-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JMO+Npe7c52//+r/1Ui4GXEg2wveJCHvqPfSw7lkOqIbk4jdG9dRjy8Fkd8wwFfT IFY2Qs2BTnAXIi7Aibu9EA== 0000950133-95-000526.txt : 19951002 0000950133-95-000526.hdr.sgml : 19951002 ACCESSION NUMBER: 0000950133-95-000526 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19950624 FILED AS OF DATE: 19950922 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIE DE FRANCE CORP CENTRAL INDEX KEY: 0000737602 STANDARD INDUSTRIAL CLASSIFICATION: 2030 IRS NUMBER: 520948383 STATE OF INCORPORATION: DE FISCAL YEAR END: 0629 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12800 FILM NUMBER: 95575591 BUSINESS ADDRESS: STREET 1: 85 SOUTH BRAGG STREET STREET 2: SUITE 600 CITY: ALEXANDRIA STATE: VA ZIP: 22312 BUSINESS PHONE: 7034429600 MAIL ADDRESS: STREET 1: 85 SOUTH BRAGG ST STREET 2: SUITE 600 CITY: ALEXANDRIA STATE: VA ZIP: 22312 10-K 1 VIE DE FRANCE 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------------------- FORM 10-K (MARK ONE) XX ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - -- EXCHANGE ACT OF 1934 /FEE REQUIRED/ FOR THE FISCAL YEAR ENDED: June 24, 1995 ------------- - --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 /NO FEE REQUIRED/ FOR THE TRANSITION PERIOD FROM ___________________ TO ______________________ COMMISSION FILE NUMBER: 0-12800 ------------------ VIE DE FRANCE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 52-0948383 -------- ---------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
85 South Bragg Street, Suite 600, Alexandria, VA 22312 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 750-9600 x350 -------------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ----------------------- None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, par value $.01 per Share -------------------------------------- (TITLE CLASS) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------ ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /_/ The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the Common Stock on August 31, 1995 as reported on the NASDAQ National Market System, was approximately $24,568,000. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of August 31, 1995, there were 13,780,793 shares outstanding of the Registrant's Common Stock. DOCUMENTS INCORPORATED BY REFERENCE Parts of the following document are incorporated by reference in Parts III and IV of this Form 10-K Report: - - Proxy Statement for Registrant's 1995 Annual Meeting of Stockholders to be filed - Items 10, 11, 12 and 13. 2 PART I ITEM 1. BUSINESS FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company is currently engaged in only one industry segment as of June 24, 1995. Accordingly, no segment data is included in the Consolidated Financial Statements for fiscal year ending June 24, 1995. GENERAL The Company is a leading manufacturer in the United States of food products for the food service industry using the sous vide food processing technology. The Company opened a USDA-approved food processing plant in Alexandria, Virginia in May 1990 and began operating another plant in Norway in August 1994. Sous vide is an advanced system of food preparation, developed in France, which cooks meats, seafood, poultry, sauces and vegetables over time using low heat. Before the cooking process begins, the product is vacuum-sealed in special plastic pouches that better maintain the food's flavor and moisture in comparison to other methods of cooking. Following the completion of the cooking process, the product can be either frozen or refrigerated for distribution. Currently, all of the Company's products are frozen. The Company also works with equipment manufacturers to provide efficient computer controlled reheating equipment to its sous vide food service providers who effectively convert their operations into sous vide kitchens and improve customer satisfaction through better and consistent product quality, while realizing reductions in their food and labor costs as a result of this technology. Vie de France was incorporated in the State of Delaware in 1974. Its principal executive offices are located at 85 South Bragg Street, Suite 600, Alexandria, VA 22312 and its telephone number at that location is (703) 750-9600. 1 3 BACKGROUND The Company commenced operations in 1972 as a wholesale producer of French bread for daily delivery to the Washington, DC area. The Company expanded its markets throughout the 1970s. In fiscal year 1979, the Company began offering its product through Company-owned retail bakeries where the products could be freshly baked throughout the day. During the 1980s, the Company expanded its frozen dough product line and developed processes to facilitate the baking of these products at the point-of-sale. As of May 1994, the Company owned and operated 31 retail units. The Company sold the Bakery Division and the Restaurant Division to Vie de France Yamazaki, Inc. in 1991 and 1994, respectively. The Company began development of the sous vide business in 1987, in conjunction with research performed previously by Nouvelle Carte France, a French company. As a result of the growth in the application of sous vide in Europe, the Board authorized the establishment of the Vie de France Culinary Corporation for the express purpose of the research and development of sous vide for the U.S. market. This Company was formed in 1987, and was later merged into Vie de France Corporation. In 1989, construction began on a 30,000 square foot plant in Alexandria, Virginia designed to manufacture its sous vide product line under the trade name Vie de France Culinary. The Culinary plant began operations in May 1990. The plant has since expanded to 50,000 square feet. During fiscal years 1991 through 1995, the Culinary Division successfully built its sous vide sales volume from zero to over $2.0 million in fiscal year 1991, $4.6 million in fiscal year 1992, $8.2 million in fiscal year 1993, $12.1 million in fiscal year 1994 and $15.0 million in fiscal year 1995. In 1992, the Company started a national direct sales organization to continue to increase sales. The Company is focusing its sales efforts on wholesale customers in the hotel industry and national/regional restaurant chains, as well as large-volume food providers such as the airline and transportation industries. In order to reduce costs, increase quality and increase production capacity, the Company is pursuing the development and construction of single product sous vide production plants located adjacent to, or in the proximity of suppliers of raw materials. One such plant, located in Norway, began production in August 1994. The Company currently has capacity in its plants to support near term sales growth. PRODUCTS The Company offers a wide range of sous vide products including entrees, side dishes, and sauces. The entree items consist of a variety of seafood, pork, beef and poultry items. Side dishes and sauces range from vegetables and rice to cream or tomato-based sauces. The products are sealed in either single or multi-serving packaging and then case-packed. Single-pack items offer the greatest flexibility to the customer, while multi-pack packaging provides increased efficiency and economy for large-volume banquets. 2 4 During fiscal year 1995, the Company began packaging its products for retail consumption. The Company is currently testing this market with a line of products being sold through outlets such as Sam's Club, a division of Wal-Mart Stores, Inc. DISTRIBUTION The Culinary Division distributes its products in a frozen state to customers nationwide and internationally primarily to Asian markets. The Company expects to expand distribution into the European markets in fiscal year 1996 in conjunction with last year's opening of the Norwegian production facility. Its products are stored in a number of regional frozen warehouses as well as at the Alexandria, Virginia plant. Major regional food service distributors, including Sage Distribution, Kraft Food Service and Sysco Food Service, purchase the product from the Company and re-sell to food service providers. Export products are transported in frozen containers via ship. RAW MATERIAL STATUS The Company buys its raw materials from a number of suppliers at market prices. While these prices may fluctuate during the year, the Company does not believe that availability poses a material risk to its business. The majority of product sales are subject to price revision to reflect shifts in the price of raw materials. PATENTS AND TRADEMARKS AND OTHER ITEMS IMPORTANT TO OPERATING SEGMENTS The Company believes that its Vie de France trademark is important to its business success. Accordingly, it takes the necessary steps to protect it. The Company and Vie de France Yamazaki, Inc. entered into a Trademark and Service Mark License Agreement in 1991 and, in conjunction with the sale of the Restaurant Division, amended and restated this agreement. The Company holds no patents that are essential for its continued operations. CUSTOMER DEPENDENCY Food service distributors continued to be the leading market segment for the Company with fiscal year 1995 sales representing approximately 59% of total net sales. In fiscal year 1995, sales to food service distributors representing Hyatt Hotels and Marriott Hotels accounted for 32% and 21% of total net sales, respectively. Sales to the airline industry in fiscal year 1995 represented 29% of total net sales, which was comprised of sales to five national/international carriers and one regional carrier. In fiscal years 1994 and 1993, sales to food service distributors representing Marriott hotels amounted to 55% and 68% of total net sales, respectively. In fiscal year 1994, sales to food service distributors representing Hyatt hotels amounted to 16% of total net sales. Sales to distributors serving the airline industry represented 17% and 11% of total net sales in fiscal years 1994 and 1993 respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Sales and Gross Margins." 3 5 SEASONALITY Culinary sales are seasonally impacted by the hotel banquet industry, which peaks in September through December and March through June. COMPETITION The Company considers itself to be a leader in the sous vide segment of the food service industry. At present, limited competition exists within the frozen wholesale component of this segment. However, other firms exist within the retail and refrigerated components of the sous vide segment. As such, the Culinary Division primarily competes for sales against the traditional forms of food preparation, rather than against other sous vide suppliers. The Company offers value-added products, but must offer these products in a price range that makes it economically advantageous for its users to convert from traditional methods of food preparation. The Company believes its products can compete against these traditional methods in price and product performance, as well as convenience. The Company also provides a full product line of items to further compete against traditional kitchens. In addition, it offers implementation and menu development services, as well as equipment, to its customers as another means of building sales. The Company depends upon its pricing structure, menu items, and customer service programs as a means of maintaining its leadership position within the sous vide industry. RESEARCH & DEVELOPMENT For continuing operations, the Company invested $94,000, $95,000 and $67,000 in research and development activities in fiscal years 1995, 1994 and 1993, respectively. The Company invests in development on an ongoing basis in order to maintain the vitality of its product lines and to build sales. REGULATION The Company is subject to various Federal, state and local laws affecting its business, including health, sanitation and safety regulations. The Culinary-U.S. plant operates under USDA supervision over the handling and labeling of its products. The Company believes its operations comply in all material respects with applicable laws and regulations. The Company's Norwegian plant meets European Community standards and regulations. The Norwegian product, along with certain raw materials, are subject to import regulations. EMPLOYEES The Company employs approximately 110 people including full-time and part-time workers and corporate staff. 4 6 ITEM 2. PROPERTIES The Company leases its offices and its two manufacturing facilities. The Culinary-U.S. plant, located in Alexandria, Virginia, is approximately 50,000 square feet. The Culinary-Norway plant, located in Hjelmeland, Norway, is approximately 20,000 square feet. The Company's Norway plant operates under a twenty-year capital lease whereby the Company will own the facility at the end of the lease term. The Company owns substantially all of the equipment used in its facilities. Lease commitments and future minimum lease payments are shown in Note 8 to the Consolidated Financial Statements, which is included in this Form 10-K. ITEM 3. LEGAL PROCEEDINGS The Company is engaged in ordinary and routine litigation incidental to its business, but management does not believe that any amounts it may be required to pay by reason thereof will have a material effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 5 7 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS COMMON STOCK The Company's Common Stock is traded in the over-the-counter market on the NASD National Market System under the symbol VDEF. The following table sets forth for the quarters indicated the high and low sales prices per share as reported on the National Market System:
Year ended June 24, 1995 High Low First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.500 $ 3.375 Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.250 3.000 Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.375 3.000 Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.125 2.875 Year ended June 25, 1994 First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.625 $ 3.375 Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.875 3.375 Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.750 4.125 Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.750 3.875
As of September 15, 1995 there were 817 holders of record of the Company's Common Stock. 6 8 ITEM 6. SELECTED FINANCIAL DATA FIVE YEAR SUMMARY (in thousands, except per share amounts)
1995 1994 1993 1992 1991 - ---------------------------------------------------------------------------------------------------------- Net sales . . . . . . . . . . . . . . . . . . . . $ 15,707 $12,786 $9,377 $ 6,147 $ 4,676 Loss from continuing operations . . . . . . . . . (706) (476) (341) (1,982) (2,232) Net income (loss) . . . . . . . . . . . . . . . . 24 7,934 261 (2,105) (4,022) Loss from continuing operations per share . . . . (.05) (.03) (.03) (.15) (.17) Net income (loss) per share . . . . . . . . . . . .00 .58 .02 (.16) (.30) Total assets . . . . . . . . . . . . . . . . . . 29,912 30,964 19,862 20,855 33,434 Long term debt, excluding current maturities . . 2,247 0 0 0 0 Stockholders' equity . . . . . . . . . . . . . . 24,482 24,431 16,016 15,755 19,503 Dividends per share . . . . . . . . . . . . . . . -- -- -- 0.12 --
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Fiscal year 1995 represents a year in which the Company's operations were dedicated to developing and improving its sous vide food manufacturing business. As part of its strategy to open new markets and reduce its cost of raw materials, the Company established and opened its second plant, in Norway, which is the world's pre-eminent source of salmon. The current year results reflect continued improvement in both sales and earnings for its U.S. operations offset, however, by losses associated with the Norwegian operations. These results, when taken together with investment income and a gain associated with discontinued operations, produced a profitable fiscal year 1995. SALES AND GROSS MARGINS The Company's sales of sous vide products are generally to hotels, airlines, and other food service providers who order through their distributor networks. In fiscal year 1993, the Company's customer base included Marriott hotels along with one airline. In fiscal year 1994, a second national hotel chain, Hyatt hotels, became a significant customer. Total food service sales represented 71% of total net sales, with airline customers representing approximately 17% of total net sales. During fiscal year 1995, the Company's hotel sales amounted to 59% of total 7 9 net sales, with Hyatt and Marriott representing 32% and 21% of total net sales respectively. As of June 24, 1995, approximately 104 Hyatt and 90 Marriott properties were using sous vide products. The Company has also significantly expanded its sales to the airline industry, now selling to six major airlines. The Company expanded its sales within the foodservice market by adding a national health care chain, Unicare, to its customer base. In addition, it also began to sell to the retail market, through the introduction of a specific product line developed for Sam's Club, a division of Wal-Mart Stores, Inc. This effort began during the fourth quarter of fiscal year 1995, and thus, does not represent any significant volume of sales in fiscal year 1995. The Company believes that its sales to Sam's Club and other retail channels can reach significant levels in the upcoming fiscal year. As a result of the exposure stemming from these two new accounts, the Company has received inquiries from a number of prospective customers. Discussions and recipe development work are currently underway with these prospective customers. A comparison of net sales, gross margin percentages and losses from operations follows:
YEAR ENDED JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ---- ---- ---- Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,707,000 $ 12,786,000 $ 9,377,000 Gross margin percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 30% 23% 22% Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,447,000) $ (1,205,000) $ (1,172,000)
Fiscal year 1995 sales increased by 23% over fiscal year 1994 to $15,707,000 from $12,786,000. This increase is attributed to substantial growth within the airline segment. Sales to Hyatt increased during fiscal year 1995, offsetting a decrease of sales to Marriott. During fiscal year 1994, as compared to fiscal year 1993, total sales increased by 36% to $12,786,000 from $9,377,000. This growth is primarily attributable to the expansion of sales to Hyatt and airline customers. Gross margin as a percentage of total net sales increased to 30% from 23% in fiscal year 1995 versus fiscal year 1994 due primarily to lower raw material costs during the year along with increased labor productivity. These improvements were offset, somewhat, due to the start-up effects of the Norway plant. Gross margin improved by one percentage point in 1994 versus 1993 due to the benefits associated with higher volume in the Alexandria, Virginia plant. The Company expects the gross margin to further improve as its Norwegian subsidiary builds its sales volume. Over the long term, a further reduction of costs will be realized from the construction of highly efficient mono-product facilities that are closer to the source of that product's raw materials, along with the purchasing leverage created from increased volumes. The Company has successfully expanded its product line and manufactures seafood, beef, poultry, vegetable and sauce products packaged in bulk or multiple servings suitable for banquet 8 10 or larger food service situations as well as single portion packs suitable for restaurant or individual service. SELLING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES A comparison of selling, distribution and general administrative costs follows:
YEAR ENDED JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ---- ---- ---- Selling and distribution costs . . . . . . . . . . . . . . . . . . . . . . . $ 2,183,000 $ 1,344,000 $ 1,171,000 General administrative costs . . . . . . . . . . . . . . . . . . . . . . . . 3,038,000 2,235,000 1,904,000 --------- --------- --------- $ 5,221,000 $ 3,579,000 $ 3,075,000 ========= ========= =========
