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Capital Resources

3 Months Ended

Jul. 02, 2011

9. Capital Resources

The Company sustained a net loss of $(5,735) for the quarter ended July 2, 2011. Net cash provided by (used in) operating activities was $(8,505) for the quarter ended July 2, 2011. The Company has amended its long-term revolving line of credit agreement several times in the last six months in order to increase borrowing capacity, change covenants in order to maintain compliance, or both. Additionally, the Company has failed certain covenants in the term note payable agreement, but covenant waivers have been received and executed. The term note lender now requires quarterly compliance certification instead of the previous annual certification.

At July 2, 2011, the Company had cash of $950, stockholders’ equity of $29,034 and available borrowings of $3,025 on the aggregate $26,000 long-term revolving line of credit. At August 13, 2011, the Company had available borrowings of $1,425 on the now aggregate $30,000 long-term revolving line of credit. The Company is pursuing, and expects to receive, additional borrowing capacity from its long-term revolving line of credit lender. The Company is also pursuing, and is optimistic that it will receive, a refinancing of the term note payable that will substantially increase available borrowings. Management announced in June 2011, effective August 19, 2011, a nearly 40% cut in production at the Pine Mountain Valley, GA facility in order to stem losses during this period of historically low sales prices and high costs. Publicly available industry information regarding other poultry producers’ cut backs should have a positive effect on markets and margins in the coming months.