additions related primarily to the consolidation of most of our operations into
our new facility in Vernon, California.
During the first quarter of fiscal 2004, our financing activities provided cash
of approximately $4,523,000, as compared to cash provided of $2,476,000 during
the first quarter of fiscal 2003. The cash provided in the current period
resulted primarily from new borrowings, net of related deferred financing costs,
in connection with the debt refinancing in October 2003.
At September 28, 2003, we were not in compliance with certain of the financial
and other covenants of our agreements with our two major lenders, including,
among other things, our failure to observe the limitations on indebtedness
relating to trade accounts payable, failure to comply with certain payment plans
and our failure to liquidate Overhill Ventures before August 20, 2003. Effective
October 31, 2003, we reached agreement with each of LLCP and Pleasant Street
wherein the lenders waived specified events of default by us under the then
existing agreements and further agreed to a refinancing of all indebtedness
owing by us to LLCP and Pleasant Street as described below.
On October 31, 2003, we entered into debt refinancing arrangements with LLCP and
Pleasant Street in order (1) to obtain an aggregate of $5,000,000 of additional
funds to finance our accounts receivable, to build up our inventory levels and
for other working capital purposes, (2) to reduce the base rates of interest on
and extend the maturity dates of the note held by LLCP and the loans made by
Pleasant Street, (3) to amend the financial covenants and certain other
provisions contained in the relevant investment documents with respect to LLCP
and the relevant loan documents with respect to Pleasant Street and (4) to
obtain waivers of specified events of default under then existing agreements
with LLCP and Pleasant Street.
- 20 -
We issued to LLCP a second amended and restated secured senior subordinated note
due October 31, 2006 in the stated principal amount of $28,858,000 in exchange
for the surrender by LLCP of the existing $24,658,000 senior subordinated note
and $4,200,000 in additional cash funds. The replacement note has a base rate of
interest that was reduced from 15% to 13.5%, subject to increase upon the
occurrence of any interest rate event, as defined in the purchase documents, or
event of default, and a maturity date that was extended from October 31, 2004 to
October 31, 2006. We paid LLCP an amendment fee of $184,800 and a new capital
fee of $168,000.
Also as part of the October 31, 2003 debt refinancing, Pleasant Street and we
amended our existing loan and security agreement to amend the financial
covenants and various other provisions. Pleasant Street waived certain specified
events of default. In addition, Pleasant Street made an additional term loan to
us in the principal amount of $800,000 and surrendered the note evidencing the
existing Term A Loan in exchange for a second amended and restated senior Term A
note in the principal amount of $17,800,000. The annual interest rate on the
in-formula portion of the Term A Loan was reduced from 10% to 5.5%. The annual
interest rate on the $5,000,000 Term B Loan was reduced from 15% to 12%. The
interest rates on the Term A Loan and Term B Loan are subject to increase upon
the occurrence of an interest rate event, as defined in the loan documents, or
event of default as provided in the notes that evidence those loans. The
maturity dates of the Term A Loan and the Term B Loan were extended to October
31, 2006 from November 30, 2003 and January 30, 2004, respectively. The Term B
Loan was modified to be a monthly amortizing term loan. The prepayment terms of
the Term A Loan and the Term B Loan were modified to provide, among other
things, that we will make mandatory prepayments of annual excess cash flow, if
any. We paid Pleasant Street an amendment fee of $35,200 and a new capital fee
of $32,000.
The October 31, 2003 debt refinancing has been recorded as a debt
extinguishment. Accordingly, unamortized costs associated with the LLCP and
Pleasant Street debt that existed at October 31, 2003, along with new amendment
fees paid to LLCP and Pleasant Street, were expensed on October 31, 2003. The
unamortized costs included original issue debt discounts of $809,635,
unamortized financing fees and expenses of $1,173,519 and unamortized cost of
warrants issued to LLCP in September of 2002 of $575,220. The total expense
recognized in connection with the October 31, 2003 debt extinguishment,
including the amendment fees of $184,800 and $35,200 referred to in the
preceding paragraphs, amounted to $2,778,374.