Selling, distribution and administrative costs increased as a percentage of net sales to 33% from 28%. For fiscal year 1995, these costs increased by 46% as compared to the prior year, to $5,221,000 from $3,579,000. This increase is due to the selling expenses associated with Norway, for which there were few outside sales, additional sales personnel in the United States who are just beginning to generate sales, and residual corporate costs that still are present within the Company, but were partially allocable to the former Restaurant Division in prior years. These costs decreased as a percentage of net sales from 33% to 28% in fiscal year 1994 compared to fiscal year 1993, as the rate of sales growth offset the rate of real dollar growth in this expense category. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased by $356,000 to $1,053,000 for fiscal year 1995 versus $697,000 for fiscal year 1994. This increase is attributable to the depreciation associated with the Norway plant. For fiscal year 1994 as compared to fiscal year 1993, depreciation and amortization increased by $79,000 from 1993's level of $618,000. NONOPERATING INCOME AND EXPENSE Investment income consists of returns earned on funds received from the sale of the Restaurant Division together with interest income associated with a $4.9 million collateralized European bank deposit, which earns interest at a rate which the Company believes to be in excess of the prevailing short-term interest rates in the United States. Interest expense relates to the borrowings, including a capital lease, associated with the Company's Norwegian subsidiary. At June 24, 1995, the Company, through its Norwegian subsidiary, had borrowings of approximately $3.0 million, bearing interest at rates ranging from 7.25% to 10.0%. It is anticipated that these borrowings will remain outstanding during the upcoming fiscal year. 9 11 PROVISION FOR TAXES The provision for income taxes in fiscal year 1995 relates primarily to the difference between fiscal year 1994's estimated income tax accrual for continuing operations and that same year's actual income expense computed during fiscal year 1995. The net effect of a variety of timing differences for fiscal year 1994 resulted in additional income, and therefore, additional income tax. The impact of this difference is reflected in the current year's operating results. In fiscal year 1994, the gain generated by the sale of the Restaurant Division resulted in the Company fully utilizing its available net operating loss tax carryforwards of approximately $2.3 million. As part of the accounting for the sale of the former Restaurant Division, income taxes were allocated between results from continuing operations, loss from discontinued operations and the gain on sale of discontinued operations based on the taxable income or loss of each component. As a result, $116,000 was recorded as a tax benefit from continuing operations. In addition, a tax benefit of $687,000 and a tax provision of $4,438,000 were recorded against discontinued operations and gain on disposal of discontinued operations, respectively, which amounts to a total net tax provision of $3,635,000 charged against fiscal year 1994 earnings. Because of the Company's operating losses, no net provision for income taxes was recorded in fiscal year 1993. In fiscal year 1993, a tax benefit of $135,000 was recorded against the loss from continuing operations, a provision of $258,000 was recorded against income from discontinued operations, and an extraordinary gain of $123,000 related to the use of net operating loss carryforwards fully offset the net income tax provision. DISCONTINUED OPERATIONS (Loss) income from discontinued operations reflects the operating results attributable to the operations of the former Restaurant Division, net of income tax effects, in fiscal years 1995, 1994, and 1993. The loss for fiscal year 1994 also includes the estimated costs to settle a recent claim by the Environmental Protection Agency related to the former Bakery Division (which was sold in 1991) of $250,000. Gain from discontinued operations for the current year relates to the reduction of reserves previously established for the former Restaurant Division. In the third quarter of fiscal year 1995, the Company reduced its reserves by $213,000, and by an additional $517,000 in the fourth quarter. These reductions were possible due to the expiration of certain contingent liabilities. The gain on the sale of the Restaurant Division in fiscal year 1994 is net of income taxes of $4.4 million. Net proceeds on the sale amounted to $17.6 million, after transaction and related direct disposal costs of approximately $2.8 million. In addition, Yamazaki assumed certain outstanding liabilities of the Division. 10 12 IMPACT OF INFLATION AND THE ECONOMY Inflation has from time to time had a material impact on the Company's expenses. Inflation in labor and ingredient costs can significantly affect the Company's operations. Many of the Company's employees are paid hourly rates related to, but generally higher than the federal minimum rates. The Company's sales pricing structure allows for the fluctuation of raw material prices. As a result, market price variations do not significantly affect the gross margin realized on product sales. Customer sensitivity to price changes can influence the overall sales of individual products. LIQUIDITY AND CAPITAL RESOURCES The Company has experienced a decline in its liquidity over the past year. The combined total of the cash and short-term investment balances was $14,210,000 and $17,887,000 at June 24, 1995 and June 25, 1994, respectively. Additionally, the Company held investments of $2,025,000 and $5,050,000 at June 24, 1995 and June 25, 1994, respectively, with maturities greater than one year. In addition, the Company holds one preferred stock investment of $500,000 at June 24, 1995. This decrease in liquidity is a direct result of the increased working capital requirements for the Company along with an increase in the Notes Receivable to a related party. Cash used by operations amounted to $6,056,000 and $990,000 in fiscal years 1995 and 1994 respectively, as compared to cash provided of $1,513,000 for fiscal year 1993. The use of cash in fiscal year 1995 resulted primarily from the payment of income taxes related to the sale of the former Restaurant Division, along with increases in inventory, receivables, and notes receivable. The use of cash in fiscal year 1994 resulted primarily from increases in inventory and receivables relating to increased sales volumes, as well as income tax payments. Fiscal year 1993 cash generated by operations primarily reflects the receipt of a $1,500,000 income tax refund. Cash in the amount of $1,095,000 was provided by investing activities, representing a decrease in investments needed to finance capital expenditures of $1,490,000 and increases in inventories and receivables. Cash in the amount of $7,487,000 was generated by investing activities in fiscal year 1994, including $17,600,000 of cash generated from the sale of the Restaurant Division, which was partially offset by cash expenditures totaling $3,117,000 for property additions for both continuing and discontinuing operations. Fiscal year 1995's investments in capital projects included, approximately $400,000 to complete construction of the Norway plant, $250,000 for a new packaging line at the Alexandria, Virginia facility and approximately $450,000 for other equipment at Alexandria. Fiscal year 1996 equipment costs of approximately $900,000 are expected for the Alexandria facility with less than $100,000 expected for the Norway facility. Cash in the amount of $1,344,000 was generated by financing activities, representing the debt acquired by the Norway subsidiary, offset by $890,000 in repayments. Cash in the amount of $448,000 was generated through the exercise of stock options during fiscal year 1994, while no financing activities took place during fiscal year 1993. 11 13 The Company continues to evaluate the possibility of establishing additional production facilities in order to increase efficiencies. One such way would be to produce sous vide products closer to the source of supply and as a means to enter new markets. The cost of such facilities ranges from approximately $1,000,000 to $5,000,000, depending upon the nature of the product and the production volume desired. Local governments may provide subsidies and other assistance in connection with such facilities. It is possible that the Company may use some of its cash resources to fund these efforts. The Company's Norwegian subsidiary has secured a working capital commitment for its liquidity needs in Norway in the form of an overdraft facility. As of June 24, 1995, $603,000 was outstanding under this overdraft facility. Subsequent to year-end, the subsidiary reduced its overdraft facility balance, and can borrow up to $600,000 under this commitment. The Company has on deposit $4.9 million with a European bank. This deposit is denominated in U.S. dollars and earns a rate of return in excess of the prevailing short-term rates in the United States. This deposit has been pledged as collateral to the bank so that the bank may loan funds to a French subsidiary of Setucaf S.A., a French company which is 21% owned by Food Research Corporation, the majority stockholder of the Company. This deposit is redeemable on thirty days notice without penalty. The Company believes no material risk to principal is associated with this deposit. FUTURE PROSPECTS In fiscal 1996 the Company intends to build upon the broader sales base established in fiscal 1995. While modest growth is expected in sales to the hotel industry, the Company believes that double-digit sales growth is possible within the airline industry, and anticipates substantial sales gains in the health care and retail segments. The Company will continue to explore and develop its emerging markets and formats that show promise of generating significant sous vide sales. Although the course of the European business is difficult to forecast, it is management's expectation that its Norwegian operations will reduce its losses substantially in fiscal 1996. If so, the Company will move towards, and may attain, overall operating profitability during the coming year. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item 8 is included at Item 14(a)(1) and (2). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None 12 14 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required under this Item 10 with respect to directors and nominees for director is shown in the Proxy Statement to be filed under Regulation 14A, under the caption "Election of Directors", and such information is incorporated herein by reference. EXECUTIVE OFFICERS The following list and narrative sets forth the name and age of each present executive officer of the Company who is not also a director or director nominee, all positions held by the person with the Company, the year in which the person first became an officer, and the principal occupations of each person during the past five years.
NAME AGE OFFICE HELD WITH COMPANY SINCE - ---- --- ------------------------ ----- Alan V. Esenstad 37 Vice President, Finance; Chief Financial Officer; 1991 Secretary and Treasurer. 1992 Arthur J. Stouffs 52 Vice President, Culinary Sales. 1990
Mr. Esenstad was appointed to the position of Vice President, Finance, Secretary and Treasurer in June 1992. He was previously appointed Chief Financial Officer and Director of Finance and Accounting in July 1991. He served as Controller of Vie de France Corporation from July 1989 to June 1991. He was Director of Accounting for the Company's former Bakery Division from July 1988 to June 1989. He came to the Company in August 1987 as the Manager of Cost and Financial Analysis for the Bakery Division and worked in that position until June 1988. Prior to joining the Company, Mr. Esenstad was a Financial Manager for Martin Marietta Corporation from 1983 to July 1987. Mr. Esenstad is a Certified Public Accountant and holds a MBA degree in finance. Mr. Stouffs has served in the capacity of Vice President of Culinary Sales since 1990, and was appointed an officer of the Company in 1994. Previously Mr. Stouffs held various positions in the Company's former Bakery Division including Director of Operations and Director of Sales - National Accounts from 1980 through 1990. ITEM 11. EXECUTIVE COMPENSATION The information required under this Item 11 is shown in the Proxy Statement to be filed under Regulation 14A, under the caption "Executive Compensation", and such information, except for the information required by Item 402(k) and Item 402(l) of Regulation S-K, is incorporated herein by reference. 13 15 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required under this Item 12 is shown in the Proxy Statement to be filed under Regulation 14A, under the caption "Voting Securities and Principal Holders Thereof", and such information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required under this Item 13 is shown in the Proxy Statement to be filed under Regulation 14A, under the caption "Certain Transactions", and such information is incorporated herein by reference. 14 16 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Index to Financial Statements
Page ---- (1) Financial Statements: Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1 Consolidated Balance Sheets - June 24, 1995 and June 25, 1994 . . . . . . . . . . . . . . F-2 Consolidated Statements of Operations - Fiscal Years Ended June 24, 1995, June 25, 1994, and June 26, 1993 . . . . . . . . . . . . . . . . . . . F-3 Consolidated Statements of Changes in Stockholders' Equity - Fiscal Years Ended June 24, 1995, June 25, 1994, and June 26, 1993 . . . . . . . . . . . . . F-4 Consolidated Statements of Cash Flows - Fiscal Years Ended June 24, 1995, June 25, 1994 and June 26, 1993 . . . . . . . . . . . . . . . . . . . . F-5 Notes to Consolidated Financial Statements - June 24, 1995 . . . . . . . . . . . . . . . F-6 (2) Financial Statement Schedules: Schedule I--Marketable Securities and Other Investments . . . . . . . . . . . . . . . . F-16 Schedule II--Amounts Receivable from Related Parties . . . . . . . . . . . . . . . . . . F-17 Schedule V--Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . F-18 Schedule VI--Accumulated Depreciation and Amortization of Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19 Schedule VIII--Valuation and Qualifying Accounts and Reserves . . . . . . . . . . . . . . F-20
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. 15 17 (3) Exhibits: The following exhibits are incorporated in this report by reference from identically numbered exhibits to the Company's Amendment to its Annual Report for the year ended June 27, 1992 on Form 8 dated February 26, 1993: Exhibit No. Description of Exhibit ------ ---------------------- 3-A The Certificate of Incorporation of the Company, as amended to date. 3-B The By-Laws of the Company, as amended to date. The following exhibits are incorporated in this report by reference from an identically numbered exhibit to the Company's Annual Report on Form 10-K for the year ended June 29, 1991: 10.46 The Company's Proxy Statement for a Special Meeting of Stockholders, dated June 7, 1991, together with a conformed copy of the Asset Purchase Agreement between Vie de France Corporation and Vie de France Bakery Yamazaki, Inc. dated May 7, 1991. The following exhibits are incorporated in this report by reference from the Company's two Registration Statements on Form S-8, dated April 5, 1993: 10.52 The Company's 1986 Stock Option Plan, as amended. 10.53 The Company's 1992 Stock Option Plan. The following exhibits are incorporated in this report by reference from an identically numbered exhibit to the Company's Annual Report on Form 10-K for the year ended June 25, 1994: 10.54 The Company's Proxy Statement for a Special Meeting of Stockholders, dated April 28, 1994, together with a conformed copy of the Asset Purchase Agreement between Vie de France Corporation and Vie de France Bakery Yamazaki, Inc. dated March 4, 1994. 10.55 Lease dated March 30, 1989 and as amended, between the Company and Duke-Shirley Industrial Development, LP, with respect to the lease of property at 4106 Wheeler Avenue, Alexandria VA. 10.56 Management contract between the Company and Food Investors Corporation dated October 27, 1993, with respect to payment in reimbursement of expenses and other costs incurred by Food Investors Corporation on the behalf of the Company. 16 18 10.57 Letter of intent, dated August 2, 1994, between the Company's Norwegian subsidiary, Vie de France Norway AS and Hjelmeland Municipality, Norway, with respect to the lease of the property at Hjelmeland Municipality. The following exhibits are filed as exhibits to this report in the indicated sections. 10.58 Fourth and Fifth Amendments, dated January 30, 1995 and April 7, 1995, respectively, to lease dated March 30, 1989 between the Company and Duke-Shirley Industrial Development, LP, with respect to the lease of property at 4106 Wheeler Avenue, Alexandria VA. 10.59 Lease dated February 24, 1995 between the Company and Hjelmeland Municipality with respect to the lease of property at Hjelmeland, Norway. 10.60 Management contract between the Company and Food Investors Corporation dated July 31, 1995, with respect to payment in reimbursement of expenses and other costs incurred by Food Investors Corporation on the behalf of the Company. 10.61 Loan agreement dated October 18, 1993 between Vie de France Norway AS, a wholly-owned subsidiary of Vie de France Corporation and Den norske Bank, and related documents, with respect to borrowings made by the subsidiary. 23 Consent of Independent Accountants. 27 Financial Data Schedule (b) Reports on Form 8-K: None (c) Exhibits: Exhibits required to be filed in response to this paragraph of Item 14 are listed above in subparagraph (a)(3). (d) Financial Statement Schedules: Schedules and reports thereon by independent accountants required to be filed in response to this paragraph of Item 14 are listed in Item 14(a)(2). 17 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. VIE de FRANCE CORPORATION (Registrant) By: /s/ Stanislas Vilgrain ------------------------ Stanislas Vilgrain President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date - ---------------------------------- ------------------------------- ------------------------- /s/ Jean-Louis Vilgrain Chairman of the Board September 22, 1995 - ---------------------------------- ------------------------- Jean-Louis Vilgrain /s/ Stanislas Vilgrain President, September 22, 1995 - ---------------------------------- Chief Executive Officer ------------------------- Stanislas Vilgrain /s/ Richard M. Tolbert Director September 22, 1995 - ---------------------------------- ------------------------- Richard M. Tolbert /s/ Bruno Goussault Director September 22, 1995 - ---------------------------------- ------------------------- Bruno Goussault Director - ---------------------------------- ------------------------- Alexandre Vilgrain /s/ Alan V. Esenstad Chief Financial Officer September 22, 1995 - ---------------------------------- (Principal Financial and Accounting Official) ------------------------- Alan V. Esenstad
18 20 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders Vie de France Corporation In our opinion, the consolidated financial statements listed in the index appearing under items 14(a)(1) and (2) present fairly, in all material respects, the financial position of Vie de France Corporation and its subsidiaries at June 24, 1995 and June 25, 1994, and the results of their operations and their cash flows for each of the three years in the period ended June 24, 1995, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PRICE WATERHOUSE LLP Washington, D.C. August 25, 1995 F-1 21 VIE DE FRANCE CORPORATION CONSOLIDATED BALANCE SHEETS
JUNE 24, JUNE 25, 1995 1994 ------------- -------------- ASSETS Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,314,380 $ 8,931,476 Short-term investment, related party . . . . . . . . . . . . . . . . . . . . . . . . . 4,900,000 4,900,000 Investments, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,995,298 4,055,365 Accounts receivable trade, less allowance for doubtful accounts of $5,000 and $2,000 . . . . . . . . . . . . . . . . . . . . . . . 1,645,741 1,413,675 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,349,798 1,403,051 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,990 181,473 Current portion of notes receivable, related party . . . . . . . . . . . . . . . . . . 1,551,438 525,076 Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688,646 452,939 ---------- ---------- Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,564,291 21,863,055 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,025,258 5,050,388 Fixed assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,970,945 3,812,195 Note receivable, related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516,646 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 834,371 238,697 ---------- ---------- Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,911,511 $ 30,964,335 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,486,035 $ 1,418,963 Accrued payroll and related liabilities . . . . . . . . . . . . . . . . . . . . . . . . 517,773 622,166 Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 734,368 Reserves for store closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194,900 533,832 Other accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,838 727,960 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,989 3,230,280 ---------- ---------- Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,182,903 6,533,201 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,247,048 ---------- ---------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,429,951 6,533,201 ---------- ---------- Stockholders' equity Common stock - $.01 par value, 20,000,000 shares authorized, 14,034,620 and 14,008,370 shares issued and 13,778,543 and 13,752,293 shares outstanding . . . . . . . . . . . . . . . . . . . . 140,346 140,084 Class B stock - $.01 par value, 175,000 shares authorized, none issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,269,214 21,219,416 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,502,775 4,478,575 Less cost of 256,077 shares held in treasury . . . . . . . . . . . . . . . . . . . . . (1,439,844) (1,439,844) Translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,069 32,903 ---------- ---------- Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,481,560 24,431,134 ---------- ---------- Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . . . $ 29,911,511 $ 30,964,335 ========== ==========
