Compensation Governance
Our compensation committee is responsible for reviewing and making recommendations to our board of directors regarding compensation policy for our executive officers and also has the authority to approve grants under our option and stock plans.
Compensation Philosophy and Objectives
Our compensation programs for our executive officers are intended to reflect our performance and the value created for our stockholders. We are engaged in a very competitive industry, and our success depends upon our ability to attract and retain qualified executives through the competitive compensation packages we offer to these individuals. Our current compensation philosophy is based on three central objectives:
|
●
|
To provide an executive compensation structure and system that is both competitive in the marketplace and also internally equitable based upon the weight and level of responsibilities of each executive;
|
|
●
|
To attract, retain and motivate qualified executives within this structure, and reward them for outstanding performance-to-objectives and business results; and
|
|
●
|
To structure our compensation policy so that the compensation of executive officers is dependent in part on the achievement of our current year business plan objectives and dependent in part on the long-term increase in our net worth and the resultant improvement in stockholder value, and to maintain an appropriate balance between short and long-term performance objectives.
|
The compensation committee evaluates both performance and compensation to ensure that the total compensation paid to our executive officers is fair, reasonable and competitive. The principal components of compensation for our executives consist of base salary, discretionary bonuses and perquisites and other personal benefits.
From time to time we also offer alternative sources of compensation, such as stock options, to our executive officers. Options provide executive officers with the opportunity to buy and maintain an equity interest in our company and to share in the appreciation of the value of our common stock. In addition, if a participant were to leave prior to the exercise of the participant’s options, the unexercised options would be forfeited after the expiration of the period specified in the options. This makes it more difficult for competitors to recruit key employees away from us. We believe that option grants afford a desirable long-term compensation method because they closely align the interests of our management and other employees with stockholder value and motivate officers to improve our long-term stock performance. No stock options were granted in fiscal year 2012.
Section 162(m) of the Internal Revenue Code places a limit on the amount of compensation that may be deducted in any year with respect to each of our named executive officers. It is our policy that, to the extent possible, compensation will be structured so that the federal income tax deduction limitations will not be exceeded.
Executive Compensation for Fiscal Year 2012
Our compensation policy is designed to reward performance. In measuring our executive officers’ contributions to our company, our compensation committee considers numerous factors, including our growth and financial performance as measured by revenue, gross margin improvement, earnings per share, as well as cashflow targets, among other key performance indicators. We consider individual experience, responsibilities and tenure when determining base salaries, as well as industry averages for similar positions. In addition, we analyze qualitative and quantitative factors when awarding incentive compensation, such as the overall performance of our company and the relative contribution of each individual compared to pre-established performance goals.
Our chief executive officer makes recommendations to our compensation committee regarding the salaries, bonus arrangements and option grants, if any, for key employees, including all executive officers. For executive officers whose bonus awards are based partly on individual performance, our chief executive officer’s evaluation of such performance is provided to and reviewed by our compensation committee. Our compensation committee does not currently engage any consultant related to executive and/or director compensation matters.
Stock price performance has not been a factor in determining annual compensation because the price of our common stock is subject to a variety of factors outside of management’s control. We do not subscribe to an exact formula for allocating cash and non-cash compensation. However, a significant percentage of total executive compensation is performance-based. Historically, the majority of the incentives to our executives have been in the form of cash incentives, as we previously had debt restrictions that restricted the number of stock options granted.
For fiscal year 2012, our compensation for named executives consisted of base salary, discretionary bonuses and perquisites. No stock options or other equity incentives were granted.
Our board of directors, upon recommendation of our compensation committee, has approved bonuses for each executive officer for fiscal year 2012. The primary criteria used in determining bonuses related to our overall performance, progress on strategic objectives and each individual’s contribution to that performance.
During fiscal year 2012, our net revenues increased by $25.2 million and our net income more than doubled to $3.1 million. We also strengthened our balance sheet by decreasing our long term debt by $4.0 million. As a result, Mr. Rudis received a total bonus of $237,500, Mr. Bruning received a total bonus of $32,166 and Mr. Olivarez received a total bonus of $27,075. Further information regarding executive bonuses is contained below under the heading “Executive Bonuses.”
Executive Bonuses
Upon recommendation of the compensation committee, our board of directors approved bonuses for fiscal year 2012 for our named executive officers, based upon their contributions to our success during fiscal year 2012. The bonuses will be paid in fiscal year 2013.
For fiscal year 2012, Mr. Rudis served as our Chairman of the board of directors, Chief Executive Officer and President. As part of the function of all three roles, Mr. Rudis served as the relationship manager to stockholders, lenders and all three of our previously disclosed significant customers. Mr. Rudis also established and negotiated the Boston Market license opportunity, which is an important part of our future growth. In addition to setting the long-term strategy for us, Mr. Rudis was responsible for our overall profitability and maintained a close working relationship with all significant parties to help ensure positive results were achieved.
For fiscal year 2012, Mr. Bruning served as our Chief Financial Officer and was responsible for overseeing: all of our accounting practices and policies; Commission and other regulatory interaction and correspondence; the establishment and maintenance of adequate control over financial reporting; and the implementation of new rules and regulations resulting from recently enacted legislation relating to proxy statements, healthcare and financial regulatory reform. Mr. Bruning is also responsible for directing our financial strategy and forecasts and also overseeing our risk management process.
