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  • 10-Q (May 14, 2009)
  • 10-Q (Jan 22, 2009)
  • 10-Q (Nov 4, 2008)
  • 10-Q (May 15, 2008)
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  • 10-Q (Nov 5, 2007)

 
8-K

 
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CUISINE SOLUTIONS 10-Q 2008

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32.1
  5. Ex-32.1
Form 10 Q


UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


Form 10-Q


(Mark One)

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

     

For the quarterly period ended: April 5, 2008


OR


¨

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


For the transition period from              to_____


 

CUISINE SOLUTIONS, INC.

 

 

(Exact name of registrant as specified in charter)

 


DELAWARE

 

1-32439

 

52-0948383

(State or other jurisdiction

of incorporation)

 

(Commission File Number)

 

(IRS Employer

 Identification No.)


 

85 S. Bragg Street, Suite 600, Alexandria, VA 22312

 

 

(Address of principal executive offices)

 


 

(703) 270-2900

 

 

(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 þ  No ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No þ


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.  The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of May 14, 2008 was 17,185,591




TABLE OF CONTENTS


PART I

 

 

 

Item 1.    Financial Statements (unaudited)

page   3

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations  

page 10

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

page 17

Item 4.    Controls and Procedures

page 17

 

 

 

 

PART II

 

 

 

Item 1.    Legal Proceedings         

page 18

Item 1A. Risk Factors

page 18

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds  

page 18

Item 3.    Defaults Upon Senior Securities  

page 18

Item 4.    Submission of Matters to a Vote of Security Holders  

page 18

Item 5.    Other Information

page 18

Item 6.    Exhibits  

page 18

 

 

 

 

SIGNATURES

 

 

page 19

EXHIBIT INDEX

 

 

page 20




PART I:   FINANCIAL INFORMATION


ITEM 1.

FINANCIAL STATEMENTS (unaudited)


CUISINE SOLUTIONS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)


 

 

April 5,

 

June 30,

 

 

2008

 

2007

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

209,000

 

$

546,000

Trade accounts receivable, net

 

 

8,144,000

 

 

5,864,000

Inventory, net

 

 

13,357,000

 

 

15,081,000

Prepaid expenses

 

 

656,000

 

 

521,000

Accounts receivable, related parties

 

 

12,000

 

 

57,000

Deferred tax assets, current portion

 

 

605,000

 

 

Other current assets

 

 

525,000

 

 

638,000

TOTAL CURRENT ASSETS

 

 

23,508,000

 

 

22,707,000

Fixed assets, net

 

 

14,013,000

 

 

12,520,000

Deferred tax assets, net

 

 

6,740,000

 

 

7,069,000

Investments, non-current

 

 

375,000

 

 

375,000

Restricted cash

 

 

118,000

 

 

66,000

Other assets

 

 

94,000

 

 

83,000

   TOTAL ASSETS

 

$

44,848,000

 

$

42,820,000

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

7,809,000

 

$

6,999,000

Line-of-credit

 

 

2,079,000

 

 

1,811,000

Accrued payroll and related liabilities

 

 

1,780,000

   

 

2,486,000

Current portion of long-term debt

 

 

882,000

 

 

777,000

TOTAL CURRENT LIABILITIES

 

 

12,550,000

 

 

12,073,000

Long-term debt, less current portion

 

 

5,791,000

 

 

5,523,000

Asset retirement obligation

 

 

601,000

 

 

499,000

Deferred rent

 

 

154,000

 

 

100,000

    TOTAL LIABILITIES

 

 

19,096,000

 

 

18,195,000

Commitments and contingencies

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

    

 

 

    

Preferred Stock - $.01 par value, 2,000,000 shares authorized, none issued

 

 

 

 

Common Stock - $.01 par value, 38,000,000 shares authorized, 17,130,591 and 16,623,191 shares issued and outstanding at April 5, 2008 and June 30, 2007, respectively.

 

 

171,000

 

 

166,000

Additional paid-in capital

 

 

28,415,000

 

 

27,934,000

Accumulated deficit

 

 

(4,761,000)

 

 

(4,583,000)

Accumulated other comprehensive income

 

 

 

 

 

 

Cumulative translation adjustment

 

 

1,927,000

 

 

1,108,000

    TOTAL STOCKHOLDERS' EQUITY

 

 

25,752,000

 

 

24,625,000

  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

44,848,000

 

$

42,820,000


See accompanying notes to consolidated condensed financial statements.



3



CUISINE SOLUTIONS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)


 

Sixteen Weeks Ended

 

Forty Weeks Ended

 

April 5,

2008

 

March 31,

2007

 

April 5,

2008

 

March 31,

2007

 

 

 

 

Net sales

$

25,245,000

 

$

23,898,000

 

$

66,463,000

 

$

61,352,000

Cost of goods sold

 

20,294,000

 

 

18,851,000

 

 

53,161,000

 

 

47,353,000

Gross margin

 

4,951,000

 

 

5,047,000

 

 

13,302,000

 

 

13,999,000

Research and development

 

320,000

 

 

290,000

 

 

819,000

 

 

647,000

Selling and marketing

 

2,451,000

 

 

2,378,000

 

 

6,300,000

 

 

6,067,000

General and administrative

 

2,946,000

 

 

1,752,000

 

 

6,421,000

 

 

4,372,000

(Loss) income before non-operating expense and income taxes

 

(766,000)

 

 

627,000

 

 

(238,000)

 

 

2,913,000

Non-operating income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(149,000)

 

 

(29,000)

 

 