See accompanying notes to consolidated financial statements. F-2 22 VIE DE FRANCE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED ------------------------------------------- JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ------------- -------------- ------------- Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,706,949 $ 12,785,517 $ 9,377,125 Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,046,221 9,830,243 7,297,668 ----------- ---------- ----------- Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,660,728 2,955,274 2,079,457 Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . 5,220,961 3,579,452 3,074,921 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . 1,052,632 697,204 617,650 Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (166,238) (116,452) (441,541) ----------- ---------- ----------- Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . (1,446,627) (1,204,930) (1,171,573) ----------- ---------- ----------- Nonoperating income Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,255,793 616,279 697,376 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . (192,482) (3,183) (1,713) Foreign exchange loss, net . . . . . . . . . . . . . . . . . . . . . . . (15,733) ----------- ---------- ----------- Net nonoperating income . . . . . . . . . . . . . . . . . . . . . . . 1,047,578 613,096 695,663 ----------- ---------- ----------- Loss from continuing operations before income taxes and extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . (399,049) (591,834) (475,910) Income tax (provision) benefit . . . . . . . . . . . . . . . . . . . . . . . (306,751) 116,000 135,000 ----------- ---------- ----------- Loss from continuing operations before extraordinary item . . . . . . . . . . (705,800) (475,834) (340,910) ----------- ---------- ----------- Discontinued operations, net of taxes (Loss) income from discontinued operations . . . . . . . . . . . . . . . (813,365) 478,889 Gain on sale of discontinued operations . . . . . . . . . . . . . . . . . 730,000 9,223,466 ----------- ---------- ----------- Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . 730,000 8,410,101 478,889 ----------- ---------- ----------- Income before extraordinary item . . . . . . . . . . . . . . . . . . . . . . 24,200 7,934,267 137,979 Extraordinary item, use of net operating loss carryforwards . . . . . . . . . 123,000 ----------- ---------- ----------- Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,200 $ 7,934,267 $ 260,979 =========== ========== =========== Earnings per common share: Continuing operations before extraordinary item . . . . . . . . . . . . . $ (0.05) $ (0.03) $ (0.03) Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . 0.05 0.61 0.04 Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01 ----------- ---------- ----------- Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00 $ 0.58 $ 0.02 =========== ========== =========== Weighted average shares outstanding . . . . . . . . . . . . . . . . . . . . . 13,767,852 13,676,762 13,567,793
See accompanying notes to consolidated financial statements. F-3 23 VIE DE FRANCE CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Total Additional Retained Stock- Par Paid-In Earnings Treasury Translation holders' Value Capital (Deficit) Stock Adjustment Equity ---------- ------------- -------------- ------------- ------------ -------------- Balance, June 27, 1992 $ 138,239 $ 20,773,182 $ (3,716,671) $ (1,439,844) $ 15,754,906 1993 net income 260,979 260,979 ------- ---------- ---------- ---------- ---------- ---------- Balance, June 26, 1993 138,239 20,773,182 (3,455,692) (1,439,844) 16,015,885 Stock options exercised 1,845 446,234 448,079 1994 net income 7,934,267 7,934,267 Translation adjustment $ 32,903 32,903 ------- ---------- ---------- ---------- ---------- ----------- Balance, June 25, 1994 140,084 21,219,416 4,478,575 (1,439,844) 32,903 24,431,134 Stock options exercised 262 49,798 50,060 1995 net income 24,200 24,200 Translation adjustment (23,834) (23,834) ------- ---------- ---------- ---------- ----------- ----------- Balance, June 24, 1995 $ 140,346 $ 21,269,214 $ 4,502,775 $ (1,439,844) $ 9,069 $ 24,481,560 ======= ========== ========== ========== =========== ===========
See accompanying notes to consolidated financial statements. F-4 24 VIE DE FRANCE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED -------------------------------------------- JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ------------- -------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,200 $ 7,934,267 $ 260,979 Adjustments to reconcile net income to net cash (used) provided by operating activities: Gain on sale of discontinued operations . . . . . . . . . . . . . . (730,000) (9,717,013) Depreciation and amortization, including discontinued operations . . . . . . . . . . . . . . . . . . . . . 1,052,632 1,738,344 1,601,691 Gain on disposal of fixed assets . . . . . . . . . . . . . . . . . (9,032) (66,610) Change in translation adjustment . . . . . . . . . . . . . . . . . (23,834) 32,903 Changes in assets and liabilities, net of effects of discontinued operations: (Increase) decrease in accounts receivable trade, net . . . . . . (232,066) (686,992) 9,631 Increase in inventory . . . . . . . . . . . . . . . . . . . . . . (946,747) (355,577) (177,150) Decrease (increase) in prepaid expenses . . . . . . . . . . . . . 62,483 131,774 (191,159) (Increase) decrease in notes receivable, related party . . . . . (1,543,008) 323,275 (325,798) Change in other assets, net . . . . . . . . . . . . . . . . . . . (365,008) (154,740) (18,100) Increase (decrease) in accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . 362,072 38,895 (359,345) Decrease in accrued payroll and related liabilities . . . . . . . (44,393) (213,588) (737,208) Decrease in reserve for store closings . . . . . . . . . . . . . (306,683) (Decrease) increase in other accrued taxes . . . . . . . . . . . (237,371) 316,733 (26,748) Change in income taxes, net . . . . . . . . . . . . . . . . . . . (3,128,291) (368,895) 1,542,526 ---------- --------- --------- Net cash (used) provided by operating activities . . . . . . . . . (6,056,014) (989,646) 1,512,709 ---------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Sale (purchase) of investments, net . . . . . . . . . . . . . . . . . 3,085,197 (7,105,753) Investment in preferred stock . . . . . . . . . . . . . . . . . . . . (500,000) Proceeds from sale of discontinued operations, net of transaction costs . . . . . . . . . . . . . . . . . . . . . . 17,625,294 Restaurant dispositions . . . . . . . . . . . . . . . . . . . . . . . 64,046 (114,728) Proceeds on disposal of fixed assets . . . . . . . . . . . . . . . . . 19,683 111,368 Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (1,489,912) (3,116,670) (898,545) ----------- ---------- --------- Net cash provided (used) by investing activities . . . . . . . . 1,095,285 7,486,600 (901,905) ----------- ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Additions to debt . . . . . . . . . . . . . . . . . . . . . . . . . . 2,183,995 Reductions of debt . . . . . . . . . . . . . . . . . . . . . . . . . . (890,422) Proceeds from issuance of stock . . . . . . . . . . . . . . . . . . . 50,060 448,079 ----------- ---------- --------- Net cash provided by financing activities . . . . . . . . . . . . . 1,343,633 448,079 ----------- ---------- --------- Net (decrease) increase in cash and cash equivalents . . . . . . . (3,617,096) 6,945,033 610,804 Cash and cash equivalents, beginning of period . . . . . . . . . . . 8,931,476 1,986,443 1,375,639 ----------- ---------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . . . . $ 5,314,380 $ 8,931,476 $ 1,986,443 =========== ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 152,640 $ 0 $ 0 Income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . 3,485,762 317,754 (1,542,526) Non-cash activities: Facility purchased under capital lease . . . . . . . . . . . . . . . $ 1,687,843
See accompanying notes to consolidated financial statements. F-5 25 VIE DE FRANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The financial statements include the consolidated accounts of Vie de France Corporation and its subsidiaries (collectively "the Company"). All significant intercompany transactions have been eliminated in the financial statements. Fiscal Year The Company utilizes a 52/53 week fiscal year which ends on the last Saturday in June. Fiscal years 1995, 1994 and 1993 contained 52 weeks. Revenue Recognition The Company recognizes revenue at the time products are shipped to customers. Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with an original maturity of three months or less. Investments Effective June 25, 1994, the Company adopted Statement of Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments in Debt and Equity Securities," which expands the use of fair value accounting for those securities, but retains the use of the amortized cost method for investments in debt securities which management has the positive intent and ability to hold to maturity. The Company has segregated its investments into the following two categories: Held-to-Maturity Securities held-to-maturity, for which management has both the ability and intent to hold to maturity, are carried at amortized cost. Available for Sale Securities available for sale include securities which could be sold in response to changes in interest rates or general liquidity needs. Such securities are carried at fair value with unrealized gains or losses recorded as a separate component of equity. F-6 26 Inventory Inventories are valued at the lower of cost, determined by the first-in, first-out method, or market. A reserve has been provided for obsolete or unsalable items. Inventory consisted of:
JUNE 24, JUNE 25, 1995 1994 ----------------- ----------------- Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 193,000 $ 184,000 Frozen product & other finished goods . . . . . . . . . . . . . . . . . 1,975,000 1,204,000 Packing materials & supplies . . . . . . . . . . . . . . . . . . . . . 227,000 112,000 --------------- --------------- 2,395,000 1,500,000 Less obsolescence reserve . . . . . . . . . . . . . . . . . . . . . . . (45,000) (97,000) --------------- --------------- $ 2,350,000 $ 1,403,000 =============== ===============
Fixed Assets Machinery, equipment, furniture and fixtures are depreciated using the straight-line method over estimated useful lives which range from two to eight years. Leasehold improvements are amortized using the straight-line method over the terms of the leases which range from four to twenty years. Expenditures for maintenance and repairs are charged to expense, and renewals and improvements are capitalized. For continuing operations, maintenance and repairs charged to expense amounted to $373,000 in 1995, $313,000 in 1994 and $172,000 in 1993. The components of fixed assets were as follows:
JUNE 24, JUNE 25, 1995 1994 ----------------- ----------------- Machinery & equipment . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,276,000 $ 3,424,000 Furniture & fixtures . . . . . . . . . . . . . . . . . . . . . . . . . 181,000 164,000 Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . 2,211,000 1,976,000 Building under capital lease . . . . . . . . . . . . . . . . . . . . . 1,691,000 Construction in progress . . . . . . . . . . . . . . . . . . . . . . . 82,000 706,000 --------------- --------------- 9,441,000 6,270,000 Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . (3,470,000) (2,458,000) --------------- --------------- $ 5,971,000 $ 3,812,000 =============== ===============
F-7 27 Income Taxes The Company accounts for certain income and expense items differently for financial reporting purposes than for income tax reporting purposes. Deferred income taxes are provided in recognition of these temporary differences. As of the beginning of fiscal year 1994, the Company adopted Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". The cumulative effect of adopting SFAS 109 was insignificant as of June 27, 1993 since the resulting deferred tax asset was fully offset by a valuation allowance. Earnings Per Share Net income per share is computed on the basis of the weighted average number of shares of stock and dilutive stock outstanding during each period. Foreign Currency Translation The statement of operations of the Company's Norwegian subsidiary (the "Subsidiary") has been translated to U.S. dollars using the average currency exchange rates in effect during the year. The Subsidiary's balance sheet has been translated using the currency exchange rate as of the end of the fiscal year. The impact of currency exchange rate changes on the translation of the Subsidiary's balance sheet has been charged directly to stockholders' equity. NOTE 2 - INVESTMENTS The Company's investments consisted of:
JUNE 24, JUNE 25, 1995 1994 -------------------------------- ------------------------------- Cost Fair Value Cost Fair Value --------- ---------- -------- ---------- European bank deposit . . . . . . . . . . . . . . . . . . $ 4,900,000 $ 4,900,000 $ 4,900,000 $ 4,900,000 U.S. Government and agencies . . . . . . . . . . . . . . 4,025,000 4,027,000 5,985,000 5,961,000 Corporate debt . . . . . . . . . . . . . . . . . 1,995,000 1,998,000 3,004,000 2,992,000 Fixed income mutual fund . . . . . . . . . . . . . . . . 117,000 117,000 -------------- -------------- ------------- ------------- Total investments . . . . . . . . . . . . . . . 10,920,000 10,925,000 14,006,000 13,970,000 Less non-current portion . . . . . . . . . . . . . . . . 2,025,000 2,030,000 5,050,000 5,017,000 --------------- --------------- -------------- ------------- Current portion . . . . . . . . . . . . . . . . $ 8,895,000 $ 8,895,000 $ 8,956,000 $ 8,953,000 ============== ============== ============== =============
The Company's short-term investment portfolio includes a European bank deposit of $4.9 million at June 24, 1995, which is pledged as collateral in connection with a loan made to a related party. The deposit is carried at cost which approximates market at June 24, 1995 and June 25, 1994. The U.S. Government and agencies and corporate debt securities have stated maturities within one year of $3,995,000 and $3,938,000 as of June 24, 1995 and June 25, 1994, respectively. These securities have stated maturities greater than one year of $2,025,000 and $5,050,000 as of June 24, 1995 and June 25, 1994, respectively. These investments were classified as held-to-maturity in accordance with SFAS 115 at June 24, 1995 and June 25, 1994. F-8 28 The Company classified the fixed income mutual fund as available for sale at June 25, 1994 in accordance with SFAS 115. The fair market value of the mutual fund at June 25, 1994 approximated cost, and accordingly, there was no impact on stockholders' equity. In addition to the above investments, during fiscal year 1995 the Company made a $500,000 investment in a start-up entity devoted to the development of a chain of frozen food retail outlets. This investment has been classified in Other assets. Subsequent to year-end, the Company approved a second $500,000 investment in this entity. NOTE 3 - INCOME TAXES The sources of income before income taxes consisted of the following:
YEAR ENDED --------------------------------------------------------- JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ---------------- --------------- ---------------- Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,142,000 $ 11,773,000 $ 261,000 Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (811,000) (204,000) --------- ---------- -------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 331,000 $ 11,569,000 $ 261,000 ========= ========== ========
The Company's income before income taxes consisted of the following:
YEAR ENDED --------------------------------------------------------- JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ---------------- --------------- ---------------- Continuing operations . . . . . . . . . . . . . . . . . . . . . . $ (399,000) $ (592,000) $ (476,000) Discontinued operations . . . . . . . . . . . . . . . . . . . . . 730,000 12,161,000 737,000 -------- ---------- -------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 331,000 $ 11,569,000 $ 261,000 ======== ========== =======
The composition of the provision for income taxes was:
YEAR ENDED --------------------------------------------------------- JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ---------------- --------------- ---------------- Current: Federal . . . . . . . . . . . . . . . . . . . . . . . . . . $ 285,000 $ 3,003,000 $ 103,000 State . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 632,000 20,000 ------------ ----------- ------------ Total provision for income taxes . . . . . . . . . . . . . . . . $ 307,000 $ 3,635,000 $ 123,000 ============ =========== ============
F-9 29 The provision for income taxes for fiscal years 1995 and 1994 has been presented in the consolidated statements of income as continuing operations and discontinued operations as follows:
JUNE 24, JUNE 25, 1995 1994 -------------- -------------- Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 307,000 $ (116,000) ------- --------- Discontinued operations: Loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . (687,000) Gain on sale of discontinued operations . . . . . . . . . . . . . . . . . . . . . 4,438,000 -------- --------- Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . 3,751,000 -------- --------- Total provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 307,000 $ 3,635,000 ======== =========
The taxable gain recorded in fiscal year 1994 on the sale of discontinued operations was reduced by the Company's available operating loss carryforwards by $2,349,000. As a result, as of June 25, 1994 the Company had no available unused net operating loss carryforwards. The differences between amounts computed by applying the statutory federal income tax rates to income from continuing operations and the total income tax provision applicable to continuing operations were as follows:
YEAR ENDED -------------------------------------------- JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 ------------- -------------- -------------- Federal tax benefit at statutory rates . . . . . . . . . . . . . . . . . . . $ (136,000) $ (201,000) $ (162,000) Loss from foreign operations . . . . . . . . . . . . . . . . . . . . . . . . 252,000 69,000 Non-deductible items . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 20,000 21,000 Period effect of valuation allowance . . . . . . . . . . . . . . . . . . . . 156,000 State income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,000 7,000 6,000 Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,000) (11,000) ----------- ------------ ------------ Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 307,000 $ (116,000) $ (135,000) =========== ============ ============
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets at June 24, 1995 are fully offset by a valuation allowance of approximately $602,000 due to uncertainties surrounding the ultimate realizability of the assets. F-10 30 The significant components of deferred tax assets as of June 24, 1995 were as follows: Deferred tax assets: Gain on sale of discontinued operations . . . . . . . . . . . . $ 67,000 Unit closings . . . . . . . . . . . . . . . . . . . . . . . . . 55,000 Reserve for EPA claim . . . . . . . . . . . . . . . . . . . . . 84,000 Inventory adjustment . . . . . . . . . . . . . . . . . . . . . . 228,000 Other accrued taxes . . . . . . . . . . . . . . . . . . . . . . 58,000 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000 ------- Total deferred tax assets . . . . . . . . . . . . . . . . . . . 602,000 Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . (602,000) ------- Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . $ 0 =======
NOTE 4 - DISCONTINUED OPERATIONS During the third and fourth quarters of fiscal year 1995, the Company reduced its reserves related to the sale of the former Restaurant Division. This reduction was possible due to the expiration of certain contingent liabilities. In March 1994, the Board of Directors of the Company approved the sale of substantially all of the net assets of the Restaurant Division pursuant to an asset purchase agreement entered into with Vie de France Bakery Yamazaki, Inc., a subsidiary of Yamazaki Baking Company, Ltd., a Japanese company. Effective May 25, 1994, the Company completed the sale for approximately $20.4 million in cash, which resulted in a gain of approximately $9.2 million, net of income taxes of $4.4 million. The gain on sale of discontinued operations is stated net of operating pre-tax losses from March 4, 1994 to the sale date of May 25, 1994 of approximately $469,000. Operating results of the Restaurant Division for fiscal year 1994 up to the measurement date of March 4, 1994 consisted of a pre-tax loss of approximately $1,250,000 which is reported in the Consolidated Statements of Operations under the caption "(Loss) income from discontinued operations." Also reported under the caption "(Loss) income from discontinued operations" are $250,000 in additional expenses associated with a claim made in 1994 by the U.S. Environmental Protection Agency relating to an ammonia leak at one of the Company's former bakery locations which was reported as a discontinued operation in 1991.