For fiscal year 2012, Mr. Olivarez served as our Vice President-Finance and Secretary and was responsible for ensuring that our board of directors and Audit Committee met regularly in accordance with NYSE MKT standards and also for creating and gathering materials needed for the meetings as well as preparing the minutes for each meeting. Mr. Olivarez was also responsible for: implementing accounting practices and policies; interaction and correspondence with the Commission and other regulatory agencies; creating and submitting publicly filed documents; establishing and maintaining adequate internal control over financial reporting; implementing new rules and regulations resulting from recently enacted legislation relating to proxy statements, healthcare and financial regulatory reform; production of periodic financial reports; maintenance of company accounting records and safeguarding of company assets. Mr. Olivarez was also responsible for shareholder interaction and correspondence.
To determine the amounts of the executive bonuses for fiscal year 2012, the compensation committee considered these individual accomplishments and also reviewed some of the Company’s more significant financial benchmarks, including but not limited to net revenue growth, gross margin improvement, earnings per share, cash flow and earnings before interest, taxes, depreciation and amortization (“EBITDA”).
For the fiscal year 2012, our net revenues and gross profit increased $25.2 million and $4.0 million, respectively, in fiscal year 2012 compared to fiscal year 2011, we had net income of $3.1 million and reduced our debt by $4.0 million. For fiscal year 2012, we had earnings per share of $0.20 per basic and $0.19 diluted shares. Lastly, our EBITDA for fiscal year 2012 was $8.5 million. EBITDA for fiscal year 2012, was calculated using the following measurements: net income of $3.1 million; interest expense of $244,000; tax expense of $1.7 million; depreciation and amortization expense of $3.5 million.
The $237,500 bonus approved for James Rudis consisted of $230,000 in cash (approximately 48% of his base salary) and a $7,500 401(k) contribution. The bonus approved for Robert C. Bruning consisted of $25,000 in cash (approximately 11% of his base salary) and $7,166 401(k) contribution. The bonus approved for Robert A. Olivarez consisted of 22,500 in cash (approximately 16% of his base salary) and $4,575 401(k) contribution.
Conclusion
Although we have adopted from time to time in the past, and may again in the future adopt, a formal bonus plan involving certain pre-established goals, we did not adopt such a plan for our executives in fiscal years 2012 and 2011. Our policy is not to disclose target levels with respect to specific quantitative or qualitative performance-related factors or factors considered to involve confidential business information, because their disclosure would have an adverse effect on us. The adverse effect would stem from competitive harm that would occur if we were to disclose confidential trade secrets or confidential commercial or financial information or specific customer-related targets and objectives.
Attracting and retaining talented and motivated management and employees is essential in creating long-term stockholder value. Offering a competitive, performance-based compensation program helps to achieve this objective by aligning the interests of executive officers and other key employees with those of stockholders. We believe that our fiscal year 2012 compensation program met this objective.
Summary Compensation Table
The following table sets forth for fiscal years 2012 and 2011 compensation awarded or paid to Mr. James Rudis, our Chairman, Chief Executive Officer and President, Mr. Robert C. Bruning, our Chief Financial Officer, Tracy E. Quinn, our former Chief Financial Officer and Mr. Robert A. Olivarez, our Vice President-Finance and Secretary for services rendered to us. Messrs. Rudis, Bruning, Olivarez and Ms. Quinn are also referred to as “named executive officers.”
Name and
|
|
Fiscal
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
Principal Positions
|
|
Year
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Compensation ($)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Rudis,
|
|
2012
|
|
$
|
481,821
|
|
|
$
|
237,500
|
|
|
$
|
278,505
|
(1)
|
|
$
|
997,826
|
|
Chairman, President and Chief Executive Officer
|
|
2011
|
|
|
475,645
|
|
|
|
38,500
|
|
|
|
276,277
|
|
|
|
790,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C. Bruning,
|
|
2012
|
|
|
154,039
|
|
|
|
32,166
|
|
|
|
-
|
|
|
|
186,205
|
|
Chief Financial Officer
(2)
|
|
2011
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tracy E. Quinn,
|
|
2012
|
|
|
174,917
|
|
|
|
-
|
|
|
|
37,057
|
(3)
|
|
|
211,974
|
|
Former Chief Financial Officer
|
|
2011
|
|
|
361,385
|
|
|
|
7,500
|
|
|
|
92,760
|
|
|
|
461,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Olivarez,
|
|
2012
|
|
|
140,000
|
|
|
|
27,075
|
|
|
|
-
|
|
|
|
167,075
|
|
Vice President-Finance and Secretary
|
|
2011
|
|
|
142,692
|
|
|
|
4,200
|
|
|
|
-
|
|
|
|
146,892
|
|
(1)
|
Mr. Rudis received certain perquisites and other personal benefits in fiscal year 2012, which consist of the following:
|
|
a.
|
Premium paid of $17,966 for term life insurance for the benefit of Mr. Rudis’ spouse; and
|
|
b.
|
Mr. Rudis maintains offices in both Vernon, California and New York. $260,539 represents perquisites or other benefits relating to payment of or reimbursement for commuting expenses between New York and California, including $210,706 for airfare, $37,653 for lodging and $12,180 for transportation, meals and other miscellaneous expenses.