(331,000)

 

 

(168,000)

Other income, net

 

141,000

 

 

11,000

 

 

184,000

 

 

27,000

Total non-operating expense

 

(8,000)

 

 

(18,000)

 

 

(147,000)

 

 

(141,000)

(Loss) income before income tax

 

(774,000)

 

 

609,000

 

 

(385,000)

 

 

2,772,000

Provision for income tax benefit

 

364,000

 

 

7,889,000

 

 

207,000

 

 

7,879,000

(Loss) income from continuing operations before discontinued operations

 

(410,000)

 

 

8,498,000

 

 

(178,000)

 

 

10,651,000

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

Net gain from dissolution of CS Norway

 

 

 

116,000

 

 

 

 

116,000

Net gain from discontinued operations

 

 

 

116,000

 

 

 

 

116,000

NET (LOSS) INCOME

$

(410,000)

 

$

8,614,000

 

$

(178,000)

 

$

10,767,000

Per common share data

 

 

 

 

 

 

 

 

 

 

 

Basic earnings:

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

$

(0.02)

 

$

0.51

 

$

(0.01)

 

$

0.64

From discontinued operations

 

0.00

 

 

0.01

 

 

0.00

 

 

0.01

Net (loss) income

$

(0.02)

 

$

0.52

 

$

(0.01)

 

$

0.65

Diluted earnings:

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

$

(0.02)

 

$

0.46

 

$

(0.01)

 

$

0.58

From discontinued operations

 

0.00

 

 

0.01

 

 

0.00

 

 

0.01

Net (loss) income

$

(0.02)

 

$

0.47

 

$

(0.01)

 

$

0.59

Weighted average shares outstanding-basic

 

16,950,904

 

 

16,471,879

 

 

16,787,866

 

 

16,452,149

Common stock equivalents

 

 

 

1,960,536

 

 

 

 

1,913,645

Weighted average shares outstanding-diluted

 

16,950,904

 

 

18,432,415

 

 

16,787,866

 

 

18,365,794


See accompanying notes to consolidated condensed financial statements.



4



CUISINE SOLUTIONS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


 

Year to date

Forty weeks ended

 

April 5,

2008

 

March 31,

2007

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net (loss) income

$

(178,000)

 

$

10,767,000

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities

 

 

 

 

 

Depreciation and amortization

 

1,517,000

 

 

1,101,000

Allowance for doubtful accounts

 

14,000

 

 

(225,000)

Inventory obsolescence reserve

 

309,000

 

 

127,000

Change in deferred tax assets

 

(232,000)

 

 

(7,900,000)

Stock-based compensation

 

59,000

 

 

187,000

Changes in assets and liabilities, net of effects of non-cash transactions:

 

 

 

Increase in accounts receivable

 

(1,797,000)

 

 

(3,560,000)

Decrease (increase) in inventory

 

2,138,000

 

 

(3,294,000)

Increase in prepaid expenses

 

(111,000)

 

 

(815,000)

Decrease (increase) in accounts receivable, related parties

 

45,000

 

 

(14,000)

Decrease (increase) in other assets

 

179,000

 

 

(164,000)

Increase in accounts payable and accrued expenses

 

247,000

 

 

3,628,000

Decrease in accrued payroll and related liabilities

 

(881,000)

 

 

(187,000)

Changes in assets and liabilities of discontinued operations

 

— 

 

 

(123,000)

Net cash provided by (used in) operating activities

 

1,309,000

 

 

(472,000)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Increase in restricted cash

 

(53,000)

 

 

(50,000)

Capital expenditures

 

(1,988,000)

 

 

(3,290,000)

Net cash used in investing activities

 

(2,041,000)

 

 

(3,340,000)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Payments on debt

 

(734,000)

 

 

(272,000)

Proceeds from debt

 

443,000

 

 

1,035,000

Net borrowing on line-of-credit

 

163,000

 

 

2,000,000

Proceeds from stock issuance

 

427,000

 

 

126,000

Net cash provided by financing activities

 

299,000

 

 

2,889,000

Net decrease in cash and cash equivalents

 

(433,000)

 

 

(923,000)

Change in cumulative translation adjustment

 

96,000

 

 

45,000

Cash and cash equivalents, beginning of period

 

546,000

 

 

2,154,000

CASH and CASH EQUIVALENTS, END OF PERIOD

$

209,000

 

$

1,276,000


See accompanying notes to consolidated condensed financial statements.




5



CUISINE SOLUTIONS, INC.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


April 5, 2008


NOTE 1 - DESCRIPTION OF OPERATIONS


The Company produces and markets premium, fully cooked, frozen and prepared foods to a variety of channels and geographic regions.  The Company has manufacturing facilities in the U.S.A. and France and its products are sold primarily to the U.S.A. and European Union business customers in the Food Service, On Board Services, Retail, Military and National Restaurant Chain channels.


NOTE 2 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures required for complete consolidated financial statements are not included herein. It is recommended that these unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and related notes as reported in the Company’s 2007 Annual Report on Form 10-K as filed with the SEC on September 21, 2007.


In management’s opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the unaudited condensed financial position, results of operations and cash flow at the dates and for the periods presented have been included. The condensed consolidated balance sheet presented at June 30, 2007 has been derived from the financial statements that have been audited by the Company’s independent registered public accounting firm, BDO Seidman, LLP, as indicated in their report incorporated by reference to the Company’s 2007 Annual Report on Form 10-K as filed with the SEC on September 21, 2007. The results of operations for the forty week period ended April 5, 2008 may not be indicative of the results that may be expected for the fiscal year ended June 28, 2008, or any other period within the fiscal year 2008.


NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS


In June 2006, the Financial Accounting Standard Board (“FASB”) issued FASB Interpretation (“FIN”) No. 48 Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109. (“FIN 48”) is effective for fiscal years beginning after December 15, 2006. Differences between the amounts recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts recognized after the adoption should be accounted for as a cumulative-effect adjustment recorded to the beginning balance of retained earnings. Effective July 1, 2007, the Company adopted the provisions of FIN 48 and the effect of the adoption was not material.


In December 2007, the FASB issued SFAS No. 141 (Revised), Business Combinations (“SFAS 141R”).  SFAS 141R clarifies the information that a reporting entity provides in its financial reports about a business combination and it replaces SFAS No. 141. SFAS 141R revises the method of accounting for a number of aspects of business combinations, including acquisition costs, contingencies (including contingent assets, contingent liabilities and contingent purchase price), the impacts of partial and step-acquisitions (including the valuation of net assets attributable to non-acquired minority interests) and post-acquisition exit activities of acquired businesses. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SFAS 141(R) will be effective for the Company during our fiscal year beginning June 28, 2009.


In December 2007, the FASB also issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). SFAS 160 requires noncontrolling (minority) interests to be reported as a component of equity on the balance sheet, to include all earnings of a consolidated subsidiary in consolidated results of operations and to treat all transactions between an entity and noncontrolling interest as equity transactions between the parties. SFAS 160 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and



6



interim periods within those fiscal years. SFAS 160 will be effective for the Company during our fiscal year beginning June 28, 2009.


In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). SFAS 161 amends and expands the disclosure requirements of SFAS No. 133 and is intended to provide users of financial statements with an enhanced understanding of (1) how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for the Company beginning June 28, 2009. The Company is currently evaluating the provisions of SFAS 161 to determine the impact on its consolidated financial statements.


NOTE 4 - TRADE ACCOUNTS RECEIVABLE, NET


Trade accounts receivable consisted of:


 

April 5, 2008

 

June 30, 2007

Trade accounts receivable

$

8,559,000

 

$

6,237,000

Allowance for doubtful accounts

 

(415,000)

 

 

(373,000)

Trade accounts receivable, net

$

8,144,000

 

$

5,864,000


The Company provides allowances for estimated credit losses, product returns and adjustments at a level deemed appropriate to adequately provide for known and inherent risks related to such accounts. The allowances are based on reviews of individual accounts by customer, their financial conditions and other factors that deserve recognition in estimating potential losses. While management uses the best information available in making its determination, the ultimate recovery of recorded accounts and other receivables is also dependent on future economic and other conditions that may be beyond management’s control.


NOTE 5 - INVENTORY, NET


Inventory consisted of the following:

 

 

April 5, 2008

 

June 30, 2007

Raw material

$

             4,937,000

 

$

             4,626,000

Frozen product & other finished goods

 

7,913,000

 

 

9,722,000

Packaging

 

1,081,000

 

 

989,000

 

 

13,931,000

 

 

15,337,000

Less obsolescence reserve

 

(574,000)

 

 

(256,000)

Inventory, net

$

           13,357,000

 

$

          15,081,000




7



NOTE 6 - DEBT


Debt, at April 5, 2008 and June 30, 2007 was as follows:


Description

 

Maturity

 

April 5,

2008

Principal

Outstanding

In Foreign

Currency

 

Interest

Rates

 

April 5,

2008

Principal

Outstanding

 

June 30,

2007

Principal

Outstanding

Term Loan

 

22-Oct-12

 

101,000€ 

 

5.70%

 

158,000 

 

$

155,000 

Term Loan

 

3-Jun-08

 

10,000€ 

 

3.30%

 

 

16,000 

 

 

81,000 

Term Loan

 

15-Jun-08

 

4,000€ 

 

4.00%

 

 

6,000 

 

 

20,000 

Term Loan

 

20-Jun-10

 

30,000€ 

 

3.80%

 

 

47,000 

 

 

54,000 

Term Loan

 

28-Nov-12

 

196,000€ 

 

2.80%

 

 

308,000 

 

 

304,000 

Term Loan

 

12-Jun-19

 

1,833,000€ 

 

3.60%

 

 

2,881,000 

 

 

2,560,000 

Term Loan

 

23-Oct-13

 

511,000€ 

 

3.80%

 

 

803,000 

 

 

766,000 

Term Loan

 

1-Mar-15

 

308,000€ 

 

4.30%

 

 

484,000 

 

 

— 

Line of Credit

 

Jun-08

 

761,000€ 

 

5.2% - 5.5%

 

 

1,195,000 

 

 

— 

Term Loan

 

5-Jun-12

 

 

 

7.00%

 

 

1,474,000 

 

 

1,718,000 

Term Loan

 

5-Oct-10

 

 

 

7.30%

 

 

381,000 

 

 

490,000 

Term Loan

 

15-Mar-10

 

 

 

6.80%

 

 

88,000 

 

 

118,000 

Line of Credit

 

15-Jun-09

 

 

 

LIBOR+2.25%

 

 

884,000 

 

 

1,811,000 

Capital Lease

 

18-Sep-08

 

 

 

19.40%

 

 

3,000 

 

 

6,000 

Capital Lease

 

31-Dec-11

 

 

 

8.40%

 

 

24,000 

 

 

28,000 

 

 

 

 

 

 

Total

 

$

8,752,000 

 

$

8,111,000 

 

 

 

 

Less: current portion

 

 

2,961,000 

 

 

2,588,000 

 

 

 

 

Non-current portion

 

$

5,791,000 

 

$

5,523,000 


From time to time, the Company enters into separate term loans to purchase new equipment and for improvement projects.  As of April 5, 2008, the total principal balance of all these term loans was $8,752,000 of which $5,898,000 was denominated in Euros in the amount of 3,754,000€. These loans bear interest rates ranging from 2.8% to 7.3% and have maturity dates ranging from June 3, 2008 to June 12, 2019.  The loans are typically secured by the related equipment.