YEAR ENDED ------------------------------------------------- JUNE 24, JUNE 25, JUNE 26, 1995 1994 1993 --------------- ---------------- -------------- Net sales - Restaurant Division . . . . . . . . . . . . . . . . . . . . . $ $ 24,604,000 $ 28,628,000 =========== ========== ========== Income (loss) from discontinued operations, before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 730,000 $ (1,500,000) $ 737,000 Tax benefit (provision) . . . . . . . . . . . . . . . . . . . . . . . . . 687,000 (258,000) ----------- ---------- ----------- Income (loss) from discontinued operations . . . . . . . . . . . . . . . $ 730,000 $ (813,000) $ 479,000 =========== ========== ===========
F-11 31 NOTE 5 - LONG-TERM DEBT Long-term debt, net of current maturities, at June 24, 1995 was as follows:
Principal Lender Description Maturity Outstanding ------ ----------- -------- ----------- Den norske Bank Overdraft Facility Six months, renewable $ 603,000 Den norske Bank Term Loan February 28, 2000 378,000 SND Term Loan February 1, 2004 312,000 Hjelmeland Kommune Capital Lease June 1, 2014 1,688,000 --------- Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,981,000 Non-current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734,000 --------- $2,247,000 =========
Borrowings under the Den norske Bank ("DnB") Overdraft Facility are limited to a percentage of the Subsidiary's inventories and receivables, up to a maximum of $1,000,000 with a floating interest rate equal to the prevailing Norwegian overnight funds rate plus two percentage points. The term loan from DnB has a stated interest rate of 7.25% and will be repaid through ten semi-annual payments of principal and interest beginning August 30, 1995 and ending February 28, 2000. As part of the terms for this loan, the Company has guaranteed the repurchase of certain assets of the Subsidiary in the amount of $426,000. Statens Narings-OgDistriktutvikiingsfond ("SND"), a governmental development agency in Norway, issued to the Subsidiary an eight-year term loan whose terms require the establishment of a working plant facility. The loan has a variable interest rate which at June 24, 1995 was 10.0%, and will be repaid through sixteen semi-annual payments of principal and interest beginning August 1, 1996 and ending February 1, 2004. The Subsidiary entered into a twenty-year capital lease obligation with an initial principal amount of $1,691,000 and with quarterly payments of $49,000. At the end of the lease term, ownership of the facility will revert to the Subsidiary. The Company has issued no guarantees with respect to this lease. During fiscal year 1995, the Subsidiary was not in compliance with certain of the covenants set forth by DnB. Subsequent to year-end, DnB agreed to temporarily waive such covenants in exchange for certain guarantees on the part of the Company. These included a guaranty in the form of a renewable six-month stand-by letter of credit issued by the Company in the amount of $600,000, along with the subordination of a $300,000 loan from the Company to the Subsidiary. Accordingly, DnB has agreed to maintain the overdraft facility and waive its covenant requirements for as long as the stand-by letter of credit is in effect, but has limited borrowings up to the amount of the guaranty of $600,000. Maturities for the renewable overdraft facility the two term loans and for the capital lease during the next five fiscal years on an aggregate basis at June 24, 1995 were as follows: 1996 - $734,000; 1997 - $154,000; 1998 - $158,000; 1999 - $162,000; 2000 - $166,000. The maturities for 1996 of $734,000 include $603,000 borrowed under the overdraft facility, which the company intends to renew rather than repay upon maturity. No borrowings were outstanding at June 25, 1994. F-12 32 NOTE 6 - STOCKHOLDERS' EQUITY The Company's capital stock is divided into two classes: Common Stock and Class B Stock. The Class B Stock, which is reserved for issuance to employees under stock option plans, is identical in all respects to the Common Stock except that the holders thereof have no voting rights unless otherwise required by law. No dividends were paid during fiscal years 1995, 1994 or 1993. NOTE 7 - EMPLOYEE BENEFITS The Company sponsors a qualified employee savings plan under which employees who meet certain minimum age and service requirements are eligible to participate. The Company matches one-third of the first 6% of eligible employees' voluntary contributions to the plan. The Company expensed, as a component of continuing operations, $11,000, $16,000 and $15,000 in fiscal years 1995, 1994 and 1993, respectively, for contributions to the savings and profit sharing plan. In fiscal year 1994, the Company implemented a non-qualified employee savings plan under which senior management employees are eligible to participate. The Company matches one-third of the first 6% of eligible employees' voluntary contributions to the plan. The Company's matching contribution is limited to 6% of the combined contributions into both the qualified and the non-qualified plan. The Company expensed, as a component of continuing operations, $14,000 in both fiscal years 1995 and 1994 for this plan. During fiscal year 1993, the Company established, upon stockholder approval, the 1992 Stock Option Plan which provides for up to 300,000 shares of the Company's Common Stock to be made available to employees at various prices as established by the Board of Directors at the date of grant. Upon the adoption of the 1992 Stock Option Plan, two previous plans, the 1986 Stock Option Plan and the 1982 Stock Option Plan, were terminated except with respect to 373,000 options issued and outstanding under these plans. During fiscal year 1995, the Company granted 77,000 options under the 1992 Stock Option Plan. The outstanding options expire through fiscal year 2005. F-13 33 Changes in outstanding options were as follows:
Price Range Shares ----------- ------ Outstanding at June 27, 1992 . . . . . . . . . . . . . . . . . . . $ 1.94-2.75 373,000 Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . 2.38 79,500 Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . 1.63-2.75 (6,500) --------------- Outstanding at June 26, 1993 . . . . . . . . . . . . . . . . . . . 1.63-2.75 446,000 Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . 3.88-4.00 131,000 Options exercised . . . . . . . . . . . . . . . . . . . . . . . . 1.63-3.88 (184,500) Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . 1.63-3.88 (13,375) --------------- Outstanding at June 25, 1994 . . . . . . . . . . . . . . . . . . . 1.63-4.00 379,125 Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . 3.50 77,000 Options exercised . . . . . . . . . . . . . . . . . . . . . . . . . 1.94-3.88 (26,250) Options cancelled . . . . . . . . . . . . . . . . . . . . . . . . . 1.94-3.88 (58,875) --------------- Outstanding at June 24, 1995 . . . . . . . . . . . . . . . . . . . 1.63-4.00 371,000 ===============
As of June 24, 1995, options to purchase 228,000 shares of common stock were currently exercisable at prices ranging from $1.63 to $4.00 per share. The exercise prices equal the fair market value of the stock at the date of grant. NOTE 8 - COMMITMENTS The Company leases office and plant space under operating leases which expire on various dates through 1999. Certain leases provide for escalations in rent based upon increases in the lessor's annual operating costs or the consumer price index. Future minimum lease payments under these agreements at June 24, 1995 were as follows: 1996 . . . . . . . . . . . . . . . . . . . . . . . . . $ 396,000 1997 . . . . . . . . . . . . . . . . . . . . . . . . . 367,000 1998 . . . . . . . . . . . . . . . . . . . . . . . . . 380,000 1999 . . . . . . . . . . . . . . . . . . . . . . . . . 331,000 --------- Total . . . . . . . . . . . . . . . . . . . . . . . $ 1,474,000 =========
Rent expense for continuing operations was $371,000, $458,000 and $454,000 for fiscal years 1995, 1994 and 1993, respectively. NOTE 9 - TRANSACTIONS WITH RELATED PARTIES The Company has a deposit with a European bank of $4.9 million at June 24, 1995 and at June 25, 1994, earning interest at a rate which the Company believes to be in excess of the prevailing short-term interest rates in the United States. This deposit is unrestricted and is available for the Company's use on thirty days notice without penalty, if necessary. This deposit has been pledged as collateral to the Bank with respect to funds loaned to a party affiliated with the principal stockholder of the Company. The Company incurs no costs as a result of the collateralization. The Company is unaware of any debt covenants to which the above related party is in default. F-14 34 At June 24, 1995 and June 25, 1994, loans outstanding to the majority stockholder of the Company amounted to $2,068,000 and $525,000, which includes accrued interest of $101,000 and $8,000 respectively. The loans have maturity dates of up to two years and at June 24, 1995 and June 25, 1994, carried a weighted-average interest rate of 8.0%. NOTE 10 - SALES TO MAJOR CUSTOMERS Food service distributors continued to be the leading market segment for the Company with fiscal year 1995 sales representing approximately 59% of total net sales. In fiscal year 1995, sales to food service distributors representing Hyatt Hotels and Marriott Hotels accounted for 32% and 21% of total net sales, respectively. Sales to the airline industry in fiscal year 1995 represented 29% of total net sales, which was comprised of sales to five national/international carriers and one regional carrier. In fiscal years 1994 and 1993, sales to food service distributors representing Marriott hotels amounted to 55% and 68% of total net sales, respectively. In fiscal year 1994, sales to food service distributors representing Hyatt hotels amounted to 16% of total net sales. Sales to distributors serving the airline industry represented 17% and 11% of total net sales in fiscal years 1994 and 1993 respectively. NOTE 11 - LITIGATION The Company is engaged in ordinary and routine litigation incidental to its business. Management does not anticipate that any amounts which it may be required to pay by reason thereof will have a material effect on the Company's financial position or results of operations. F-15 35 SCHEDULE I VIE de FRANCE CORPORATION MARKETABLE SECURITIES AND OTHER INVESTMENTS
Number of Shares, Units or Market Carrying Name of Issuer Principal Amount Cost Value Amount - -------------- ----------------- -------------- -------------- -------------- June 26, 1993 European bank deposit . . . . . . . . . . . . . . $ 6,900,000 $ 6,900,000 $ 6,900,000 $ 6,900,000 ========== =========== =========== June 25, 1994 European bank deposit . . . . . . . . . . . . . . $ 4,900,000 $ 4,900,000 $ 4,900,000 $ 4,900,000 U.S. Government and agencies . . . . . . . . . . . . . . . . . . . $ 6,000,000 5,985,000 5,961,000 5,985,000 Corporate debt . . . . . . . . . . . . . . . . . $ 3,000,000 3,004,000 2,992,000 3,004,000 Fixed income mutual fund . . . . . . . . . . . . 11,195 117,000 117,000 117,000 ---------- ----------- ----------- Total $ 14,006,000 $ 13,970,000 $ 14,006,000 ========== =========== =========== June 24, 1995 European bank deposit . . . . . . . . . . . . . . $ 4,900,000 $ 4,900,000 $ 4,900,000 $ 4,900,000 U.S. Government and agencies . . . . . . . . . . . . . . . . . . . $ 4,025,000 4,025,000 4,027,000 4,025,000 Corporate debt . . . . . . . . . . . . . . . . . $ 1,995,000 1,995,000 1,998,000 1,995,000 --------- --------- --------- Total $ 10,920,000 $ 10,925,000 $ 10,920,000 ========== ========== ==========
F-16 36 SCHEDULE II VIE de FRANCE CORPORATION AMOUNTS RECEIVABLE FROM RELATED PARTIES
Balance at Balance at End of Period Beginning ---------------------------- Name of Debtor of Period Additions Receipts Current Noncurrent - ----------------------------- -------------- ---------------- ------------ ------------- ------------- Year ended June 26, 1993 Food Research Corporation $ 515,000 $ 325,000 (1) $ -0- $ 840,000 $ -0- ========= ======= ======== ======= ======= Year ended June 25, 1994 Food Research Corporation $ 840,000 $ 216,646 (2) $ (540,000) $ 516,646 $ -0- ========= ======== ======== ======= ======= Year ended June 24, 1995 Food Research Corporation $ 516,646 $1,450,000 (3) $ -0- $ 1,450,000 (4) $ 516,646 (4) ========= ========= ======== ========= =======
(1) Unsecured promissory notes in the amounts of $210,000 and $90,000 dated June 18, 1993, and a $25,000 unsecured promissory note dated June 16, 1993, all with maturity dates of September 10, 1994 and bearing interest at 12% per annum. The $25,000 note was repaid in July, 1994. The remaining two notes totaling $300,000 were reissued in three month intervals bearing an interest rate of 8% and subsequently consolidated into one overall note dated July 1, 1994, including the total of $216,646 issued during fiscal year 1994. (2) Unsecured demand note in the amount of $150,000 dated January 31, 1994 and an unsecured demand note in the amount of $66,646 dated March 2, 1994, both bearing interest at 8% per annum. These notes, totaling $216,646, were subsequently consolidated with the $300,000 also outstanding into one unsecured promissory note dated July 1, 1994, bearing interest at 8% per annum. (3) Unsecured promissory notes in the amounts of $500,000, $450,000, $250,000, and $250,000 dated June 29, 1994, September 30, 1994, November 7, 1994, and November 28, 1994, respectively, all bearing interest at 8% per annum. Effective January 1, 1995, the Company consolidated the $500,000 note, along with the two $250,000 notes into one $1,000,000 note, bearing interest at 8% per annum. The note in the amount of $516,646 pays interest quarterly, while the remaining notes bear interest on a cumulative basis. (4) Effective December 23, 1994, the Company entered into a Security Agreement with Food Research Corporation ("FRC") whereby FRC has delivered 654,597 shares of Vie de France Corporation Common Stock to the Company to serve as collateral for these notes. F-17 37 SCHEDULE V VIE de FRANCE CORPORATION PROPERTY, PLANT AND EQUIPMENT
Balance at Balance Beginning Additions at End of Period to Costs Retirements Other of Period ----------- ------------ ------------- --------- ----------- Year ending June 26, 1993 Machinery and equipment . . $ 7,598,908 $ 603,353 $ (256,739) $ 97,608 (1) $ 8,043,130 Furniture and fixtures . . . 1,894,343 6,730 (58,706) 43,079 (1) 1,885,446 Leasehold improvements . . . 10,579,387 225,384 (189,015) 289,741 (1) 10,905,497 Building under capital lease -0- -0- -0- -0- -0- Construction in Progress . . 182,426 -0- -0- 35,237 (2) 217,663 ---------- ---------- ----------- -------- ---------- Totals . . . . . . . . . $20,255,064 $ 835,467 $ (504,460) $ 465,665 $21,051,736 ========== ========= ========== ======= ========== Year ending June 25, 1994 Machinery and equipment . . $ 8,043,130 $1,538,794 $ (6,157,881) $ -0- $ 3,424,043 Furniture and fixtures . . . 1,885,446 98,493 (1,819,285) -0- 164,654 Leasehold improvements . . . 10,905,497 711,619 (9,641,420) -0- 1,975,696 Building under capital lease -0- -0- -0- -0- -0- Construction in Progress . . 217,663 -0- -0- 488,385 (2) 706,048 ---------- ---------- ----------- -------- ---------- Totals . . . . . . . . . $21,051,736 $2,348,906 $(17,618,586) $ 488,385 $ 6,270,441 ========== ========= =========== ======= ========= Year ending June 24, 1995 Machinery and equipment . . $ 3,424,043 $ 1,851,967 $ -0- $ -0- $ 5,276,010 Furniture and fixtures . . . 164,654 16,490 -0- -0- 181,144 Leasehold improvements . . . 1,975,696 235,029 -0- -0- 2,210,725 Building under capital lease -0- 1,691,176 -0- -0- 1,691,176 Construction in Progress . . 706,048 171,392 -0- (795,234) (2) 82,206 ---------- ---------- ----------- --------- ---------- Totals . . . . . . . . . $ 6,270,441 $ 3,966,054 $ -0- $(795,234) $ 9,441,261 ========= ========= ============ ======== =========
(1) Represents historical cost of assets reestablished on general ledger at zero net book value (see Schedule VI for offset of full value.) Assets had previously been removed from the general ledger pursuant to designation as a disposition unit. This unit was later reinstated as an operating unit. (2) These amounts represent the net activity for projects remaining in construction in progress at year-end. F-18 38 SCHEDULE VI VIE de FRANCE CORPORATION ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Balance at Balance Beginning Additions at End of Period to Costs Retirements Other of Period ------------ ------------ ------------- ---------- ---------- Year ending June 26, 1993 Machinery and equipment . . $ 5,033,683 $ 630,060 $ (243,845) $ 97,608 (1) $ 5,517,506 Furniture and fixtures . . . 1,350,291 83,988 (58,706) 43,079 (1) 1,418,652 Leasehold improvements . . . 7,922,916 555,453 (186,714) 289,741 (1) 8,581,396 Building under capital lease -0- -0- -0- -0- -0- ---------- ---------- ----------- ------- --------- Totals . . . . . . . . . $ 14,306,890 $ 1,269,501 $ (489,265) $ 430,428 $15,517,554 ========== ========= =========== ======= ========= Year ending June 25, 1994 Machinery and equipment . . $ 5,517,506 $ 687,809 $ (4,982,586) $ -0- $ 1,222,729 Furniture and fixtures . . . 1,418,652 117,576 (1,447,474) -0- 88,754 Leasehold improvements . . . 8,581,396 573,167 (8,007,800) -0- 1,146,763 Building under capital lease -0- -0- -0- -0- -0- ---------- --------- ----------- ------- ----------- Totals . . . . . . . . . $ 15,517,554 $ 1,378,552 $ (14,437,860) $ -0- $ 2,458,246 ========== ========= =========== ======= ========== Year ending June 24, 1995 Machinery and equipment . . $ 1,222,729 $ 710,095 $ -0- $ -0- $ 1,932,824 Furniture and fixtures . . . 88,754 22,328 -0- -0- 111,082 Leasehold improvements . . . 1,146,763 233,754 -0- -0- 1,380,517 Building under capital lease -0- 45,893 -0- -0- 45,893 ---------- --------- ------------ ------- ----------- Totals . . . . . . . . . $ 2,458,246 $ 1,012,070 $ -0- $ -0- $ 3,470,316 ========== ========= ============= ======= =========