|
(2)
|
Mr. Bruning’s employment as our Chief Financial Officer began on January 20, 2012.
|
(3)
|
Ms. Quinn’s employment ended on February 24, 2012. She received certain perquisites and other personal benefits in fiscal year 2012, which consist of the following:
|
|
Mr. Quinn maintains her principal residence in Pennsylvania. $37,057 represents perquisites or other benefits relating to payment of or reimbursement for commuting expenses between Pennsylvania and California, including $26,726 for airfare, $10,032 for lodging and $299 for transportation, meals and other miscellaneous expenses.
|
Executive Employment Agreements and Arrangements
James Rudis
Mr. Rudis’ previous employment agreement expired on December 31, 2011. On February 6, 2012, we entered into an employment agreement with James Rudis, our Chairman, President and Chief Executive Officer. The term of the employment agreement runs from January 1, 2012 to December 31, 2014. Mr. Rudis’ base salary is $475,000 per year and will be reviewed annually and increased in a percentage no less than that of the annual increase in the cost of living.
The employment agreement contains a covenant that Mr. Rudis will not compete with us during the term of his employment and for a period of one year thereafter. We have agreed to provide, at our expense, a $1.0 million life insurance policy on Mr. Rudis’ life, payable to a beneficiary of his choice, and to pay to him up to $800 per month for an automobile lease and to reimburse him for all operating expenses relating to the leased automobile. In addition, if Mr. Rudis chooses not to participate in our existing group medical insurance plan, we have agreed to reimburse him for health insurance premiums he pays through the term of the employment agreement for him and his immediate family, up to the amounts he paid for such coverage immediately prior to the effective date of the employment agreement. Mr. Rudis is entitled to four weeks vacation time annually and we have agreed to cash out and pay Mr. Rudis for the portion of any vacation time not used by the end of the calendar year in which it was earned or at such a later date as may be specified by Mr. Rudis.
Mr. Rudis is also entitled to receive a minimum payment of $300,000 (in addition to any other payments our compensation committee may award in its sole discretion) upon:
|
●
|
an individual, entity or group becoming the beneficial owner of more than 50% of the total voting power of our total outstanding voting securities on a fully-diluted basis;
|
|
●
|
an individual or entity acquiring substantially all of our assets and business; or
|
|
●
|
a merger, consolidation, reorganization, business combination or acquisition of assets or stock of another entity, other than in a transaction that results in our voting securities outstanding immediately before the transaction continuing to represent at least 50% of the combined voting power of the successor entity’s outstanding voting securities immediately after the transaction.
|
However, a change in control does not include a financing transaction approved by our board of directors and involving the offering and sale of shares of our capital stock.
The employment agreement also provides that if Mr. Rudis is terminated by reason of his death or disability, he or his estate is entitled to receive:
|
●
|
any accrued, unpaid base salary payable in effect on the date of termination
|
|
●
|
any unreimbursed business expenses outstanding as of the date of termination; and
|
|
●
|
any accrued but unused vacation pay as of the date of termination.
|
If Mr. Rudis voluntarily resigns prior to the end of the term, he will not be entitled to receive any bonus payments. If we terminate Mr. Rudis without cause, then subject to certain requirements, Mr. Rudis will be entitled to:
|
●
|
a severance benefit in the form of continuation of his base salary in effect at the date of termination and payment of COBRA health insurance premiums for the longer of twelve months or the remaining unexpired portion of the initial term of the agreement; and
|
|
●
|
a pro rated bonus payment under the terms of a bonus plan, if any, pursuant to which a bonus has been earned, payable at the time provided in the bonus plan.
|
In addition, Mr. Rudis maintains offices in both Vernon, California and New York. As of September 30, 2012 we paid $260,539 in perquisites or other benefits relating to payment of or reimbursement for commuting expenses between New York and California. This includes $210,706 for airfare, $37,653 for lodging and $12,180 for transportation, meals and other miscellaneous expenses.
Robert C. Bruning
Mr. Bruning’s employment arrangement commenced on January 20, 2012. Mr. Bruning receives an annual base salary of $225,000 per year, with a guaranteed minimum bonus of $25,000 because he remained in the employment of the Company through the end of fiscal year 2012. His employment is “at will.” He will also be eligible for health and other insurance programs, and 401(k) participation, on the same basis as other employees of the Company.
Tracy E. Quinn
Ms. Quinn’s employment arrangement commenced on September 10, 2007 and ended on February 24, 2012. The initial term of Ms. Quinn’s employment was for 90 days, but was reviewable by us every 30 days, and terminable at-will by either party. Ms. Quinn received a monthly base salary of $30,000. In addition, we agreed to pay or reimburse Ms. Quinn for all reasonable travel expenses from the Pittsburgh, Pennsylvania area to southern California and all reasonable living expenses while she conducted business on our behalf in southern California. As of September 30, 2012, we paid $92,760 in perquisites or other benefits relating to payment of or reimbursement for commuting expenses between Pennsylvania and California, including $57,138 for airfare, $33,810 for lodging and $1,812 for transportation, meals and other miscellaneous expenses.
Robert A. Olivarez
Mr. Olivarez receives an annual base salary of $140,000. Our board of directors determines Mr. Olivarez’ discretionary bonus based on performance and his contributions to our success.