As of April 5, 2008, the total loan balance under capital leases was $27,000.  These loans bear interest rates ranging from 8.4% to 19.4% and have maturity dates ranging from September 18, 2008 to December 31, 2011.


NOTE 7 - INCOME TAXES


The Company’s effective tax rate of 53.8% for the forty weeks ended April 5, 2008 increased 13.8% from 40.0% for the forty weeks ended March 31, 2007. The increase in the effective rate resulted from the reversal of our tax valuation reserve in the third quarter of fiscal year 2007; however, the Company still retains its net operating loss carryforward of $13,970,000 at June 30, 2007 for U.S. Federal and state income tax purposes and does not expect to pay any taxes in fiscal year 2008.  Effective July 1, 2007 the Company adopted the provisions of FIN 48 and the effect of the adoption was not material.


NOTE 8 - STOCKHOLDERS’ EQUITY

 

Effective June 26, 2005, the Company adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment (“SFAS 123(R)”), using the modified prospective-transition method. Under that transition method, compensation cost recognized in the fiscal year 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of June 25, 2005, based on the grant date fair value estimated in accordance with the original provision of SFAS 123 and (b) compensation cost for all share-based payments granted subsequent to June 25, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). As a result, a non-cash charge of $59,000 and $187,000 were charged to compensation expense during the forty week



8



period ended April 5, 2008 and March 31, 2007, respectively. The Company allocated share-based compensation expense under SFAS 123(R) in the unaudited condensed consolidated statements of income as follows:


 

Forty weeks ended

 

April 5, 2008

 

March 31, 2007

Cost of goods sold

$

                      —

 

$

              26,000

Selling and marketing

 

 

 

62,000

General and administrative

 

59,000

 

 

99,000

 

 

59,000

 

 

187,000

Income tax benefit

 

(24,000)

 

 

(71,000)

Total share-base compensation, net of tax benefits

$

            35,000

 

$

             116,000


During the forty week periods ended April 5, 2008 and March 31, 2007, the Company granted zero and 72,401 stock options, respectively.  Options exercised during the first three quarters of fiscal year 2008 and 2007 were 507,400 and 98,350, with an intrinsic value of $3,794,000 and $592,000, respectively.


As of April 5, 2008, the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was $112,000, which is expected to be recognized over a weighted average period of 2 years.


NOTE 9 - EARNINGS PER SHARE


Basic earnings per common share are computed using the weighted-average number of shares outstanding during the period. Diluted earnings per common share are computed using the weighted-average number of shares outstanding during the period, plus the incremental shares outstanding assuming the exercise of diluted stock options. Anti-dilutive options of 30,000 and 15,000 were not included in the computation for the first three quarters of fiscal year 2008 and 2007, respectively.


NOTE 10 - TRANSACTIONS WITH RELATED PARTIES


The Company’s 10% equity investment in Cuisine Solutions Chile for $375,000 is accounted for under the cost method as the Company does not have the ability to exercise significant influence over the operating or financial policy of Cuisine Solutions Chile.  During the first three quarters of fiscal year 2008 and 2007, the Company purchased $3,860,000 and $4,362,000, respectively, of products from Cuisine Solutions Chile for resale in the U.S. and Europe. The balance owed by the Company to Cuisine Solutions Chile as of the third quarter of fiscal year 2008 and 2007 were $676,000 and $2,069,000, respectively and recorded to accounts payable.


The Company’s line-of-credit with Branch Banking and Trust Company (“BB&T”), with a maximum borrowing amount of $6.0 million and a maturity date of June 15, 2010, is guaranteed by Food Investors Corporation (“FIC”), an affiliate of the Company and it is secured by real estate owned by FIC. The Company has agreed to pay compensation for FIC’s guarantee from FIC of 1.5% of the maximum borrowing amount, or $90,000 per year, which is payable quarterly.



9



ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


All statements contained herein, other than historical facts, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “estimate,” “future,” “could,” “project,” “growth,” “ “intend,” “expect,” “should,” “would,” “if,” “possible,” “potential,” “likely” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: (1) a significant change of our relationship with our customers in channels where concentration of sales to a certain number of customers exists; (2) the impact on our profitability from the fluctuations in the availability and cost of raw materials; (3) the impact on our reported earnings from fluctuations in currency exchange rates, particularly the Euro; and (4) those factors listed under the caption “risk factors” of this Report and the Annual Report on Form 10-K as filed with the SEC on September 21, 2007. We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Form 10-Q.


The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this report. 


BUSINESS OVERVIEW


We produce and market premium, fully cooked, frozen and prepared foods to a variety of channels and geographic regions.  We believe that we are recognized in the market place as having the highest quality frozen food product line in the world.   Our motto is:  exceptional food - ultimate convenience.


We currently distribute products through the following sales channels:


·

On Board Services: Airlines, railroad and cruise lines.

·

Foodservice: Hotel banquets, convention centers, sport stadiums and other special events such as the Olympics.