(1) Represents historical accumulated depreciation and amortization related to assets reestablished on the general ledger at zero net book value (see Schedule V for reestablishment of cost). Assets had previously been removed from the general ledger pursuant to designation as a disposition unit. This unit was later reinstated as an operating unit. F-19 39 SCHEDULE VIII VIE de FRANCE CORPORATION VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Additions -------------------------------- Balance at Charged to Charged to Balance Beginning Costs and Other at End of Period Expenses Accounts Deductions of Period ------------ ----------- -------- -------------- ----------- Year ended June 26, 1993 Allowance for doubtful accounts $ 40,378 $ (14,494) $ (7,455)(1) $ 18,429 ========= ======== ====== ========== Provision for losses on unit closings 640,664 -0- (164,726)(2) 475,938 ========= ======== ======== ========== Allowance for obsolete inventory 61,676 (23,833) (11,343) 26,500 ========= ======== ======== ========== Year ended June 25, 1994 Allowance for doubtful accounts $ 18,429 $ -0- $ (16,552)(1) $ 1,877 ========= ======== ======== ========== Provision for losses on unit closings 475,938 323,835 (265,941)(2) 533,832 ========= ======== ======== ========== Allowance for obsolete inventory 26,500 87,774 (17,116) 97,158 ========= ======== ======== ========== Year ended June 24, 1995 Allowance for doubtful accounts $ 1,877 $ 3,543 $ (219)(1) $ 5,201 ========= ======== ======== ========== Provision for losses on unit closings 533,832 -0- (338,932)(3) 194,900 ========= ======== ======== ========== Allowance for obsolete inventory 97,158 (26,568) (25,356) 45,234 ========= ======= ======== =========
(1) Writeoff of uncollectible customer accounts, net of recoveries. (2) Writeoff of assets of closed units and related closing costs associated with the former Restaurant Division. (3) Lease termination costs associated with the former Restaurant Division. F-20 40 VIE DE FRANCE CORPORATION EXHIBIT INDEX
Exhibit Page Number Exhibit Number -------- ------- ------ 10.58 Fourth and Fifth Amendments, dated January 30, 1995 and April 7, 1995, respectively, to lease dated March 30, 1989 between the Company and Duke-Shirley Industrial Development, LP, with respect to the lease of property at 4106 Wheeler Avenue, Alexandria VA. 10.59 Lease dated February 24, 1995 between the Company and Hjelmeland Municipality with respect to the lease of property at Hjelmeland, Norway. 10.60 Management contract between the Company and Food Investors Corporation dated July 31, 1995, with respect to payment in reimbursement of expenses and other costs incurred by Food Investors Corporation on the behalf of the Company. 10.61 Loan agreement dated October 18, 1993 between Vie de France Norway AS, a wholly-owned subsidiary of Vie de France Corporation and Den norske Bank, and related documents, with respect to borrowings made by the subsidiary. 23 Consent of Independent Accountants. 27 Financial Data Schedule
EX-10.58 2 FOURTH & FIFTH AMENDMENTS TO LEASE DATED 03/30/89 1 FOURTH ADDENDUM TO DEEDS OF LEASE This Fourth Addendum to Deeds of Lease is made as of this 30 day of January, 1995, by and between Duke-Shirley Industrial Development ("Landlord") and Vie de France Corporation ("Tenant"). WITNESSETH: WHEREAS, as of this date Tenant is a party to leases with the Landlord for the premises known as 4100, and 4102 through 4108, and 4112 Wheeler Avenue, Alexandria, Virginia, ("Leases"); and WHEREAS, by Addendum to Deeds of Lease dated March 26, 1990, by Second Addendum to Deeds of Lease dated July 14, 1992, and by Third Addendum to Deeds of Lease dated September 29, 1993 collectively ("Addenda"), the Landlord and Tenant amended the Leases; and WHEREAS, Landlord and Tenant agree to lease additional space to Tenant known as 4110 Wheeler Avenue in Alexandria, Virginia ("4110 Premises") and to modify the prior Addenda upon the terms and conditions set forth hereinafter. NOW THEREFORE in consideration of the recitals above and the rents, covenants and conditions hereinafter set forth, the Landlord and Tenant agree as follows: 1. Tenant shall lease the 4110 Premises, approximately 6,000 square feet, more or less, of rentable warehouse space, to be delivered in "as is" condition and 1 2 without any warranty except as specifically set forth herein. This premises shall be in addition to the premises already defined in the Leases and Addenda. 2. Tenant hereby leases the 4110 Premises for a term commencing January 16, 1995 until April 30, 1999, which term may be extended as provided in the Addenda. 3. The rent payable on the first day of each calendar month for the 4110 Premises shall be $3,228.00 per month as base rent ("Base Rent"), plus Tenant's proportionate share of common area maintenance ("CAM") and real estate taxes. CAM expenses are assessed for this and all other leased premises at $.20 per square foot and are adjustable as hereinafter provided. This new rate is effective as of January 1, 1995. 4. The Base Rent shall hereafter be increased by the greater of either (i) 3 1/2% of the previous calendar year's Base Rent, or (ii) the percentage increase of the consumer price index for all urban consumers ("CPI-U") over the previous 12-month period, pursuant to the formula more fully defined in the Leases and Addenda. The first increase shall be on January 1, 1996, calculated on the starting monthly base rent of $3,228.00. 5. In consideration of this addendum to lease the 4110 Premises, Landlord agrees that Tenant shall not be required to pay Base Rent for the first 90 days from the commencement date of this lease. However, should Tenant default or cancel this addendum or any of the other Leases or Addenda within the first six months of the 2 3 term of this Fourth Addendum to lease the 4110 Premises, then the abated Base Rent shall come due in full as part of the damages due Landlord for such breach. 6. Landlord may maintain, in its sole discretion, policies of insurance and for such amounts covering loss or damage from all perils included within the classifications of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk), and any other perils, and rental income insurance policy with loss payable to Landlord in an amount equal to the sum of one year's base rent, estimated real property taxes, and insurance premiums. Tenant shall not knowingly do or permit to be done anything which invalidates any such insurance policies. Tenant shall comply with all other insurance requirements as specified within the Leases and Addenda. 7. Landlord will provide prompt repair and maintenance services to the common areas of the industrial development. Trash and debris will be removed from the common areas, and security patrols will be established for 40 hours each week during nonworking hours. Tenant shall contribute to the repair, maintenance, and security costs for the common areas by the payment of CAM charges on the first day of each month, as required paragraph 3 above. Tenant shall also pay monthly any CAM increases at its proportionate share: 60/3577. 8. Real estate taxes, both general and special, becoming due upon the 4110 Premises shall be borne by Tenant and shallbe paid as additional rent. The 4110 Premises constitutes 11.11 percent of the tax parcel. So payment of taxes by Tenant shall equal 11.11 percent of the parcel's total tax bill. Taxes are payable 3 4 semi-annually and Tenant shall pay its share of such taxes within ten (10) days after notice from Landlord. 9. Landlord's duty to maintain the roof of 4110 Premises, as provided in paragraph 4.02 of the Lease, hereby shifts to the Tenant. Tenant shall be fully responsible for prompt repairs to or replacement of the roof for any roof leak or damage developing thereto during the term or extension hereof. Furthermore, Tenant and Landlord hereby modify the Addendum leasing the 4112 Premises, so that it, too, shall be a roof responsibility of Tenant. In consideration, Tenant has hereby elected and instructed Landlord to contract with R.D. Bean, Inc. ("Bean's"), roofing contractor, to begin reroofing the roof area covering 4100-4112 Wheeler Ave., representing all of Tenant's demised premises pursuant to the Lease and these Addenda in accordance with Bean's attached contract. Tenant agrees to first raise the six pieces of roof-based air-handling equipment at 4100-4104 premises, at Tenant's cost, which is a prerequisite to Bean's roofing work. If this is not timely done to permit Bean's schedule of roof work from 2/15/95 - 3/95, then Tenant will be solely responsible to Bean for any delay-increases in Bean's work. Otherwise, upon receipt of Bean's final invoice (with ten-year warranty addressed to both Tenant and Landlord), Tenant will immediately reimburse Landlord $28,000, which the parties agree is Tenant's share for the roof work and was determined after reference to the Addenda for cost-sharing of this new roof installation. Should Tenant choose to install the Dynaflex walkways referenced in Bean's contract, this will be at Tenant's expense. Any other cost 4 5 overruns shall be pro-rated for Tenant's leased premises and shared by Tenant by 25% thereof. 10. Tenant acknowledges that the 4110 Premises has floor-tile in part of the premises which may contain asbestos. Tenant may remove this floor-tile, but shall hold Landlord harmless for any liability concerning this floor-tile or the asbestos therein. Likewise, Landlord acknowledges that there may be asbestos-containing construction material in other interior parts of the premises, and Landlord shall hold Tenant harmless from any liability related thereto. Tenant acknowledges Landlord makes no further warranty concerning the existence of or liability for any other environmental or hazardous material, including but not limited to the nuclear gauge equipment warehoused at the premises by the prior tenant, Ambric Testing. Tenant has reviewed the 1/12/95 letter from Ambric Testing which included test results confirming such equipment detected below 0.005 microcuries. 11. This Fourth Addendum to Deeds of Lease amends and is made part of the Leases and Addenda. Except as amended hereby, all terms, covenants, provisions and conditions of the Leases and Addenda shall apply to the 4110 Premises and shall remain in full force and effect during the current or extended terms of said Leases and Addenda. The Leases and Addenda are hereby ratified and reaffirmed as if fully set forth herein. Any breach of this addendum shall be deemed a breach of the Leases and Addenda, and vice versa. 12. Tenant shall have the right once per year to review, upon 10 business days written notice, all CAM charges for the leased premises. No documents may be 5 6 removed from Landlord's office, and Tenant shall pay an administrative fee to Landlord of $100 per day, plus $.20 per photocopied page. IN WITNESS WHEREOF, the parties have executed this Fourth Addendum to Deeds of Lease as of the date first above written in three counterparts, each of which shall be deemed an original. DUKE-SHIRLEY DEVELOPMENT, a Limited Partnership By: /s/ JOHN E. MCPHERSON, JR., ----------------------------------- John E. McPherson, Jr., General Partner VIE DE FRANCE CORPORATION By: /s/ WILLIAM A PEACHY ------------------------------------ Culinary Division Attest: /s/ ALAN V. ESENSTAD, Secretary -------------------------------- Corporate Seal 7 ROOFING GUARANTEE Whereas R.D. Bean, Inc. --------------------------------------------------------- of 5105 Powder Mill Road, Beltsville, MD 20705 -------------------------------------------------------------- herein called "the Contractor," has completed application of the following roof: Owner: ----------------------------------------------------- Address of owner: ------------------------------------------ Type and name of building: --------------------------------- Location: --------------------SAMPLE------------------------ Area of roof: ---------------------------------------------- Date of completion: ---------------------------------------- Date guarantee expires: ------------------------------------ Whereas, at the inception of such work the Contractor agreed to guarantee the aforesaid roof against faulty materials or workmanship for a limited period and subject to the conditions herein set forth: Now, Therefore the Contractor hereby agrees, subject to the conditions herein set forth, that during a period __________ from the date of completion of said roof, it will, at its own cost and expense, make or cause to be made such repairs to said roof and composition flashing resulting solely from faults or defects in materials or workmanship applied by or through the Contractor but not to exceed the Owner's original cost of the installed roof over the life of this warranty. This guarantee is made subject to the following conditions: 1. Specifically excluded from this guarantee is any and all damage to said roof, the building or contents caused by the acts or omissions of other trades or contractors; lightning, windstorm, hailstorm, or other unusual phenomena of the elements; foundation settlement; failure or cracking of the roof deck; defects or failure or material used as a roofbase over which the roof is applied; faulty construction or parapet walls, copings, chimneys, skylights, vents, supports, or other parts of the building; vapor condensation beneath the roof; penetrations for pitch boxes; or fire. If the roof is damaged by reason of any of the foregoing this guarantee shall thereupon become null and void for the balance of the guarantee period unless such damage is repaired by the Contractor at the expense of the party requesting such repairs. 2. The Contractor is not liable for consequential damages to the building or contents resulting from any defects in said roof or composition flashing. 3. No work shall be done on said roof, including, but without limitation, work in connection with flues, vents, drains, sign braces, railings, platforms or other equipment fastened or to set on the roof, and no repairs or alterations shall be made to said roof, unless the Contractor shall be first notified, shall be given the opportunity to make the necessary roofing application recommendations with respect thereto, and such recommendations are complied with. Failure to observe this condition shall render this guarantee null and void. The Contractor shall be paid for time and material expended in making recommendations or repairs occasioned by the work of others on said roof. 4. This guarantee shall become null and void if the roof is used as a promenade or work deck is or sprayed or flooded, unless such use was originally specified and the specification is noted in paragraph 8 below. 5. This guarantee shall not be or become effective unless and until the Contractor has been paid in full for said roof in accordance with the agreement pursuant to which such roof was applied. 6. This guarantee shall become null and void unless the Contractor is promptly notified of any alleged defect in materials or workmanship and provided an opportunity to inspect the roof. 7. This guarantee is in lieu of all other guarantees or warranties, express or implied. THERE ARE NO WARRANTIES OR GUARANTEES WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE HEREOF. 