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding the number of shares of common stock underlying options held by the named executive officers at September 30, 2012.
|
|
Option Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise Price
($)
|
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Rudis
|
|
|
69,136
|
|
|
|
-
|
|
|
|
1.47
|
|
|
2/1/15
|
|
|
|
|
10,288
|
|
|
|
-
|
|
|
|
1.50
|
|
|
2/1/15
|
|
|
|
|
10,288
|
|
|
|
-
|
|
|
|
2.00
|
|
|
2/1/15
|
|
|
|
|
10,288
|
|
|
|
-
|
|
|
|
2.50
|
|
|
2/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C. Bruning
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tracy E. Quinn
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Olivarez
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Director Compensation
Non-employee directors are entitled to cash payments of $3,000 per month in consideration for their service on our board of directors. In addition, each non-employee director receives a $1,000 bonus for every board and committee meeting that they attend in which they are a member. We may also periodically award options to our directors under our existing option and stock plans or otherwise.
Mr. Rudis was compensated as a full-time employee and officer and received no additional compensation for service as a board member during fiscal year 2012. Information regarding the compensation awarded to Mr. Rudis is included in the “Summary Compensation Table” above.
Director Compensation Table
The following table summarizes the compensation of our directors for the fiscal year ended September 30, 2012:
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Option
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
($)
(1)
|
|
|
($)
(2)
|
|
|
($)
|
|
Geoffrey A. Gerard
|
|
$
|
50,000
|
|
|
$
|
-
|
|
|
$
|
50,000
|
|
Alexander Auerbach
(3)
|
|
|
48,000
|
|
|
|
-
|
|
|
|
48,000
|
|
Alexander Rodetis, Jr.
|
|
|
48,000
|
|
|
|
-
|
|
|
|
48,000
|
|
Harold Estes
|
|
|
46,000
|
|
|
|
-
|
|
|
|
46,000
|
|
|
(1)
|
For a description of annual director fees, see the disclosure above under “Director Compensation.” The
value of perquisites and other personal benefits was less than $10,000 in aggregate for each director.
|
|
(2)
|
There were no stock options awarded during fiscal 2012. Outstanding options held by each director as of
September 30, 2012 are as follows:
|
|
●
|
Geoffrey A. Gerard – 25,000 options, which are fully vested.
|
|
●
|
Alexander Auerbach – 25,000 options, which are fully vested.
|
|
●
|
Alexander Rodetis, Jr. – 25,000 options, which are fully vested.
|
|
(3)
|
Mr. Auerbach’s firm, Alexander Auerbach & Co. Inc., also provides us with public relations and
marketing services, for which we paid $57,000 with respect to fiscal year 2012. See “Certain
Relationships and Related Transactions, and Director Independence” in Item 13 of this report.
|
OVERHILL FARMS, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Retained
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 26, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
15,823,271
|
|
|
|
158,233
|
|
|
|
11,558,479
|
|
|
|
27,354,528
|
|
|
|
39,071,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,441,508
|
|
|
|
1,441,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,441,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 2, 2011
|
|
|
-
|
|
|
|
-
|
|
|
|
15,823,271
|
|
|
|
158,233
|
|
|
|
11,558,479
|
|
|
|
28,796,036
|
|
|
|
40,512,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net issuance of common stock under stock compensation plans
|
|
|
-
|
|
|
|
-
|
|
|
|
223,273
|
|
|
|
2,232
|
|
|
|
45,054
|
|
|
|
-
|
|
|
|
47,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit on stock option exercises
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
376,760
|
|
|
|
-
|
|
|
|
376,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,114,965
|
|
|
|
3,114,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,114,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2012
|
|
|
-
|
|
|
$
|
-
|
|
|
|
16,046,544
|
|
|
$
|
160,465
|
|
|
$
|
11,980,293
|
|
|
$
|
31,911,001
|
|
|
$
|
44,051,759
|
|
The accompanying notes are an integral part
of these financial statements
OVERHILL FARMS, INC.
|
|
For the Years Ended
|
|
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(52 weeks)
|
|
|
(53 weeks)
|
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
3,114,965
|
|
|
$
|
1,441,508
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
3,419,441
|
|
|
|
4,216,353
|
|
Amortization of deferred financing costs
|
|
|
71,163
|
|
|
|
109,704
|
|
Gain on sale of property and equipment
|
|
|
(2,680
|
)
|
|
|
-
|
|
(Recovery of) provision for doubtful accounts
|
|
|
(41,113
|
)
|
|
|
43,402
|
|
Deferred income tax benefit
|
|
|
(351,661
|
)
|
|
|
(400,713
|
)
|
Changes in:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(2,051,410
|
)
|
|
|
378,164
|
|
Inventories
|
|
|
(3,167,208
|
)
|
|
|
(5,093,137
|
)
|
Prepaid expenses and other assets
|
|
|
230,631
|
|
|
|
(402,602
|
)
|
Accounts payable
|
|
|
(381,655
|
)
|
|
|
2,382,359
|
|
Accrued liabilities
|
|
|
226,515
|
|
|
|
571,763
|
|
Net cash provided by operating activities
|
|
|
1,066,988
|
|
|
|
3,246,801
|
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
Additions to property and equipment
|
|
|
(950,361
|
)
|
|
|
(1,318,063
|
)
|
Proceeds from sale of property and equipment
|
|
|
2,680
|
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(947,681
|
)
|
|
|
(1,318,063
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
Borrowings under credit facility
|
|
|
-
|
|
|
|
3,100,000
|
|
Principal payments on long-term debt
|
|
|
(4,030,000
|
)
|
|
|
(5,525,000
|
)
|
Issuance of common stock under stock compensation plans
|
|
|
47,286
|
|
|
|
-
|
|
Tax benefit on stock option exercises
|
|
|
376,760
|
|
|
|
-
|
|
Deferred financing costs
|
|
|
-
|
|
|
|
(1,117
|
)
|
Net cash used in financing activities
|
|
|
(3,605,954
|
)
|
|
|
(2,426,117
|
)
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
|
|
|
(3,486,647
|
)
|
|
|
(497,379
|
)
|
Cash at beginning of period
|
|
|
5,470,362
|
|
|
|
5,967,741
|
|
Cash at end of period
|
|
$
|
1,983,715
|
|
|
$
|
5,470,362
|
|
|
|
|
|
|
|
|
|
|
Supplemental Schedule of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
244,738
|
|
|
$
|
223,725
|
|
Income taxes
|
|
$
|
1,665,036
|
|
|
$
|
1,671,065
|
|
The accompanying notes are an integral part
of these financial statements
OVERHILL FARMS, INC.