·

Retail: Supermarket in-store deli and premium frozen packaged foods.

·

Military: Naval carriers, Army field feeding and military dining halls and clubs.

·

National Restaurant Chain: Casual dining multi-unit restaurants.


We utilize the “sous vide” technology and methods, which means that the products are vacuum sealed and then slowly cooked in water at very low temperatures. The sous vide technology involves knowing the precise time and temperature that food changes molecular structure during cooking. This enables us to cook the food for optimum taste, color and texture while also pasteurizing.  Since the products are immediately flash-frozen, there is no need for preservatives in the product and most of our products have a guaranteed 18 month shelf life.


CRITICAL ACCOUNTING ESTIMATES AND POLICIES


Our accounting policies, which are in compliance with U.S. GAAP, require us to apply methodologies, estimates and judgments that have a significant impact on the results we report in our financial statements. In our 2007 Annual Report on Form 10-K, we have discussed those material policies that we believe are critical and require the use of complex judgment in their application.  There were no material changes to the policies during the fiscal quarter ended April 5, 2008.


RESULTS OF OPERATIONS



10




Comparison of the sixteen weeks ended April 5, 2008 to the sixteen weeks ended March 31, 2007


NET SALES


By Geographic Region

April 5, 2008

 

March 31, 2007

 

% change

U.S. Sales

$

16,641,000

 

$

16,401,000

 

1.5%

Europe Sales

 

8,570,000

 

 

7,268,000

 

17.9%

Rest of World Sales

 

34,000

 

 

229,000

 

(85.2%)

Net Sales

$

25,245,000

 

$

23,898,000

 

5.6%


 

April 5, 2008

 

March 31, 2007

 

% change

Existing products

$

19,333,000

 

$

   18,253,000

 

5.9%

New products

 

5,912,000

 

 

5,645,000

 

4.7%

Net Sales

$

25,245,000

 

   23,898,000

 

5.6%


By Channel

April 5, 2008

 

March 31, 2007

 

% change

On Board Services

$

6,139,000

 

$

5,319,000

 

15.4%

Food Service

 

4,316,000

 

 

4,102,000

 

5.2%  

Retail

 

5,789,000

 

 

7,104,000

 

(18.2%)

Military

 

5,862,000

 

 

5,086,000

 

15.3%

National Restaurant Chain

 

3,139,000

 

 

2,287,000

 

35.4%

Net Sales

$

25,245,000

 

$

23,898,000

 

5.6%


Our net sales of $25,245,000 for the third quarter of fiscal year 2008 increased $1,347,000, or 5.6%, over the third quarter of fiscal year 2007 sales of $23,898,000.  We do not have any defined segments since all of our products are produced similarly despite the sales channel or area of distribution.  Our new product sales of $5,912,000 for the third quarter of fiscal year 2008, increased $267,000, or 4.7%, over the third quarter of fiscal year 2007 new product sales of $5,645,000.  These new product sales are defined as sales during the first year of introduction.  


For the third quarter of fiscal year 2008 we had gains in four of our five sales channels.  Our National Restaurant Chain sales of $3,139,000 for the third quarter of fiscal year 2008 increased 852,000, or 35.4% over the third quarter of fiscal 2007 sales of $2,287,000, which reflects our continued product acceptance in larger chain restaurants.  Our On Board Services sales of $6,139,000 increased $820,000, or 15.4% over the third quarter of fiscal year 2007sales of $5,319,000, which reflects sales to additional new airlines and continued expansion in existing carriers.  Military sales of $5,862,000 for the third quarter of fiscal year 2008 increased $762,000 or 15.3% over the third quarter of fiscal year 2007 sales of $5,086,000..  While there has been some restructuring in Military contracting, which slowed the growth Military sales in the second quarter of fiscal year 2008, we regained some of our business in the third quarter of fiscal year 2008.  Our Food Service sales of $4,316,000 for the third quarter of fiscal year 2008 increased $214,000 or 5.2% over the third quarter of fiscal year 2007 sales of $4,102,000 due primarily from increased revenues from hotel banqueting.    Retail sales decreased 18.2% from $7,104,000 in the third quarter of fiscal year 2007 to $5,789,000 in the third quarter of fiscal year 2008, which is due primarily to reduced promotions for our products in Costco.  While we consider new products and channel information helpful to the reader we cannot forecast any particular trends for our sales as a result of such information.  Our sales development cycle can run over one year in certain markets before recognizing a sale.  


GROSS MARGIN

The gross margin decreased during the third quarter of fiscal year 2008 to 19.6% compared to 21.1% in the same period during the prior year. This margin reduction was primarily attributable to higher raw materials costs, fuel surcharges, continued increases in facility expansion and increased costs associated with new product introductions. We have completed price increases through all the sales channels but with continued rising costs it may be necessary to raise prices further.  In addition, our France plant incurred some operational expense increases as compared to the prior year period.  Our French operation is under close review by management and is undergoing some changes to



11



improve operations, purchasing and development.  We expect that these changes will be effected during the fourth quarter of fiscal year 2008  and we believe that such changes will improve margins by the end of the first quarter of fiscal year 2009.


RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses for the third quarter of fiscal year 2008 increased $30,000, or 10.3%, to $320,000 from the third quarter of fiscal year 2007 expenses of $290,000.  Most of the research and development costs are incurred well before an actual sale and the cycle can last over one year in certain markets.  The expense increase is primarily related to increased salaries for additional staff.