8. Additional conditions or exclusions ________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ In Witness Whereof, this instrument has been duly executed this ......... day of ________________ 19...... [ASSOCIATED ROOFING CONTRACTORS OF MARYLAND, INC. LOGO] R. D. Bean, Inc. --------------------------------------- By ------------------------------------- 8 ---------------------------------------------------------------- ---------------------------------------------------------------- 4100-4116 49,900 Square Feet of Roof Area 9 PROPOSAL RE-ROOF [R.D. BEAN, INC. LOGO] 5105-5113 Powder Mill Rd. Beltsville, Md. 20705 (301)937-0260 Maryland H.I.C. License No. 5897 DATE: 01-27-94. PAGE 1 OF 2 DUKE-SHIRLEY INDUSTRIAL DEVELOPMENT 901 N. WASHINGTON STREET SUITE 601 ALEXANDRIA, VIRGINIA 22314 ATTENTION: JOHN MCPHERSON RE: VIE-DE-FRANCE/LOGAN FOODS 4100-4116 WHEELER AVE. ALEXANDRIA, VIRGINIA ROOF RENOVATIONS - BUILT-UP ROOFING: FURNISH EQUIPMENT, LABOR AND MATERIAL TO: REMOVE EXISTING ROOF AND DISPOSE OF ALL GENERATED DEBRIS. OVER EXISTING DECK, INSTALL NEW 1" THICK POLYISOCYANURATE INSULATION, MECHANICALLY FASTENED, OVERLAID WITH 1/2" THICK RETROFIT INSULATION IN HOT ASPHALT. INSTALL NEW BUILT-UP ROOFING CONSISTING OF FOUR (4) PLIES OF PREMIER (TYPE-VI) FIBERGLASS FELTS IN HOT ASPHALT. SURFACE WITH 400# PER SQUARE OF GRAVEL INSTALL NEW BUILT-UP BASE FLASHINGS AT WALLS AND CURBS. FLASH PLUMBING STACKS AND ROOF DRAINS WITH 4# LEAD. PITCH-POCKETS WILL BE FABRICATED FROM 16 OZ. COPPER. GRAVEL STOPS WILL BE FABRICATED FROM 24GA. PRE-FINISHED GALVANIZED. REMOVE TERRA-COTTA COPING FROM TWO (2) PARTY WALLS-ONLY AND INSTALL NEW .032 MILL-FINISHED ALUMINUM COPING. STONE PRE-CAST COPING TO REMAIN ON ALL PARAPETS, REUSE EXISTING CAP-FLASHINGS. REMOVE EXISTING AND INSTALL NEW 24 GAUGE PRE-FINISHED GALVANIZED 6" BOX TYPE GUTTERS, FABRICATED FROM MANUFACTURER'S STANDARD COLORS. NOTE: The above outlined work is based solely upon the use of our proposal form or the current edition of the A-401 form. The use of any other contract form or document shall nullify the above price unless deemed appropriate by R.D. Bean, Inc. Any replacement of deteriorated decking or wood blocking shall be done by owner or R.D. Bean, Inc. on a time and material basis. Our TEN (10) YEAR Warranty against defective workmanship. ----------------------- WE PROPOSE to furnish labor and/or material - complete in accordance with above specifications, and subject to conditions found on both sides of this agreement, for the sum of: SEE FIGURE ON PAGE TWO dollars ($ ). - ------------------------------- --------------- Payment to be made as follows: 1/3 upon ratification of contract; 1/3 upon stocking of job; 1/3 upon completion. - -------------------------------------------------------------------------------- ACCEPTED. The above prices, specifications and conditions are satisfactory and are hereby accepted. You are authorized to do the work as specified. Payment will be made as outlined above. (Read reverse side for conditions) Date of Acceptance 1/27/95 ------------- By /s/ JOHN MCPHERSON, JR., GEN. PARTNER -------------------------------------- By -------------------------------------- Respectfully submitted, R.D. BEAN, INC. By /s/ RICK DREW, ESTIMATOR ---------------------------- RICK DREW, ESTIMATOR Note: This proposal may be withdrawn by us if not accepted within 30 days. 10 PROPOSAL RE-ROOF [R.D. BEAN, INC. LOGO] 5105-5113 Powder Mill Rd. Beltsville, Md. 20705 (301)937-0260 Maryland H.I.C. License No. 5897 - DATE: 01-27-94. PAGE 2 OF 2 RE: VIE-DE-FRANCE/LOGAN FOODS CONTINUED.... REUSE EXISTING CASE IRON DOWNSPOUTS. ALL WOOD BLOCKING REPLACEMENT, RAISING OF CURB HEIGHTS AND ANY DECK REPLACEMENT, IF NECESSARY, WILL BE THE RESPONSIBILITY OF THE OWNER AT NO EXPENSE TO R.D.BEAN,INC. ATTACHED DRAWING SHOWS ROOF AREAS INCLUDED. A TEN (10) YEAR R.D.BEAN,INC. WARRANTY IS INCLUDED, TO BE IN THE NAME OF DUKE-SHIRLEY INDUSTRIAL DEVELOPMENT AND VIE-DE-FRANCE CORP. BASE BID: $177,980.00 UNIT PRICE: INSTALL NEW DYNAFLEX WALKWAYS, FULL WIDTH AT $3.50 PER LINEAL FOOT. REPLACE DETERIORATED METAL DECKING AT $7.00 PER SQUARE FOOT. NOTE: ANY EXISTING MECHANICAL EQUIPMENT, CONDUITS OR SERVICE LINES WHICH NEED TO BE REMOVED FOR THE INSTALLATION OF THE NEW ROOFING SYSTEM MUST BE REMOVED AND REINSTALLED BY OTHERS AT NO EXPENSE TO R. D. BEAN, INC., TWO LARGE UNITS MUST BE REMOVED AND SEVERAL SMALLER UNITS MUST BE DISCONNECTED. PLEASE NOTE THAT THE REMOVAL OF AN EXISTING ROOF IS MAJOR DEMOLITION AND THE TENANT, WILL BE RESPONSIBLE FOR THE PROTECTION OF THE CONTENTS IN THE EXISTING BUILDING FROM DUST, DIRT, DEBRIS OR ASPHALT DRIPPINGS CAUSED BY THE TEAR-OFF ROOFING OPERATION, AT NO CHARGE TO R. D. BEAN, INC.. WE WILL NOT BE RESPONSIBLE FOR ANY CONSEQUENTIAL DAMAGES OR DOWN TIME INCURRED BY THIS CONSTRUCTION. NOTE: The above outlined work is based solely upon the use of our proposal form or the current edition of the A-401 form. The use of any other contract form or document shall nullify the above price unless deemed appropriate by R.D. Bean, Inc. Any replacement of deteriorated decking or wood blocking shall be done by owner or R.D. Bean, Inc. on a time and material basis. Our TEN (10) YEAR Warranty against defective workmanship. ------------------------ WE PROPOSE to furnish labor and/or material - complete in accordance with above specifications, and subject to conditions found on both sides of this agreement, for the sum of: SEE FIGURE ABOVE dollars ($ ). - --------------------------- --------------- Payment to be made as follows: 1/3 upon ratification of contract; 1/3 upon stocking of job; 1/3 upon completion. - -------------------------------------------------------------------------------- ACCEPTED. The above prices, specifications and conditions are satisfactory and are hereby accepted. Your are authorized to do the work as specified. Payment will be made as outlined above. (Read reverse side for conditions) Date of Acceptance 1/27/95 ------------- By ---------------------------- By ---------------------------- Respectfully submitted, R.D. BEAN, INC. By ---------------------------- RICK DREW, ESTIMATOR 11 NOTE: UNDER MARYLAND STATE LAW: "ALL HOME IMPROVEMENT CONTRACTORS MUST BE LICENSED BY THE HOME IMPROVEMENT COMMISSION. INQUIRES ABOUT A CONTRACTOR SHOULD BE TRANSMITTED TO THE HOME IMPROVEMENT COMMISSION, TELEPHONE: (301) 383-4043" DEPOSITS AT TIME OF CONTRACT EXECUTION ARE LIMITED TO 33 PERCENT OF THE CONTRACT PRICE. - -------------------------------------------------------------------------------- CONDITIONS All material is guaranteed to be as specified. All work is to be completed in a workmanlike manner according to standard practices. Any alteration or deviation from specifications involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate. Any permits required will be obtained by and at the expense of the owner. All agreements contingent upon strikes, accidents or delays beyond our control. Owner to carry fire, tornado and other necessary insurance. Our workers are fully covered by Workmen's Compensation Insurance. The removal of hazardous materials is expressly excluded from this contract. In the event the Contractor encounters material reasonably believed to be asbestos, or any other hazardous material, the Contractor shall immediately stop work in the area affected and report the condition to the Owner. Corrective actions shall be the sole responsibility of the Owner. The work in the affected area shall only resume in the absence of hazardous material, or when it has been rendered harmless. Any projections or additions to building after completion of the shingles will be charged as an extra to this proposal. Any extras to this proposal must have a signed purchase order from the owner or contractor before work will be executed. No retainage to be held on residential work. The reroofing work proposed herein may create additional loading on the structures supporting the roof. It is the owners responsibility to consult a structural engineer or other design expert. R. D. Bean, Inc. its agent, and employees assume no responsibility or liability of any nature due to failure of the roof support systems, as a result of overloading. - -------------------------------------------------------------------------------- 12 DUKE-SHIRLEY INDUSTRIAL LIMITED PARTNERSHIP 901 North Washington Street, Suite 601 Alexandria, Virginia 22314 April 6, 1995 Alan V. Esenstad, Secretary Vie de France Corporation 8201 Greensboro Dr., Suite 1224 McLean, VA 22102-3897 Re: Side Agreement as to Fifth Addendum to Deeds of Lease Dear Mr. Esenstad: This letter will confirm that Duke-Shirley Industrial Park, as Landlord ("Landlord"), and Vie de France Corp., as Tenant ("Tenant"), have entered into that certain agreement entitled Fifth Addendum to Deeds of Lease (the "Fifth Addendum") dated today, April 6, 1995, pertaining to 4303 Wheeler Avenue, Alexandria, Virginia (the "4303 Premises"). This letter is to memorialize the side agreement between Landlord and Tenant as to the Fifth Addendum and the 4303 Premises regarding such personal property that may remain on or within the 4303 Premises upon and after the commencement of the term of the Fifth Addendum, having been left or abandoned by tenant(s) or other parties having possession of the 4303 Premises prior to Tenant. In consideration of the covenants and conditions set forth herein and in the Fifth Addendum, Landlord and Tenant hereby agree that Landlord will rebate to Tenant a portion of the Base Rent in the amount of $25.00 for each day such personal property remains on or within the 4303 Premises. This rebate shall be made in one lump sum payment after said personal property has been removed. Landlord agrees to use its best efforts to have said personal property removed as soon as is practicable and as allowed by law. Furthermore, notwithstanding anything to the contrary in the Fifth Addendum, and/or the Leases and Addenda described in the Fifth Addendum, in the event Landlord is unable to deliver to Tenant possession to the 4303 Premises within fourteen (14) days after April 11, 1995, the Fifth Addendum shall be null and void. 13 Side Agreement as to Fifth Addendum to Deeds of Lease April 6, 1995 Page 2 Except as provided herein, all terms, covenants, provisions and conditions of the Fifth Addendum shall remain in full force and effect. DUKE-SHIRLEY INDUSTRIAL LIMITED PARTNERSHIP By /s/ JOHN MCPHERSON, JR. ----------------------------------- John McPherson, Jr., General Partner SEEN AND AGREED: VIE DE FRANCE CORP. By: /s/ ALAN V. ESENSTAD -------------------------------- Name: ALAN V. ESENSTAD Title: VP FINANCE, SECRETARY 14 FIFTH ADDENDUM TO DEEDS OF LEASE This Fifth Addendum to Deeds of Lease ("Fifth Addendum") is made as of this 7 day of April, 1995, by and between Duke-Shirley Industrial Development ("Landlord") and Vie de France Corporation ("Tenant"). WITNESSETH: WHEREAS, as of this date Tenant is a party with Landlord to leases dated March 30, 1989 and August 1, 1989 (the "Leases") and addenda thereto for the premises known as 4100, and 4102 through 4108, 4110, and 4112 Wheeler Avenue, Alexandria, Virginia; and WHEREAS, by Addendum dated March 26, 1990, by Second Addendum dated July 14, 1992, by Third Addendum dated September 29, 1993, and by Fourth Addendum dated January 30, 1995 (collectively, the "Addenda"), Landlord and Tenant amended the Leases; and WHEREAS, Landlord and Tenant agree to lease additional space to Tenant known as 4303 Wheeler Avenue in Alexandria, Virginia (the "4303 Premises") and to modify the Leases and Addenda upon the terms and conditions set forth hereinafter. NOW THEREFORE in consideration of the recitals above and the rents, covenants and conditions hereinafter set forth, Landlord and Tenant agree as follows: 1 15 1. Tenant shall lease the 4303 Premises, approximately 6,000 square feet, more or less, of rentable warehouse space, to be delivered in "as is" condition and without any warranty except as specifically set forth herein, including such equipment, fixtures and furnishings determined to be the property of Landlord. The 4303 Premises includes that certain walk-in freezer situated within the 4303 Premises of approximately fifty (50) feet by twenty-six and one-half (26 and 1/2) feet in size, and all compressors and other equipment and devices relating thereto, which Tenant is taking "as is" with no warranties or representations of any kind. The 4303 Premises shall be in addition to the premises already defined in the Leases and Addenda. 2. Tenant hereby leases the 4303 Premises for a term commencing April 11, 1995 until March 31, 1996. 3. The rent payable for the 4303 Premises shall be $4,700.00 per month as base rent ("Base Rent"), plus Tenant's proportionate share of Landlord's common area maintenance ("CAM") costs and insurance costs for the Industrial Development, and shall be due and payable on the first day of each calendar month during the term of this Fifth Addendum and any extension; provided, however, that the rent (eg: Base Rent, CAM charges, insurance costs, etc.) payable for the period of April 11 through April 30, 1995 shall be two-thirds (2/3) of the regular monthly amounts due, and shall be due on or before April 11, 1995. 4. Tenant agrees to pay to Landlord as additional rent the sum of Nine Hundred and No/100 Dollars ($900) per annum payable in advance without deduction, set-off, or demand in equal monthly installments of Seventy-Five and 2 16 No/100 Dollars ($75) each on or before the first day of each calendar month payable with all other sums due and payable hereunder on or before the first day of each month, as required in paragraph 3 above, as a reimbursement to Landlord for Tenant's proportionate share of insurance costs as to the Industrial Development; provided, however, that the installment payable for the period of April 11 through April 30, 1995 shall be $49.50, and shall be due on or before April 11, 1995. Landlord shall accordingly maintain policies of insurance covering loss of or damage to the 4303 Premises in the full amount of its replacement value. Such policies shall provide protection against such perils which Landlord deems necessary. Landlord may also maintain a rental income insurance policy. Tenant shall pay its proportionate share of any increase in the premiums of such policies which Landlord may be carrying. Tenant shall not do or permit to be done anything which invalidates any such insurance policies which Landlord may be carrying. Tenant shall, at Tenant's expense, maintain such primary or additional insurance on its fixtures, equipment, and building improvements as Tenant deems necessary to protect its interest. Tenant shall comply with all other insurance requirements as specified in the Leases, the Addenda, and this Fifth Addendum. 5. Landlord will provide prompt repair and maintenance services to the common areas of the Industrial Development. Trash and debris will be removed from the common areas, and security patrols will be established for 40 hours each week during nonworking hours. Tenant shall contribute to the repair, maintenance, and security costs for the common areas by the payment of CAM charges on the first day of each month, as required in paragraph 3 above, the sum of One Hundred 3 17 and No/100 Dollars ($100.00); provided, however, that the installment payable for the period of April through April 30, 1995 shall be $66.67, and shall be due on or before April 11, 1995. . In addition, the parties understand, covenant, and agree that Landlord will give notice to Tenant of any increases in the cost of common area maintenance of the Industrial Development, as described above, and Tenant shall pay monthly 60/3577 of any such monthly increase. 6. Real estate taxes, both general and special, becoming due upon the 4303 Premises shall be borne by Tenant and shall be paid as additional rent. The 4303 Premises constitutes 11.11 percent of the tax parcel. So payment of taxes by Tenant shall equal 11.11 percent of the parcel's total tax bill. Taxes are payable semi-annually and Tenant shall pay its share of such taxes within ten (10) days after notice from Landlord. 7. Landlord's duty to maintain the roof of the 4303 Premises, as provided in paragraph 4.02 of the Leases, shall shift to the Tenant should the Tenant install any equipment upon or make any penetrations through the roof. In such event, Tenant shall be fully responsible for prompt repairs to or replacement of that section of the roof, described by a 15-foot radius around the equipment or penetration, in which any roof leak or damage develops during the term or extension hereof. Tenant shall have no party other than Jones Roofing, Inc. ("Jones Roofing"), of Alexandria, Virginia, roofing contractor, undertake any and all such repairs and replacements. Tenant hereby acknowledges that the roof was replaced in 1993 by Jones Roofing and that Jones Roofing has given a ten-year warranty 4 18 thereon. This warranty requires that Jones Roofing conduct all repairs and replacements on the roof during said ten-year warranty period in order for the warranty to remain in full force and effect. 8. In addition and without limitation to all other duties which Tenant has as to equipment, fixtures and furnishings in or upon the 4303 Premises, Tenant shall be responsible for all maintenance and repairs and/or replacements of all existing equipment, so as to deliver at termination of the term hereof and any extension such equipment in good working order, including without limitation the freezer described in paragraph 1 above and all compressors and other devices related thereto. Tenant shall maintain a maintenance contract with a licensed professional refrigeration company acceptable to Landlord for the term of this Fifth Addendum and any extensions. 9. Tenant shall have the right once per year to review, upon 10 business days written notice, all CAM charges for the 4303 Premises. No documents may be removed from Landlord's office, and Tenant shall pay an administrative fee to Landlord of $100.00 per day, plus $.20 per photocopied page. 10. Tenant shall have the right to renew and extend the term of this Fifth Addendum with respect to the 4303 Premises for the Renewal Term (herein so called) upon and subject to the following terms and conditions: a. Tenant may renew and extend this Fifth Addendum for one (1) Renewal Term, which may be either: (i) a term for one (1) year (to terminate March 31, 1997); OR 5 19 (ii) a term for three (3) years and one (1) month (to terminate April 30, 1999), by Tenant's giving written notice thereof to Landlord no later than September 30, 1995. Such Renewal Term shall commence April 1, 1996, and upon exercise of such renewal option, the expiration date of the term of this Fifth Addendum shall automatically become the last day of the Renewal Term. If Tenant does not renew and extend this Fifth Addendum as herein provided, then Tenant's rights with respect to such Renewal Term shall expire and be of no further force or effect, and Tenant shall vacate the 4303 Premises on March 31, 1996. b. The exercise by Tenant of the renewal option set forth herein must be made, if at all, by written notice executed by Tenant and delivered to Landlord on or before the date set forth hereinabove. Once Tenant shall exercise such renewal option, Tenant may not thereafter revoke such exercise. Tenant shall not have the right to exercise the renewal option if Tenant is in default under the Leases, any Addenda and/or this Fifth Addendum. Tenant's failure to exercise timely the renewal option for any reason whatsoever shall conclusively be deemed a waiver of such renewal option. c. Tenant shall take the 4303 Premises "as is" for the Renewal Term and Landlord shall have no obligation to make any improvements or alterations to the 4303 Premises. d. The Base Rent for the first year of the Renewal Term, and all successive years thereafter during the Renewal Term (if applicable), shall be increased by the greater of either (i) 3 1/2% of the previous calendar year's Base 6 20 Rent, or (ii) the percentage increase of the consumer price index for all urban consumers ("CPI-U") over the previous 12-month period, pursuant to the formula more fully defined in the Leases and Addenda. The first increase shall be on April 1, 1996, calculated on a stipulated annual Base Rent for the original term of this Fifth Addendum in the amount of $56,400.00. Each successive increase during the Renewal Term shall be on the first day of April of each successive year. e. Tenant's rights to exercise the option to renew the original term under this Fifth Addendum shall be personal to Tenant and shall not inure to the benefit of any assignee, in fact or in law, or any other occupant of the 4303 Premises. f. Except as set forth herein, the leasing of the 4303 Premises for the Renewal Term shall be upon the same terms and conditions as are applicable for the original term of this Fifth Addendum, and shall be upon and subject to all of the provisions of this Fifth Addendum, including, without limitation, the obligation of Tenant to pay all CAM charges, insurance costs, real estate taxes, and any other costs or amounts payable by Tenant to Landlord in addition to the Base Rent under this Fifth Addendum. 