NOTES TO FINANCIAL STATEMENTS
1.
|
COMPANY AND ORGANIZATIONAL MATTERS
|
Nature of Business
Overhill Farms, Inc. (the “Company” or “Overhill Farms”) is a value-added manufacturer of high quality, prepared frozen food products for branded retail, private label, foodservice and airline customers. The Company’s product line includes entrées, plated meals, bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish specialties, and organic and vegetarian offerings.
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Fiscal Year
The Company utilizes a 52- to 53- week accounting period, which ends on the last Sunday of September in each fiscal year if September 30 does not fall on a Saturday, or October 1 if September 30 falls on a Saturday. The fiscal year ended September 30, 2012 was a 52-week period while October 2, 2011 was a 53-week period.
Deferred Financing Costs and Debt Discount
Debt financing costs are deferred and amortized as additional interest expense over the term of the related debt. Deferred financing costs, net of accumulated amortization was $56,000 and $127,000 for fiscal years ended September 30, 2012 and October 2, 2011, respectively. Amortization of these costs totaled $71,000 and $110,000 for the fiscal years ended September 30, 2012 and October 2, 2011, respectively.
Financial Instruments
The fair value of financial instruments is determined by reference to market data and by other valuation techniques as appropriate. The Company believes the carrying value of the debt approximates fair value at both September 30, 2012 and October 2, 2011, as the debt bears interest at variable rates based on prevailing market conditions. The fair values of other financial instruments approximate their recorded values due to their short-term nature.
Inventories
Inventories, which include material, labor, and manufacturing overhead, are stated at the lower of cost, using the first-in, first-out (“FIFO”) method, or market. The Company uses a standard costing system to estimate its FIFO cost of inventory at the end of each reporting period. Historically, standard costs have been materially consistent with actual costs. The Company periodically reviews its inventory for excess items, and writes it down based upon the age of specific items in inventory and the expected recovery from the disposition of the items.
The Company writes down its inventory for the estimated aged surplus, spoiled or damaged products, and discontinued items and components. The amount of the write-down is determined by analyzing inventory composition, expected usage, historical and projected sales information, and other factors. Changes in sales volume due to unexpected economic or competitive conditions are among the factors that could result in material increases to the write-down of the Company’s inventory.
Inventory write-offs were $726,000 and $835,000 for fiscal years 2012 and 2011, respectively.
The Company classifies costs related to shipping as cost of sales in the accompanying statements of income.
Property and Equipment
The cost of property and equipment is depreciated over the estimated useful lives of the related assets, which range from three to ten years. Leasehold improvements to the Company’s Plant No.1 in Vernon, California are amortized over the lesser of the initial lease term plus one lease extension period, initially totaling 15 years, or the estimated useful life of the assets. Other leasehold improvements are amortized over the lesser of the term of the related lease or the estimated useful lives of the assets. Depreciation is generally computed using the straight-line method. Depreciation expense was $3.2 million and $3.3 million for fiscal years 2012 and 2011, respectively.
Expenditures for maintenance and repairs are charged to expense as incurred. The cost of materials purchased and labor expended in betterments and major renewals are capitalized. The fixtures and equipment balances included $2.0 million and $1.8 million of construction in process at September 30, 2012 and October 2, 2011, respectively. Costs and related accumulated depreciation of properties sold or otherwise retired are eliminated from the accounts, and gains or losses on disposals are included in operating income.
Licensing Fee
During fiscal year 2008, the Company entered into a five-year licensing agreement (with two renewable five-year terms) with Better Living Brands
tm
Alliance (“Alliance”) for the exclusive right to produce and sell frozen entrées under the Eating Right
tm
and O Organics
tm
brands. The Company agreed to pay a one-time $1.25 million licensing fee that it was amortizing over five years.