SELLING AND MARKETING EXPENSES

Our selling and marketing teams are focused on customers primarily in the U.S. and Europe.  Expenses for the third quarter of fiscal year 2008 increased $73,000, or 3.1%, to $2,451,000 from the third quarter of fiscal year 2007 expenses of $2,378,000 (selling and marketing expenses represented 9.7% and 10.0% of revenue for the third quarters of fiscal years 2008 and 2007, respectively).  This increase was primarily related to increased consulting fees of $306,000 offset by decreased in store demonstration costs of $112,000, reclassification of certain costs to general and administrative expenses of $25,000.


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the third quarter of fiscal year 2008 increased $1,194,000, or 68.2%, to $2,946,000, from the third quarter of the prior fiscal year 2007 expenses of $1,752,000 (general and administrative expenses represented 11.7% and 7.3% of revenue for the third quarters of fiscal 2008 and 2007, respectively).  This increase was primarily due to costs associated with personnel reductions in our French operations totaling $590,000, additional staff and salary increases of $275,000, bad debt increase of $150,000, increases in public company expenses of $107,000 and reclassification of certain costs from selling and marketing expenses of $25,000.


NON-OPERATING INCOME AND EXPENSE

Non-operating expenses decreased to $8,000 for the third quarter of fiscal year 2008 from $18,000 in the third quarter of fiscal year 2007.  This decrease is due primarily to the increase in Other income from consulting and some sous-vide training outside of Europe offset by interest expense of $149,000 related to the increased outstanding borrowings in the U.S. and France.


(LOSS) INCOME BEFORE INCOME TAXES

(Loss) Income before income taxes in the third quarter of fiscal year 2008 of ($774,000) decreased substantially from the third quarter fiscal year 2007 income of $609,000, or a decrease of 227.1%.  This decrease was primarily related to lower gross margin percentages, principally from higher raw material costs resulting in approximately a $505,000 decrease in margins as well as higher general and administrative due to the costs associated with personnel reductions in France of $590,000.


INCOME TAXES

We recorded a benefit for income taxes of $364,000 and $7,889,000 for the third quarter of fiscal years 2008 and 2007, respectively. Our effective income tax rate for the third quarter of fiscal year 2008 was computed to be 47.0% as compared to 0.25% for the third quarter of fiscal year 2007, which was based on minimum tax payments and a full reversal of our valuation allowance on our net deferred tax assets of $7,900,000.


NET (LOSS) INCOME

Net loss of $410,000 for the third quarter of fiscal year 2008 decreased $9,024,000 from $8,614,000 in the third quarter of fiscal year 2007.  The primary reason for the decrease was lower gross margin, higher general and administrative and research and development expenses offset by a prior year reversal of a $7,900,000 valuation allowance reserve related to income taxes.




12



Comparison of the forty weeks ended April 5, 2008 to the forty weeks ended March 31, 2007


NET SALES


By Geographic Region

April 5, 2008

 

March 31, 2007

 

% change

U.S. Sales

$

43,932,000

 

$

42,708,000

 

2.9%

Europe Sales

 

22,169,000

 

 

18,362,000

 

20.7%

Rest of World Sales

 

362,000

 

 

282,000

 

28.3%

Net Sales

$

66,463,000

 

$

61,352,000

 

8.3%


 

April 5, 2008

 

March 31, 2007

 

% change

Existing products

$

52,938,000

 

$

48,129,000

 

10.0%

New products

 

13,525,000

 

 

13,223,000

 

2.3%

Net Sales

$

66,463,000

 

61,352,000

 

8.3%


By Channel

April 5, 2008

 

March 31, 2007

 

% change

On Board Services

$

18,108,000

 

$

14,081,000

 

28.6%

Food Service

 

10,943,000

 

 

10,196,000

 

7.3%

Retail

 

17,701,000

 

 

19,593,000

 

(9.5%)

Military

 

12,881,000

 

 

13,585,000

 

(5.2%)

National Restaurant Chain

 

6,830,000

 

 

3,897,000

 

73.9%

Net Sales

$

66,463,000

 

$

61,352,000

 

8.3%


Our net sales of $66,463,000 for the first three quarters of fiscal year 2008 increased $5,111,000, or 8.3%, over the first three quarters of fiscal year 2007 sales of $61,352,000.  We do not have any defined segments since all of our products are produced similarly despite the sales channel or area of distribution.  Our new product sales of $13,525,000 in the first three quarters of fiscal year 2008 increased $202,000, or 2.3%, over the first three quarters of fiscal year 2007 new product sales of $13,223,000.  These new product sales are defined as sales during the first year of introduction.  


For the first three quarters of fiscal year 2008 we had gains in three of our five channels.  Our National Restaurant Chain sales of $6,830,000 for the first three quarters of fiscal 2008 increased $2,933,000, or 73.9%, over the first three quarters of fiscal 2007 sales of $3,897,000, reflecting continued product acceptance in larger chain restaurants.  Our On Board Services sales of $18,108,000 for the first three quarters of fiscal year 2008 increased $4,027,000, or 28.6%, over the first three quarters of fiscal year 2007 sales of $14,081,000, which reflects sales to additional new airlines and continued expansion in existing carriers.  Our Food Service sales of $10,943,000 for the third quarter of fiscal year 2008 increased $747,000 or 7.3%, over the first three quarters of fiscal year 2007 sales of $10,196,000 due primarily from increased revenues from hotel banqueting. Retail sales decreased 9.5% from $19,593,000 in the first three quarters of fiscal 2007 to $17,701,000 in the first three quarters of fiscal 2008, which is due primarily to reduced promotions for our products in Costco.  Military sales decreased 5.2% from $13,585,000 in the first three quarters of fiscal 2007 to $12,881,000 in the first three quarters of fiscal 2008, which is due primarily to some restructuring in Military contracting.  While we consider new products and channel information helpful to the reader we cannot forecast any particular trends for our sales as a result of such information.  Our sales development cycle can run over one year in certain markets before recognizing a sale.  