11. This Fifth Addendum to Deeds of Lease amends and is made part of the Leases and Addenda. Except as amended hereby, all terms, covenants, provisions and conditions of the Leases and Addenda shall apply to the 4303 Premises and shall remain in full force and effect during the current or extended terms of said Leases and Addenda. The Leases and Addenda are hereby ratified and reaffirmed as if fully set forth herein except as amended hereby. Any breach of 7 21 this addendum shall be deemed a breach of the Leases and Addenda, and vice versa. Tenant shall be liable for all damages suffered by Landlord flowing from Tenant's breach of the Leases, the Addenda, and /or this Fifth Addendum. IN WITNESS WHEREOF, the parties have executed this Fifth Addendum to Deeds of Lease as of the date first above written in three counterparts, each of which shall be deemed an original. DUKE-SHIRLEY INDUSTRIAL DEVELOPMENT, a Limited Partnership By: /s/ JOHN E. MCPHERSON, JR., ----------------------------------- John E. McPherson, Jr., General Partner VIE DE FRANCE CORPORATION By: /s/ WILLIAM N. PEACHEY ----------------------------------- Name: WILLIAM N. PEACHEY Title: V.P CULINARY DEPARTMENT Attest:/s/ ALAN V. ESENSTAD ---------------------------------- Corporate Seal 8 EX-10.59 3 LEASE 02/24/95 / COMPANY & HJELMELAND MUNICIPALITY 1 VIE DE FRANCE NORWAY A/S PAGE 1 OF 4 Lease contract TRANSLATION FROM NORWEGIAN LEASE CONTRACT The following is entered into between Hjelmeland municipality as lessor and Vie de France Norway A/S as lessee for the lease of the property designated gnr. 65, bnr, 52 in Hjelmeland: 1. LEASE OBJECT The lease object comprises gnr. 65, bnr. 52 with existing industrial building and production facility. The plot is 4894, 1 square metres on two floors. 2. LEASE PERIOD The lease between Hjelmeland municipality and Vie de France Norway A/S is valid from 1 September 1994 to 31 August 2014. Vie de France Norway A/S may terminate the contract by giving six months' notice in the event of a force majeure situation, for example if the market situation changes for instance due to boycott actions against Norwegian products or lack of raw materials. Such a situation must persist for minimum three months. Should such a situation arise and Vie de France Norway A/S therefore terminates the contract, the company shall be obligated to pay the outstanding rent for a period of three years from the date of signature of this contract. The rent shall not be changed for the remaining part of such period. 3. RENTAL AND ADJUSTMENT THEREOF From 1 September 1994 the rental is payable in the amount of NOK 308,000 per quarter. The rental is payable in advance on 1 September, 1 December, 1 March and 1 June every year. Penalty interest of 12 per cent per annum shall accrue for any late payment. The rental is the sum of interest and instalments on the lessor's loan in respect of the building, insurance, and the costs of the lessor's maintenance obligation. The interest rate is fixed at 0.2 per cent above the nominal interest rate on the above-mentioned loan. Interest and instalments are calculated as an annuity with 80 instalments over 20 years each of NOK 11,500,000. The insurance of the buildings and does not included liability in respect of production losses. Translation from Norwegian 2 VIE DE FRANCE NORWAY A/S PAGE 2 OF 4 Lease contract The maintenance cost are the costs for which the lessor is responsible. The basis is the stipulated annual costs, with a step-wise increment as the building gets older. Either party hereto can demand that the rental be adjusted once a year in accordance with the actual changes in the above three cost factors. If Hjelmeland municipality enters into a new agreement concerning the above mentioned loan, the Vie de France Norway A/S shall be given an opportunity to make its position clear. If a new agreement is signed then in principle it will be based on the most favourable offer. The rental does not include expenses such as electricity and municipal rates for water, sewage and refuse collection. 4. TAKE-OVER The property is taken over by the lessee from 1 September 1994 and is leased in the condition it is in upon signature of this contract unless otherwise agreed in a special protocol. The lessee does not assume any obligation that the lessor may have in respect of contractors that have erected the building. In the event the lease is terminated during the contract period, Vie de France Norway A/S accepts that the production equipment shall remain intact on the production premises for a period of one year after vacating the premises. During that year Hjelmeland municipality shall have the option to purchase the equipment at the market rate. After such period the company reserves the right to remove the equipment. 5. USE OF LEASE OBJECT The facility shall be used for the production and processing of foods, and other activities naturally connected therewith. Any other use of the premises is not permitted without the lessor's consent. 6. LESSOR'S OBLIGATIONS The lessor is responsible for external maintenance of the building, including windows, and the outdoor area. Such maintenance includes road, water and sewage up to the building's wall, and all outdoor lighting. All maintenance work shall be performed in accordance with the relevant regulation and in such a manner that it involves the least possible disruption of the lessee's production. The lessor shall be responsible for insurance of the building. Translation from Norwegian 3 VIE DE FRANCE NORWAY A/S PAGE 3 OF 4 Lease contract 7. LESSEE'S OBLIGATIONS The lessee is responsible for all maintenance inside the building, including fixtures, refrigeration and freezing equipment, and entrance doors. This responsibility includes replacement of equipment with a useful life of less than 20 years. The lessee shall be responsible for ensuring that the premises and equipment meet the authorities' requirements, i.e. those of the Labour Inspection. Major maintenance work shall be approved by the lessor. If the lessee fails to fulfil his maintenance obligation, then the lessor may have the work performed for the lessee's account. The lessee must not make any changes to the building without the lessor's written consent. Such consent may not be unreasonable withheld. 8. SUBLETTING Subletting in whole or in part is not permitted without the lessor's written consent. Such consent may not be unreasonably withheld by lessor. 9. BREACH OF CONTRACT AND EVICTION ORDER In the event the rental or other undisputed claims are not paid within 30 days after a written demand after the due date, the lessee may be evicted without legal action and judgment under section 13-2, third paragraph of the Enforcement Act. Should the lessee otherwise materially breach this lease contract, then the lessor may cancel the contract, in which case the lessee shall be obligated to move out forthwith. If the lessee moves out due to an eviction order or breach of contract, he shall be obligated to pay rental for the time which remains of the lease period, with the deduction of any amount the lessee receives under andy new lease. In addition, the lessee must pay the costs of eviction, legal action and any cleaning of the premises. 10. VACATING THE PREMISES Upon vacating the premises the lessee shall return the premises in a clean and tidy condition, and in a high standard of maintenance. The lessor may have any defects that the lessee has failed to correct repaired for the lessee's account. Fixtures and other fixed furniture installed by the lessee must not be removed unless the lessee is able to bring the premises back to the state they were in when taking over the building. Such articles shall nevertheless be removed should the lessor so demand. Any costs associated therewith shall be reimbursed by the lessee. Translation from Norwegian 4 VIE DE FRANCE NORWAY A/S PAGE 4 OF 4 Lease contract 11. LEGAL VENUE The parties adopt the legal venue of the property for any and all disputes in connection with the lease contract. 12. SPECIAL PROVISIONS Provided the lease takes the form described in this contract the lessee will acquire the property after twenty years at not further cost. The lessee may at may time initiate negotiations to purchase the property. In the event the price shall be determined on the basis of the lessor's costs and the time remaining of the lease period. The parties are agreed that where changes in production or other conditions require the lessor's consent, then such consent shall not unreasonably by refused. 13. RELATIONSHIP TO THE RENT ACT Unless otherwise specified in this contract the Rent Act of 16 June, no 6, 1939 shall apply. 14. REPLACEMENT AND REGISTRATION This contract may be publicly registered for the property designated gnr, 65, bnr,52 in Hjelmeland and shall replace the interim lease contract sighed by the parties on 11 May 1994 and registered for the same property. HJELMELAND, 24 FEBRUARY 1995 FOR HJELMELAND MUNICIPALITY VIE DE FRANCE NORWAY A/S /S/ TERJE BORGE /S/INGVALD SVANDAL HJELMELAND MUNICIPALITY (STAMP) /S/HAAKON LUNDE MAYOR Translation from Norwegian /s/ Alan V. Esenstad --------------------------- Chief Financial Officer Vie de France Corporation EX-10.60 4 MANAGEMENT CONTRACT / COMPANY & FOOD INVESTORS CRP 1 MANAGEMENT SERVICES AGREEMENT THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made this 31st day of July, 1995, by and between Vie de France Corporation, a Delaware corporation (the "Company"), and Food Investors Corporation, a Delaware corporation (the "Consultant"). WHEREAS, the Company engages in business within the food service industry, manufacturing frozen food "sous vide" for distribution and use worldwide, and developing worldwide sources of raw materials as well as worldwide markets for its goods and services, as well as maintaining an internationally recognized trademark in North America, Europe, and Asia, and has its principal office at 85 South Bragg Street, Suite 600, Alexandria, Virginia 22312; WHEREAS, the parties have been engaged in a management services arrangement pursuant to an agreement, dated October 27, 1993 (a copy of which is attached hereto) by and between the parties, as previously approved by the board of directors of the Company, and the parties now wish to update their agreement with respect to their future arrangements, which agreement is consistent with their past agreement; WHEREAS, the Company desires to obtain the benefits of the Consultant's knowledge and experience as consultants to the Company, and the consultant desires to perform certain services for the Company, subject to the terms and provisions of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Contract Term. The term of this Agreement shall be for a period of one year from the Effective Date with successive one-year automatic renewal periods corresponding with the fiscal years 1 2 of the Company as the fiscal year may be adjusted from time to time, until terminated prior to any such period by the written notice of termination by either party hereto. The Effective Date hereof shall be June 25, 1995. 2. Consulting. The Company engages the Consultant to provide management services, and the Consultant accepts such engagement, on the terms and conditions set forth in this Agreement. During the term of this Agreement, the Consultant shall perform all consulting and managerial services as may be assigned to it by the Board of Directors or the Chief Executive Officer of the Company with respect to any management, planning, strategy development and pursuing worldwide interests of the Company in connection with the Business or otherwise. In addition, Consultant may provide access to housing facilities for the benefit of the Company. The Consultant shall perform services hereunder at such times and places as may be reasonably requested by the Company. 3. Payments. In exchange for the management services provided hereunder by the Consultant, the Company agrees to pay to the Consultant an annual amount as established from time to time by the Company's Board of Directors. A portion of the annual payments made hereunder shall be attributable to reimbursement of expenses actually incurred by Consultant and accordingly, Consultant shall not be entitled to any further reimbursement of expenses. The annual amount shall be payable in four equal quarterly installments coinciding with the fiscal year of the Company. 4. Income Tax Statement. The Company and the Consultant shall not take inconsistent positions with respect to the treatment for federal, state and local income tax purposes of the fees and other monetary and non-monetary compensation to be paid by the Company to the Consultant hereunder. 5. Waiver. The waiver by the Company or by the Consultant of a breach by the other party of any covenant or agreement herein or any provision hereof shall not operate or be construed as a waiver of any subsequent breach by the waiving party. 2 3 6. Confidential Information. During the term of this Agreement and for a period of two years after the expiration of this Agreement, the Consultant shall not (and shall ensure that its Employees do not), directly or indirectly, use, other than pursuant to this Agreement on behalf of the Company, or disclose to any person, corporation or entity any information relating to the Company's methods of operation or any pricing methods, customers or customer lists, trade or technological secrets or other information of any nature confidential to the Company. The obligations of the Consultant under this Section 6 shall survive the expiration of the term of this Agreement. 7. Notices. Any notice required or permitted to be given and shall cause under this Agreement shall be given in writing, and shall be delivered by hand or by certified mail, postage prepaid, addressed as set forth below (or to such other address furnished by any party to the other in accordance with this Section 7). If to the Company: Vie de France Corporation 85 South Bragg Street, Suite 600 Alexandria, Virginia 22312 Attn: Corporate Secretary If to the Consultant: Food Investors Corporation Route 1, Box 27K Aldie, Virginia 22001 Attn: Jean-Louis Vilgrain All notices delivered by mail shall be deemed delivered upon mailing. 8. Severability. Any provision of this Agreement which is found to be unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective to the extent of such unenforceability, without invalidating or otherwise affecting the remaining provisions hereof. 3 4 9. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Virginia. 10. Successor and Assigns. The Consultant may not assign this Agreement or any of its rights or obligations hereunder. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, personal representatives and successors. IN WITNESS WHEREOF, the parties have executed this Agreement under seal as of the day and year first above written. ATTEST: VIE de FRANCE CORPORATION /s/ Alan Esenstad By: /s/ Stanislas Vilgrain (SEAL) - ------------------------------------------- -------------------------------------------- Name: Alan Esenstad Name: Stanislas Vilgrain Title: Secretary Title: President WITNESS: FOOD INVESTORS CORPORATION /s/ Stanislas Vilgrain By: /s/ Jean-Louis Vilgrain (SEAL) - ------------------------------------------ -------------------------------------------- Name: Stanislas Vilgrain Name: Jean-Louis Vilgrain Title: President Title: Chairman
4 EX-10.61 5 LOAN AGREEMENT DATED OCTOBER 18, 1993 1 [DEN NORSKE BANK LETTERHEAD] FINANSSENTER Vie de France Norway AS Langgt. 1 Borenhaugen 1 Postboks 525, Krossen 4066 Stavanger 4301 Sandnes Att: Haakon Lunde Our ref.: brvdfntj.10s Sandnes, Oct. 18th, 1993 Dear Sirs, RE: TERM LOAN, OVERDRAFT FACILITY AND BRIDGE LOAN FACILITY We refer to letter from Vie de France Corp. dated October 1st, 1993. As requested, please find below a revised, consolidated offer for the above mentioned facilities. The offer is basically a consolidation of our previous commitment letters, with the introduction of certain new conditions for the bridge loan facility. 1. TERM LOAN Borrower Vie de France Norway AS Lender: Den norske Bank AS Amount: NOK 2,500,000 or the equivalent in USD. Purpose: The purpose of the facility is to provide working capital pertaining to the operations of a new sous vide plant at Hjelmeland. Interest: NOK interest rate P.t. 8,5 % p.a. payable quarterly in arrears. The interest rate will be adjusted according to the banks' funding cost at any time. USD interest rate Libor as quoted by the Lender for the actual interest period for USD plus a margin of p.t. 2 % p.a., payable at the end of each interest period. Interest periods of 3 and 6 months are available.