Long-lived assets, subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by an asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the estimated fair value, which is determined based on discounted future cash flows. The impairment loss calculation requires management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in future cash flows. The estimated cash flows used for this non-recurring fair value measurement is considered level 3 as defined in Note 12. During the fourth quarter of fiscal year 2011 the Alliance did not generate revenues consistent with that of prior periods, and it was determined that any future revenues were no longer estimable. As such, an impairment indicator was deemed to exist related to the Alliance licensing fee. The impairment charge of $412,000 was recorded as a selling expense in the statement of income for the year ended October 2, 2011. For fiscal years 2012 and 2011, amortization expense, including the impairment charge, related to the licensing fee was zero and $679,000 respectively.
On November 4, 2010, the Company entered into a five-year licensing agreement with Boston Market Corporation (“BMC”) for the exclusive right to use BMC’s trademarks, trade dress and copyrights in connection with the manufacturing, advertising, promotion, sales and distribution of frozen food and certain shelf-stable licensed products. The agreement commenced on July 1, 2011. The agreement also contains options for two five-year renewal terms. The Company will pay BMC an earned royalty computed at four and a half percent of net sales during the initial term and a guaranteed minimum royalty of $2.75 million and $3.25 million for the first and second renewal terms, respectively. For fiscal years 2012 and 2011, royalty expense was $1.4 million and $354,000, respectively.
Goodwill
Goodwill is evaluated at least annually for impairment. The Company has one reporting unit and estimates fair value based upon a variety of factors, including discounted cash flow analysis, market capitalization and other market-based information. The Company performed its evaluation of goodwill for impairment as of September 30, 2012, which indicated that goodwill was not impaired.
Stock Options
The Company measures the cost of all employee stock-based compensation awards based on the grant date fair value of those awards using a Black-Scholes model and records that cost as compensation expense over the period during which the employee is required to perform service in exchange for the award (generally over the vesting period of the award). No options were granted or vested during fiscal years 2012 or 2011. Therefore, there was no impact on the income statement or cash flow statement as a result of stock-based compensation for any of these fiscal periods.
Revenue Recognition
The Company’s revenues arise from one business segment – the development and manufacture of frozen food products. Revenues are recognized when products are shipped and customer takes title and assumes risk of loss, collection of the relevant receivable is reasonably assured, pervasive evidence of an arrangement exists, and the sales price is fixed or determinable
.
The Company provides for estimated returns and allowances, which have historically been immaterial, at the time of sale. Shipping and handling revenues are included as a component of net revenue.
The Company classifies customer rebate costs and slotting fees as a reduction in net revenues. Customer rebate costs and slotting fees were $9.1 million and $3.9 million for fiscal years 2012 and 2011, respectively.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company accounts for uncertainty in income taxes in accordance with authoritative guidance, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure, and transition. During the current fiscal year, the Company recorded no increase in the liability for unrecognized tax benefits, and the balance of unrecognized tax benefits was zero at September 30, 2012 and October 2, 2011.
The tax year 2011 remains open to examination by the major tax jurisdictions to which the Company is subject.
The Company has also adopted the accounting policy that interest and penalties recognized are classified as part of income taxes. No interest and penalties were recognized in the statement of income for fiscal years 2012 and 2011.
The Company does not anticipate any significant change within twelve months of this reporting date of its uncertain tax positions.
Asset Retirement Obligations
The Company records liabilities related to asset retirement obligations in the period in which they are incurred and measures them at the net present value of the future estimated cost. The offset to the liability is capitalized as part of the carrying amount of the related long-lived asset. Changes in the liability due to the passage of time are recognized over the operating term in the income statement in cost of sales.
Recent Accounting Pronouncements
In September 2011, the Financial Accounting Standard Board (“FASB”) issued an update to its authoritative guidance regarding the methods used to test goodwill for impairment. The amendment allows the option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test currently required. Under that option, an entity would no longer be required to calculate the fair value of a reporting unit unless the entity determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. If an entity concludes otherwise, then it must perform the two-step impairment test currently required. The Company will adopt this guidance commencing in fiscal 2013, effective October 1, 2012, and apply it prospectively. The adoption of the standard is not expected to have a material impact on the Company’s financial position or results of operations.
In June 2011, the FASB issued authoritative guidance that revised its requirements related to the presentation of comprehensive income. This guidance eliminates the option to present components of other comprehensive income as part of the consolidated statement of equity. It requires presentation of comprehensive income, net income and the components of other comprehensive income, either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company will adopt this guidance commencing in fiscal 2013, effective October 1, 2012, and apply it retrospectively. The adoption of the standard is not expected to have a material impact on the Company’s financial position or results of operations.
In May 2011, the FASB issued an update to its authoritative guidance regarding fair value measurements to clarify disclosure requirements and improve comparability. Additional disclosure requirements include: (a) for level 3 fair value measurements, quantitative information about significant unobservable inputs used, qualitative information about the sensitivity of the measurements to change in the unobservable inputs disclosed including the interrelationship between inputs, and a description of the Company’s valuation processes; (b) all, not just significant, transfers between level 1 and 2 of the fair value hierarchy; (c) the reason why, if applicable, the current use of a nonfinancial asset measured at fair value differs from its highest and best use; (d) the categorization in the fair value hierarchy for financial instruments not measured at fair value but for which disclosure of fair value is required. The Company adopted this guidance in the second quarter of fiscal 2012, effective January 2, 2012, and has applied it retrospectively. The adoption of the standard did not and is not expected to have in the future a material impact on the Company’s financial position or results of operations.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates.