We believe, based upon forecasted performance for fiscal year 2004, that it is
probable that we will be in compliance with all of our revised financial and
other covenant requirements. Accordingly, and as a result of the refinancing of
the obligations described above, all principal amounts payable to LLCP and to
Pleasant Street, other than currently scheduled principal payments, have been
classified as long-term liabilities in the accompanying balance sheet as of
December 28, 2003. In the future, our failure to achieve certain revenue,
expense and profitability levels could result in a violation of the amended
financial covenants under our financing arrangements, which would cause the
interest rates on the above loans to increase substantially and could further
result in acceleration of maturity of the loans, both of which could adversely
affect our financial condition, results of operations or cash flows.
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We believe that funds available to us from operations and existing capital
resources will be adequate for our capital requirements for at least the next
twelve months.
Following is a summarization of our contractual obligations at December 28,
2003:
FUTURE DEBT MATURITIES AT DECEMBER 28, 2003:
Fiscal Year
-----------
2004 $ 662,818
2005 888,742
2006 884,301
2007 49,295,628
------------
Total 51,731,489
=============
FUTURE CONTRACTUAL OBLIGATIONS AT DECEMBER 28, 2003:
Fiscal Year
-----------
2004 $ 2,142,352
2005 2,048,815
2006 1,364,697
2007 1,024,453
2008 and thereafter 6,980,429
-------------
$ 13,560,746
=============
OTHER CONTRACTUAL OBLIGATIONS AT DECEMBER 28, 2003:
In addition to the contractual obligations mentioned above, at December
28, 2003, we had open purchase orders for raw materials to be delivered
in the subsequent quarter totaling $2,173,000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk - Obligations. We are currently subject to interest rate risk
on variable interest rate obligations. A hypothetical 10% increase in average
market interest rates would increase annual interest expense on currently
outstanding debt by approximately $111,000. We are also subject to interest rate
risk on our fixed interest rate obligations. Based upon outstanding amounts of
fixed rate obligations as of December 28, 2003, a hypothetical 10% decrease in
average market interest rates would increase the fair value of outstanding fixed
rate debt by approximately $337,000.
We do not own, nor do we have an interest in, any other market risk sensitive
instruments.
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ITEM 4. CONTROLS AND PROCEDURES
Our management, including our Chief Executive Officer and Chief Financial
Officer (our principal executive officer and principal financial officer,
respectively) has concluded, based on its evaluation as of December 28, 2003,
that the design and operation of our "disclosure controls and procedures" (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended
("Exchange Act")) are effective to ensure that information required to be
disclosed by us in the reports filed or submitted under the Exchange Act is
accumulated, recorded, processed, summarized and reported to management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding whether or not disclosure is
required.