GROSS MARGIN

The gross margin decreased during the first three quarters of fiscal year 2008 to 20.0%, compared to 22.8% in the prior year. This margin reduction was primarily attributable to higher raw materials costs, fuel surcharges, continued increases in facility expansion and increased costs associated with new product introductions. We have completed price increases through all the sales channels but with continued rising costs it may be necessary to raise prices further.  In addition, our France plant incurred some operational expense increases as compared to the prior year period.  Our French operation is under close review by management and is undergoing some changes to improve operations, purchasing and development.  We expect that these changes will be effected during the fourth quarter of



13



fiscal year 2008 and we believe that such changes will improve margins by the end of first quarter of fiscal year 2009.


RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses for the first three quarters of fiscal year 2008 increased $172,000, or 26.6%, to $819,000 from the first three quarters of fiscal year 2007 expenses of $647,000.  Most of the research and development costs are incurred well before an actual sale and the cycle can last over one year in certain markets.  The expense increase is primarily related to increased salaries for additional staff.


SELLING AND MARKETING EXPENSES

Our selling and marketing teams are focused on customers primarily in the U.S. and Europe.  Expenses for the first three quarters of fiscal year 2008 increased $233,000, or3.8%, to $6,300,000 over the first three quarters of fiscal year 2007 expenses of $6,067,000 (selling and marketing expenses represented 9.5% and 9.9% of revenue for the first three quarters of fiscal years 2008 and 2007, respectively).  This increase was primarily related to increased promotional expenses related to the rugby world cup of $201,000, salaries of $128,000, consulting expenses of $390,000, reclassification of certain costs to general and administrative expenses of $93,000, partially offset by a reduction in costs associated with in-store demonstrations of $237,000.


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the first three quarters of fiscal year 2008 increased $2,049,000, or 46.9%, to $6,421,000 over the first three quarters of prior fiscal year 2007 expenses of $4,372,000 (general and administrative expenses represented 9.7% and 7.1% of revenue for the first three quarters of fiscal 2008 and 2007, respectively).  This increase was primarily due to layoffs in our French operation totaling $590,000, salaries and benefits from additional staff and salary expenses of $342,000, public company expenses of $185,000, bad debt increase of $183,000, reclassification of certain costs to selling and marketing expenses of $93,000, financing charges of $110,000, information technology expenses of $93,000, rent expenses of $55,000 and broker fees $62,000.


NON-OPERATING INCOME AND EXPENSE

Non-operating expenses increased to $147,000 for the first three quarters of fiscal year 2008 from $141,000 in the first three quarters of fiscal year 2007.  This decrease is due primarily to the increase in Other income from consulting and some sous-vide training outside of Europe offset by interest expense of $149,000 relating to the increased outstanding borrowings in the U.S. and France.


(LOSS) INCOME BEFORE INCOME TAXES

Loss before income taxes in the first three quarters of fiscal year 2008 of $385,000 decreased substantially (114.9%) from income before income taxes of $2,772,000 for the first three quarters of fiscal year 2007.  This decrease was primarily related to lower gross margin percentages, principally from higher raw material costs resulting in approximately a $1,525,000 decrease in margins as well as higher general and administrative, selling and marketing and research and development expenses.


INCOME TAXES

We recorded a benefit for income taxes of $207,000 and $7,879,000 for the first three quarters of fiscal years 2008 and 2007, respectively. Our effective income tax rate for the first three quarters of fiscal year 2008 was computed to be 53.8% as compared to 284.2% for the first three quarters of fiscal year 2007, which was based on minimum tax payments and a full valuation allowance on our deferred tax assets.


In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (“FIN 48”).  FIN 48 addresses uncertainty in tax positions recognized in a company’s financial statements and stipulates a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return.  We adopted FIN 48 on July 1, 2007 and the effect of applying the provisions of this interpretation was not material.






14



NET (LOSS) INCOME

Net loss of $178,000 for the first three quarters fiscal year 2008 decreased $10,945,000 from $10,767,000 in the first three quarters of fiscal year 2007.  The primary reason for the decrease was lower gross margin and increases in research and development, sales and marketing, general and administrative expenses and income taxes.




15



LIQUIDITY AND CAPITAL RESOURCES


Selected financial ratios for the forty weeks ended April 5, 2008 and March 31, 2007 were as follows:


 

 

 April 5,

 

March 31,

 

 

2008

 

2007

Liquidity Ratios

 

 

 

 

Current ratio

 

1.91

 

1.72

Receivables turnover

 

15.2

 

16.7

Days sales in receivables

 

34.3

 

42.6

Inventory turnover

 

8.1

 

8.5

Days sales in inventory

 

70.4

 

75.9

Leverage Ratio

 

 

 

 

Long-term debt to equity

 

25.9%

 

18.9%

Operating Ratios

 

 

 

 

Return on investment

 

-0.7%

 

43.7%

Return on assets

 

-0.4%

 

24.0%


Cash, cash equivalents and short-term marketable securities were $209,000 at the end of the third quarter of fiscal year 2008 compared to $546,000 at the end of fiscal year 2007.