3.
|
RELATED PARTY TRANSACTIONS
|
In February 2004, the Company engaged Alexander Auerbach & Co., Inc. (“AAPR”) to provide the Company with public relations and marketing services. AAPR provides public relations, media relations and communications marketing services to support the Company’s sales activities. Alexander Auerbach, who is a director and stockholder of the Company, is a stockholder, director and officer of AAPR. The Company paid to AAPR $57,000 and $67,000 for services rendered under this engagement during fiscal years 2012 and 2011, respectively. These fees totaled more than 5% of AAPR’s gross revenues for its fiscal years ended January 31, 2012 and 2011, respectively.
Inventories are summarized as follows:
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Raw ingredients
|
|
$
|
6,180,900
|
|
|
$
|
5,874,813
|
|
Finished product
|
|
|
13,008,871
|
|
|
|
10,312,375
|
|
Packaging
|
|
|
2,129,637
|
|
|
|
1,965,012
|
|
|
|
$
|
21,319,408
|
|
|
$
|
18,152,200
|
|
Long-term debt of the Company is summarized as follows:
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Bank of America Revolver
|
|
$
|
6,742,647
|
|
|
$
|
10,772,647
|
|
Less current maturities
|
|
|
(6,742,647
|
)
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
10,772,647
|
|
The Company executed a senior secured credit agreement with Bank of America on September 24, 2010. The facility is structured as a $30 million three-year senior secured revolving credit facility, secured by a first priority lien on substantially all the Company’s assets. The Company made an initial loan drawdown of $13.2 million on September 24, 2010, which was used to pay off the Company’s prior credit facility. Under the Bank of America facility the Company has the ability to increase the aggregate amount of the financing by $20 million under certain conditions.
The Bank of America facility bears annual interest at the British Bankers Association LIBOR Rate, or LIBOR, plus an applicable margin (listed below). The margin was initially 1.75%. Beginning on January 1, 2011, and adjusted quarterly thereafter, the margin is calculated as follows:
Ratio of aggregate outstanding funded
commitments under the facility (including letter
of credit obligations) to EBITDA for the
preceding four quarters
|
|
Applicable Margin
|
|
Greater than or equal to 1.50:1
|
|
|
2.00%
|
|
|
|
|
|
|
Greater than or equal to 0.50:1
but less than 1.50:1
|
|
|
1.75%
|
|
|
|
|
|
|
Less than 0.50:1
|
|
|
1.50%
|
|
At September 30, 2012, there was $6.7 million outstanding under the Bank of America facility with an applicable interest rate of approximately 2.0%. In addition, the Company paid an unused fee equal to 0.25% per annum. For fiscal years 2012 and 2011, the Company incurred $244,000 and $225,000, respectively, in interest expense excluding amortization of deferred financing costs. During fiscal year 2012, the Company reduced the outstanding balance of the facility by ($4.0 million in voluntary payments). As of September 30, 2012, the Company had $23.3 million available to borrow under the new credit facility.
Initial proceeds from the Bank of America facility, received September 24, 2010, were used to repay approximately $13.2 million in existing debt in connection with the termination of the Company’s former financing arrangements.
The Bank of America facility contains covenants whereby, among other things, the Company is required to maintain compliance with agreed levels of fixed charge coverage and total leverage. The facility also contains customary restrictions on incurring indebtedness and liens, making investments and paying dividends. At September 30, 2012, the Company was in compliance with all covenants.
The Company’s outstanding obligations under the facility will be due and payable upon maturity in September 2013.
Stock Options
The Company adopted stock option plans in October 2002 and May 2005. The Company reserved 800,000 and 550,000 shares of common stock under the plans adopted in October 2002 and May 2005, respectively, for the issuance to eligible directors and employees of, and consultants to, the Company under the plans. The plans provide for the grant of both incentive stock options (at exercise prices no less than fair value at the date of grant) and non-qualified stock options (at exercise prices as determined by the Company’s Compensation Committee). Such options may be exercisable as determined by such Committee. The plans expire ten years following their adoption. The October 2002 plan expired on September 30, 2012.