During the quarter ended December 28, 2003, there were no changes in our
"internal controls over financial reporting" (as defined in Rule 13a-15(f) under
the Exchange Act) that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are involved in various lawsuits, claims and proceedings
related to the conduct of our business. Our management does not believe that the
disposition of any pending claims is likely to adversely affect our financial
condition, results of operations or cash flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
As described in Note 4 to the financial statements that accompany this report,
on October 31, 2003, we refinanced substantially all of our outstanding debt. In
connection with the refinancing, we amended our investor rights agreement among
us, James Rudis and LLCP to, among other things, grant to LLCP the right to
designate for nomination and election up to three members of our board of
directors, together with the right to fill the next available vacancy created on
our board of directors after October 31, 2003, which could result in LLCP having
up to four LLCP representatives on our board of directors at any time.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
At September 28, 2003, we were not in compliance with certain of the financial
and other covenants under borrowing arrangements with our two major lenders,
including, among other things, our failure to observe the limitations on
indebtedness relating to trade accounts payable, failure to comply with certain
payment plans and our failure to liquidate Overhill Ventures before August 20,
2003. Effective October 31, 2003, we reached agreement with each of LLCP and
Pleasant Street wherein the lenders waived specified events of default by us
under the then existing agreements and further agreed to a refinancing of all
indebtedness owing by us to LLCP and Pleasant Street as described elsewhere in
this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number Description
------ -----------
10.1 Amendment to Employment Agreement dated October 30, 2003
between OFI and James Rudis (#) (1)
10.2 Letter agreement dated October 30, 2003 confirming amendment
to terms of April 3, 2003 employment agreement between OFI
and John Steinbrun (#) (1)
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10.3 Third Amendment to Second Amended and Restated Securities
Purchase Agreement dated October 31, 2003 among OFI, the
entities from time to time parties thereto as Guarantors,
and Levine Leichtman Capital Partners II, L.P. ("LLCP") (1)
10.4 Second Amended and Restated Secured Senior Subordinated Note
due 2006 in the principal amount of $28,858,000 made by OFI
in favor of LLCP on October 31, 2003 (1)
10.5 Third Amendment to Amended and Restated Security Agreement
dated October 31, 2003 among OFI, any future subsidiaries of
OFI from time to time parties thereto, and LLCP (1)
10.6 Second Amendment to Amended and Restated Investor Rights
Agreement dated October 31, 2003 among OFI, James Rudis and
LLCP (1)
10.7 Termination Agreement Re: Equity Repurchase Option Agreement
dated October 31, 2003 between OFI and LLCP (1)
10.8 Third Amendment to Second Amended and Restated Loan and
Security Agreement dated October 31, 2003 between OFI and
Pleasant Street Investors, LLC ("PSI") (1)
10.9 Second Amended and Restated Secured Senior Term A Note in
the principal amount of $17,800,000 made by OFI in favor of
PSI on October 31, 2003 (1)
10.10 First Amendment to and Consent Under Second Amended and
Restated Intercreditor and Subordination Agreement dated
October 31, 2003 between LLCP and PSI (1)
10.11* Conditional Waiver Letter dated December 12, 2003 between
Levine Leichtman Capital Partners II, L.P. and Overhill
Farms, Inc. relating to Second Amended and Restated
Securities Purchase Agreement dated as of April 16, 2003, as
amended.
10.12* Conditional Waiver Letter dated December 12, 2003 between
Pleasant Street Investors, LLC and Overhill Farms, Inc.
relating to Second Amended and Restated Loan and Security
Agreement dated as of April 16, 2003, as amended.
31* Certifications Required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32* Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- 25 -
- --------------
(1) Filed as an exhibit to and incorporated by reference from
our Form 8-K for October 31, 2003 that was filed with the
Securities and Exchange Commission on November 5, 2003.
* Filed herewith
# Management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
-------------------
On November 5, 2003, we filed a Form 8-K for October 31, 2003 that
included a discussion of the refinancing of substantially all of our
debt in Item 5 - Other Events and Required FD Disclosure and also
included various exhibits in Item 7 - Financial Statements, Pro Forma
Financial Information and Exhibits.
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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.
OVERHILL FARMS, INC.
(REGISTRANT)
Date: February 9, 2004 By: /s/ James Rudis
-------------------------
James Rudis
Chairman, President and
Chief Executive Officer
Date: February 9, 2004 By: /s/ John L. Steinbrun
-------------------------
John L. Steinbrun
Senior Vice President and
Chief Financial Officer
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EXHIBITS FILED WITH THIS REPORT ON FORM 10-Q
Number Description
------ -----------
10.11 Conditional Waiver Letter dated December 12, 2003 between
Levine Leichtman Capital Partners II, L.P. and Overhill
Farms, Inc. relating to Second Amended and Restated
Securities Purchase Agreement dated as of April 16, 2003, as
amended.
10.12 Conditional Waiver Letter dated December 12, 2003 between
Pleasant Street Investors, LLC and Overhill Farms, Inc.
relating to Second Amended and Restated Loan and Security
Agreement dated as of April 16, 2003, as amended.
31 Certifications Required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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