2 -2- Repayment The loan shall be redeemed over 5 years in equal semi-annual consecutive instalments, commencing 12 months from the date of drawdown. Prepayment: The loan may be prepaid in part or in full on any interest term date, provided a written notice is given to the bank 14 days prior to the interest due date. No prepayment fee will be charged. Up front fee: NOK 5,000 payable on date of acceptance. Applicable law: The facility shall be construed and governed according to the laws of the Kingdom of Norway. 2. MULTI CURRENCY OVERDRAFT FACILITY Facility: Multi currency overdraft facility Borrower: Vie de France Norway AS Lender: Den norske Bank AS Purpose: The purpose of the facility is to provide working capital pertaining to the operations of a new sous vide plant at Hjelmeland. Limit: The equivalent of USD 1 Mio. to be fixed in NOK. Availability: Drawings under the facility are to be subject to a borrowing base, limiting total drawings to the following: 70 % of eligible accounts receivable from Vie de France Corp., i.e. receivables not exceeding 30 days from invoice date, and 70 % of inventories pertaining to orders from said parent company, and 100 % of accounts receivable secured by satisfactory letter of credit or bank guarantee, and 60 % of other receivables not exceeding 60 days from invoice date and 50 % of other marketable inventories. Drawings under the multi currency facility are available in various currencies. The sum of drawings and deposits on accounts included in the multi currency facility, converted on a daily basis to NOK, is not permitted to exceed the Limit. Drawings in each single currency is to be within the Limit.
3 -3- Interest: A. Foreign currencies Debit interest rate DnB base rate for the relevant currency plus a marging of 2 % p.a. The base rate is fixed daily on the basis of overnight or tomorrow/ next cost of money for the relevant currency. Our base rate for USD drawings is currently 3,1875 % p.a. Credit interest rate DnB base rate for the relevant currency less a margin of 0,625 % p.a. Our base rate for USD deposits is currently 2,875 % p.a. B. NOK Debit interest rate P.t. 8,5 % p.a., corresponding to approximately DnB's funding cost plus 2 % p.a. margin. Credit interest rate P.t. 5 % p.a. Accrued debit and credit interest to be payable quarterly in arrears. Commitment fee: P.t. 0,125 % of Limit, calculated and payable quarterly in arrears. Up front fee: NOK 8.000,- payable up front on date of acceptance. Annual account fee: NOK 2.000,- annually per account included in the multi currency overdraft facility. Law: The facility will be construed and governed according to the laws of the Kingdom of Norway. 3. BRIDGE LOAN FACILITY Borrower: Vie de France Norway AS. Lender: Den norske Bank AS.
4 -4- Limit: NOK 3,360,000. Purpose: Bridge financing of production equipment at new sous vide plant in Hjelmeland. The bridge loan facility is to be converted by a term loan and a grant from SND totalling NOK 3,360,000, according to commitment letter from SND dated August 20th 1993. Interest: P.t. 9 % p.a. payable quarterly in arrears or at conversion. Commitment fee: P.t. 0,125 % payable quarterly in arrears. Up front fee: NOK 6,000,-. Availability: The facility is available for drawings pertaining to actual payments of investment expenses up to and including 31st May 1994. Drawings will be made available on a bridge loan account, similar to an overdraft facility. Law: The facility will be construed and governed according to the laws of the Kingdom of Norway.
4. TERMS AND CONDITIONS APPLICABLE TO BOTH TERM LOAN, MULTI CURRENCY OVERDRAFT FACILITY AND BRIDGE LOAN FACILITY Collateral: 1. priority mortgage over the Borrower's accounts receivable (factoringpant). 1. priority mortgage over the Borrower's inventories (varelagerpant). 1st. priority mortgage over Borrower's rental right(s), machinery and equipment etc. (leierett med driftstilbehor) with a face value of NOK 2,500,000, 2nd. priority mortgage over Borrower's rental right(s), machinery and equipment etc. (leierett med driftstilberhor) with a face value of NOK 3,360,000 to be released in favour of SND on conversion of the bridge loan facility. Charges pertaining to the registration of security documents, are payable by the Borrower. Affirmative covenants: Borrower is to furnish the Lender with: - Quarterly financial reports within one month from the end of each fiscal quarter and annual reports with 3 months from the end of the fiscal year.
5 -5- - Monthly statements specifying accounts receivable by age, within seven business days from the end of each month. - Monthly inventory list specified according to Lender's requirements within seven business days from the end of each month.. - Quarterly form 10-Q financial reports and annual reports for Vie de France Corp. at the request of the Lender. - Other such financial information as the Lender may reasonably require. - Copies of agreements with suppliers of salmon evidencing the supply of salmon in required quantities at stable prices. - Evidence of satisfactory financial condition of the ultimate supplier(s) of sliced salmon (Ryfisk or others). - Documentation, evidencing total finacing commitments available to Borrower being not less than scheduled investments. Negative covenants: Borrower's capital, defined as subordinated loans and shareholders' equity, shall be minimum 30 % of total assets at any time. Borrower's ratio between current assets and short term liabilities shall be min. 1,3 at any time. Redemption of subordinated loans to the Borrower is subject to the consent of the Lender. Equity of Vie de France Corp. shall equal minimum 40 % of total assets at any time. The ratio between current assets and short term liabilities of Vie de France Corp. to be min 1,7 at any time. Undertaking by Vie de France Corp. to waive any possible rights to off set debt payable to Borrower against subordinated loans to Borrower. Guarantee from Vie de France Corp., USA acceptable to Lender, stating that Vie de France Corp. undertakes in the event of default by Borrower, to purchase, at 55 % of costprice, the following machinery from Vie de France Norway AS or the lender as the case may be: Cooker, multivacs incl. printer, labeling equipment and searing machine with an estimated value of approx. USD 775,000. Vie de France
6 -6- Corp's said undertaking shall, however, be limited to the balance of the prevailing term loan. Guarantee from Vie de France Corp. acceptable to Lender, to the effect that all orders placed by Vie de France Corp. with Vie de France Norway AS, in the event of default by the Borrower, will be paid to beneficiary at contract price. Guarantee by Vie de France Corp. acceptable to Lender, whereby said company undertakes to purchase, in the event of default by the Borrower, the portion of Borrower's inventories intended for other customers than Vie de France Corp., at 70 % of book value. Drawings under the bridge loan facility are subject to sufficient documentation evidencing compliance with all terms and conditions regarding the term loan and grant, as set out by SND. Acceptance from SND for each drawing under the bridge loan facility, or, guarantee from Vie de France Corp., acceptable to Lender, securing any outstandings under the bridge loan facility up to the date of conversion of the bridge loan facility. Borrower's equity/subordinated loan capital has to be fully paid and utilized before drawings under the bridge loan facility is made available. According to the financing scheme for Borrower, the equity/subordinated loan capital is to be minimum USD 750,000, equivalent of approximately NOK 5 Mio. Conditions precedent: The above mentioned facilities and term loan are made available to Borrower conditionally upon the receipt by Lender of the following documents duly signed by authorized officer(s) of the relevant company: - Acceptance of this offer duly signed on copy of this letter by the Borrower's board of directors. - Multi currency overdraft facility agreement - Term loan agreement - Security documents - Undertakings and guarantees from Vie de France according to covenants above. - Acceptable legal opinion regarding guarantees and undertakings issued by Vie de France Corp. Expenses for such legal opinion to be payable by the Borrower.
7 -7- In addition, documentation of the compliance with other covenants are required before overdraft facility or term loan are made available. Events of default: Standard default clauses including breach of covenants.
This offer is valid and open for acceptance for two months from the date of this letter. If higher activity than anticipated at a later stage should increase the need for working capital, we are prepared to discuss the possibility of increasing the the multi currency facility. We hope the above offer will prove satisfactory to you and look forward to hearing from you. Yours sincerely for Den norske Bank AS /s/ TERJE LIND /s/ TORGEIR JOHANNESSEN - -------------- ----------------------- Terje Lind Torgeir Johannessen We hereby accept the terms and conditions attached to the term loan, the overdraft facility and the bridge loan facility according to this letter. Place: Dated: 12/17/93 /s/ WILLIAM N. PEACHEY /s/ HAAKON LUNDE /s/ INGVALD SVANDAL ----------------------------- Vie de France Norway AS 8 Vie de France Norway AS [DEN NORSKE BANK LETTERHEAD] Borehaugen 1 FINANSSENTER Langgt. 1 Postboks 525, 4004 4004 Stavanger 4301 Sandnes Att.: Haakon Lunde Our ref.: brvdfntj.lls Sandnes, Nov. 18., 1993 Dear Sirs, RE: OUR OFFER LETTER DATED OCTOBER 18, 1993 FOR CREDIT FACILITIES - AMENDMENTS We refer to our above mentioned letter and to your request for amendments of terms and conditions in said letter. We are pleased to offer you the following amendments: 1. Term Loan availability The Term Loan is made available for drawdown when the planned production machinery at the production plant in Hjelmeland has been installed and production of sous vide salmon at the plant has started, provided that other terms and conditions for the facilities have been complied with. 2. Extension of the Bridge Loan Facility The Bridge Loan Facility is extended from May 31, 1994 to September 30, 1994 due to change in equipment requirements and later date of upstart of production than previously expected. 3. Negative covenant regarding guarantee from parent company for buy back of machinery. Last line in last paragraph on page 5, regarding guarantee of 55 % cost price, is amended to read: "with an estimated cost price of USD 775,000". 9 4. Negative covenant regarding equity/subordinated loan utilization. The condition in paragraph 13 under negative covenants, page 6, 1st sentence is changed to read: " Borrower's equity/subordinated loan capital has to be fully paid in, and minimum 90 % of the paid in equity/subordinated loan has to be utilized, before the Bridge Loan Facility is made available for drawings." 5. Commitment fee for Overdraft Facility and Bridge Loan Facility The fees begin to accrue as of the actual signing date of the loan agreements. We hope the above amendments are satisfactory to you Yours sincerely for Den norske bank AS /s/ TERJE LIND /s/ TORGEIR JOHANNESSEN - --------------- ----------------------- Terje Lind Torgeir Johannessen We hereby accept the above amendments of our offer letter dated October 18, 1993. Place: McLean Virginia Date June 9, 1994 /SIG/ ---------------------------- Vie de France Norway AS 10 [FIRST UNION LOGO] SWIFT TELEX MESSAGE FROM FIRST UNION NATIONAL BANK TO DEN NORSKE BANK PAGE 1 of 2 {1:F01FUNBUS33AINT0000000000} {2:I700ONBANOKKXXXXN2000){4: ?????/1 ????:IRREVOCABLE :20:S055419 :31C:950803 :31D:960201FRANCE :50:VIE DE FRANCE-CORP. 85 S BRAGG STREET, SUITE 600 ALEXANDRIA, VA 22312 :59:DEN NORSKE BANK ATTN TERJE LIND AND TORGEIR JOHANNESSEN DSLO NORWAY :32B:USD600000 :41A:FUNBUS3V BY PAYMENT :42C:AT SIGHT :42D:FUNBUS3V :43P:PARTIAL SHIPMENTS ARE PROHIBITED :43T:TRANSHIPMENTS ARE PROHIBITED :46A:BENEFICIARY'S STATEMENT SIGNED BY EITHER TERJE LIND OR TORGEIR JOHANNESSEN STATING QUOTE VIE DE FRANCE NORWAY AS AND OR VIE DE FRANCE CORPORATION IS IN DEFAULT UNDER THE TERMS OF THE OVERDRAFT FACILITY BY AND BETWEEN VIE DE FRANCE NORWAY AS AND DEN NORSKE BANKE, DATED OCTOBER 18, 1993 AND THAT ALL APPLICABLE CURE PERIODS HAVE ELAPSED WITHOUT CURE OF THE DEFAULT(S). :49:WITHOUT :78:WE WILL HONOR YOUR REIMBURSEMENT INSTRUCTIONS UPON OUR RECEIPT OF DOCUMENTS IN ORDER :72:SUBJECT TO UCP 500. ISSUED BY FUNB VA AND TRANSMITTED WITH FUNB NC. ALL DOCS TO BE SENT TO FUNB VA 2 FIRST UNION CENTER, 301 S. TRYON ST. T-7, CHARLOTTE, NC 28288-0742 IN ONE MAILING VIA COURIER. - -} 11 [FIRST UNION LOGO] SWIFT TELEX MESSAGE FROM FIRST UNION NATIONAL BANK TO DEN NORSKE BANK PAGE 2 of 2 S.W.I.F.T. MESSAGE FOR LETTER OF CREDIT - S055419 08/10/95 {1:F01FUNBUS33AINT0000000000} {2:I799ONBANOKKXXXX 000} {4: :20:S055419 :79:WE HEREBY AMEND OUR ABOVE REFERENCED LETCREDIT AS FOLLOWS: 1. EXPIRY; ITEM 31: PLACE OF DOCUMENT PRESENTATION IS FIRST UNION NATIONAL BANK OF VIRGINIA LOCATED AT 301 SOUTH TRYON STREET, INTERNATIONAL T7, CHARLOTTE, NC 28288-0742. LETTER OF CREDIT EXPIRES ON 01FEB96 IN U.S.A. 2. PARTIAL SHIPMENTS, ITEM 43P AND TRANSSHIPMENT, ITEM 43T ARE DELETED 3. PARTIAL DRAWINGS ARE ALLOWED UNDER THIS CREDIT 4. ITEM 72 DELETED AND RESTATED AS FOLLOWS: THIS LETTER OF CREDIT IS ISSUED BY FIRST UNION NATIONAL BANK OF VIRGINIA BUT IS TRANSMITTED VIA AUTHENTICATED SWIFT TO YOU BY FIRST UNION NATIONAL BANK OF NORTH CAROLINA. DOCUMENTS ARE TO BE SENT TO FIRST UNION NATIONAL BANK OF VIRGINIA LOCATED AT 301 SOUTH TRYON STREET, INTERNATIONAL T7, CHARLOTTE, NC 28288-0742. PLEASE BE ADVISED THAT ALL TRANSMISSIONS VIA AUTHENTICATED SWIFT COME FROM FIRST UNION NATIONAL BANK OF NORTH CAROLINA (FUNBUS33INT) BEST REGARDS, G:ADAMS - -} EX-23 6 CONSENT OF PRICE WATERHOUSE 1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-60614 and 33-60616) of Vie de France Corporation of our report dated August 25, 1995 appearing on page F-1 of this Form 10-K. /s/ PRICE WATERHOUSE LLP Washington, D.C. September 22, 1995 EX-27 7 FINANCIAL DATA SCHEDULE
5 YEAR JUN-25-1995 JUN-26-1994 JUN-25-1995 5,314,380 6,020,556 3,713,825 5,000 2,349,798 20,564,291 9,441,000 3,470,000 29,911,511 3,182,903 2,247,048 140,346 0 0 24,481,560 29,911,511 15,706,949 15,706,949 11,046,221 11,046,221 6,273,593 0 192,482 (399,049) (306,751) (705,800) 730,000 0 0 24,200 0 0
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