During the first three quarters of fiscal year 2008, cash generated by operating activities was $1,309,000, compared to a usage of $472,000 in the first three quarters of fiscal year 2007. The increase in cash generated by operating activities was primarily due to changes in working capital: decreases in inventory of $2,138,000 and increases in accounts payable and accrued expenses of $247,000, which were partially offset by increases in accounts receivable of $1,797,000.


Cash used in investing activities was $2,041,000 in the first three quarters of fiscal year 2008, compared to $3,340,000 in the first three quarters of fiscal year 2007. The decrease was due primarily to the completion of expansion activities at the U.S. facility. Projected capital expenditures for fiscal year 2008 are estimated to be between $3,000,000 and $5,000,000.


Cash provided by financing activities was $299,000 in the first three quarters of fiscal year 2008, compared to $2,889,000 in the first three quarters of fiscal year 2007.  Our line of credit now sweeps automatically and debt proceeds are not individual transactions as in the past.  Our lines of credit total over $2,000,000 with a variable interest rate between 4.95% and 5.5%,  

   

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS


Our significant contractual obligations as of April 5, 2008 were for debt, asset retirement obligations and capital and operating leases. Debt by year of maturity and future rental payments under operating lease agreements as of April 5, 2008 are presented below and there were no material changes during the first two quarters of fiscal year 2008.  We have not engaged in off-balance sheet financing, commodity contract trading or significant related party transactions.


 

 

 

 

Payments Due by Period

Contractual Obligations

Total

 

Less than

1 year

 

1 - 3 years

 

4 - 5 years

 

More than

5 years

Debt payable – current

$

2,953,000 

 

$

2,953,000 

 

$

— 

 

$

— 

 

$

— 

Debt payable – long term

 

5,772,000 

 

 

     — 

 

 

2,358,000 

 

 

1,369,000 

 

 

2,045,000 

Capital leases

 

27,000 

 

 

8,000 

 

 

13,000 

 

 

6,000 

 

 

— 

Operating leases

 

4,347,000 

 

 

776,000 

 

 

1,284,000 

 

 

1,176,000 

 

 

1,111,000 

Interest

 

838,000 

 

 

208,000 

 

 

307,000 

 

 

147,000 

 

 

176,000 

Total

$

13,937,000 

 

$

3,945,000 

 

$

3,962,000 

 

2,698,000 

 

 $

3,332,000




16



Assuming that there are no significant changes to our business plan, management also anticipates generating positive cash flow from operations during fiscal year 2008.  Management believes that the combination of cash on hand, cash flows from operations and available credit facilities will provide sufficient liquidity to meet our ongoing cash requirements for the foreseeable future.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Derivative Financial Instruments.  We do not hold or issue derivative financial instruments for trading purposes. 

 

Interest Rate Exposure.  Based on our overall interest rate exposure during the first three quarters of fiscal year 2008 and assuming similar interest rate volatility in the future, a near-term (12 months) change in interest rates would not materially affect our consolidated financial position, results of operation or cash flows. 

 

Foreign Currency Exchange Exposure.  Our revenue, expense and capital purchasing activities are primarily transacted in U.S. dollars.  We have one foreign operation that exposes us to translation risk when the local currency financial statements are translated to U.S. dollars.  Since changes in translation risk are reported as adjustments to stockholders' equity, a 10% change in the foreign exchange rate would not have a material effect on our financial position, results of operation or cash flows.  For the first three quarters of fiscal year 2008, a 10% change in the foreign exchange rate would have increased or decreased our consolidated net income by approximately $72,000.


ITEM 4.

CONTROLS AND PROCEDURES


Our management evaluated, with the participation of our principal executive officer and our principal financial officer, the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report.  Based on that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC.


There have been no changes in our internal control over financial reporting that occurred during the quarter ended April 5, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all errors and fraud.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.  Further, the design of a control system must reflect the fact that there are resource constraints and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



17



CUISINE SOLUTIONS, INC.


PART II: OTHER INFORMATION


ITEM 1.

LEGAL PROCEEDINGS.


Neither we, nor our subsidiary are currently subject to any material legal proceeding, nor, to our knowledge, is any material legal proceeding threatened against us or our subsidiary.

 

ITEM 1A.

RISK FACTORS.


Our business is subject to certain risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our stock. For a discussion of these risks, please refer to the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended June 30, 2007 filed by us with the SEC on September 21, 2007 and our Quarterly Report on Form 10-Q for the quarter ended December 15, 2007 filed by us with the SEC on January 24, 2008.


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Not applicable.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


Not applicable.


ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


Not applicable


ITEM 5.

OTHER INFORMATION


On February 7, 2008, our Board of Directors approved amended and restated bylaws of the Company in order to, among other things, impose certain advance notice requirements that must be met for nominations of persons for election to the board of directors and the proposal of business to be considered by stockholders.

 

ITEM 6.

EXHIBITS


See the exhibit index.



18



SIGNATURES


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


 

 

 

CUISINE SOLUTIONS, INC.     

 

 

 

 

 

 

 

 

 

May 14, 2008

 

By:

/s/ Ronald Zilkowski

 

 

 

 

Ronald Zilkowski

 

 

 

 

Chief Financial Officer, Treasurer and

 

 

 

 

Corporate Secretary

 



19



EXHIBIT INDEX


Exhibit

Number

 

Description

3.1

 

Second Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed on October 31, 2007.

 

 

 

3. 2

 

Amended and Restated Bylaws of Cuisine Solutions, Inc., incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K, filed on February 14, 2008.

 

 

 

31.1

 

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2

 

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1

 

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

________________





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