A summary of the Company’s stock option activity and related information follows:
|
|
For the Fiscal Years Ended
|
|
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
Exercise
|
|
|
|
Options
|
|
|
Price
|
|
|
Options
|
|
|
Price
|
|
Outstanding at beginning of year
|
|
|
521,000
|
|
|
$
|
1.61
|
|
|
|
521,000
|
|
|
$
|
1.61
|
|
Exercised
|
|
|
(329,000
|
)
|
|
$
|
(1.60
|
)
|
|
|
-
|
|
|
|
-
|
|
Outstanding at end of year
|
|
|
192,000
|
|
|
$
|
1.62
|
|
|
|
521,000
|
|
|
$
|
1.61
|
|
Exercisable at end of year
|
|
|
192,000
|
|
|
$
|
1.62
|
|
|
|
521,000
|
|
|
$
|
1.61
|
|
The cash received and fair value of the net share settlement for the 329,000 options exercised totaled approximately $47,000 and $480,000, respectively. Exercise prices for the 192,000 options outstanding as of September 30, 2012 ranged from $1.47 to $2.50. The weighted-average remaining contractual life of those options is 2.3 years. The following table summarizes information about stock options outstanding as of September 30, 2012:
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted -
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
Average
|
|
|
Aggregate
|
|
|
|
|
|
Average
|
|
|
Aggregate
|
|
|
|
|
Number
|
|
|
Contractual
|
|
|
Exercise
|
|
|
Intrinsic
|
|
|
Number
|
|
|
Exercise
|
|
|
Intrinsic
|
|
|
|
|
Outstanding
|
|
|
Life
|
|
|
Price
|
|
|
Value
(1)
|
|
|
Exercisable
|
|
|
Price
|
|
|
Value
(1)
|
|
$
|
2.50
|
|
|
|
18,004
|
|
|
|
2.3
|
|
|
$
|
2.50
|
|
|
$
|
37,448
|
|
|
|
18,004
|
|
|
$
|
2.50
|
|
|
$
|
37,448
|
|
$
|
2.00
|
|
|
|
18,004
|
|
|
|
2.3
|
|
|
$
|
2.00
|
|
|
|
46,450
|
|
|
|
18,004
|
|
|
$
|
2.00
|
|
|
|
46,450
|
|
$
|
1.50
|
|
|
|
18,004
|
|
|
|
2.3
|
|
|
$
|
1.50
|
|
|
|
55,452
|
|
|
|
18,004
|
|
|
$
|
1.50
|
|
|
|
55,452
|
|
$
|
1.47
|
|
|
|
137,988
|
|
|
|
2.3
|
|
|
$
|
1.47
|
|
|
|
429,143
|
|
|
|
137,988
|
|
|
$
|
1.47
|
|
|
|
429,143
|
|
$
|
1.47 - 2.50
|
|
|
|
192,000
|
|
|
|
2.3
|
|
|
$
|
1.62
|
|
|
$
|
568,493
|
|
|
|
192,000
|
|
|
$
|
1.62
|
|
|
$
|
568,493
|
|
|
(1)
|
Based on the last reported sale price of the Company’s common stock of $4.58 on September 28, 2012 (the last trading day of fiscal
year 2012).
|
The total intrinsic value of options exercised during the fiscal year ended September 30, 2012 was $950,910 at the time of exercise.
The following table sets forth the calculation of income per share (“EPS”) for the periods presented:
|
|
For the Fiscal Years Ended
|
|
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Basic EPS Computation:
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
Net income
|
|
$
|
3,114,965
|
|
|
$
|
1,441,508
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
15,831,596
|
|
|
|
15,823,271
|
|
Total shares
|
|
|
15,831,596
|
|
|
|
15,823,271
|
|
Basic EPS
|
|
$
|
0.20
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Computation:
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
3,114,965
|
|
|
$
|
1,441,508
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
15,831,596
|
|
|
|
15,823,271
|
|
Incremental shares from assumed conversion of preferred stock and exercise of stock option and warrants
|
|
|
163,257
|
|
|
|
227,787
|
|
Total shares
|
|
|
15,994,853
|
|
|
|
16,051,058
|
|
Diluted EPS
|
|
$
|
0.19
|
|
|
$
|
0.09
|
|
Accrued liabilities consisted of the following:
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Compensation
|
|
$
|
2,609,403
|
|
|
$
|
2,617,533
|
|
Taxes other than income taxes
|
|
|
41,657
|
|
|
|
36,068
|
|
Long-term accrued liabilities
|
|
|
709,018
|
|
|
|
616,890
|
|
Royalty
|
|
|
753,591
|
|
|
|
405,827
|
|
Other
|
|
|
642,064
|
|
|
|
760,771
|
|
|
|
$
|
4,755,733
|
|
|
$
|
4,437,089
|
|
Income tax provision consisted of the following:
|
|
For the Fiscal Years Ended
|
|
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
Current:
|
|
|
|
|
|
|
Federal
|
|
$
|
1,635,509
|
|
|
$
|
829,701
|
|
State
|
|
|
441,889
|
|
|
|
396,058
|
|
Total current
|
|
|
2,077,398
|
|
|
|
1,225,759
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(297,290
|
)
|
|
|
(206,924
|
)
|
State
|
|
|
(54,371
|
)
|
|
|
(193,789
|
)
|
Total deferred
|
|
|
(351,661
|
)
|
|
|
(400,713
|
)
|
|
|
|
|
|
|
|
|
|
Total income tax provision
|
|
$
|
1,725,737
|
|
|
$
|
825,046
|
|
The total income tax provision was 35.7% and 36.4% of pretax income for fiscal years 2012 and 2011, respectively. A reconciliation of income taxes with the amounts computed at the statutory federal rate follows:
|
|
For the Fiscal Years Ended
|
|
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computed tax provision at federal statutory rate (35%)
|
|
$
|
1,694,245
|
|
|
$
|
793,294
|
|
State income tax provision, net of federal benefit
|
|
|
251,887
|
|
|
|
131,475
|
|
Permanent items
|
|
|
(153,256
|
)
|
|
|
(77,412
|
)
|
Other
|
|
|
(67,139
|
)
|
|
|
(22,311
|
)
|
|
|
$
|
1,725,737
|
|
|
$
|
825,046
|
|
The deferred tax assets and deferred tax liabilities recorded on the balance sheet are as follows:
|
|
September 30,
|
|
|
October 2,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Deferred
|
|
|
Deferred
|
|
|
Deferred
|
|
|
Deferred
|
|
|
|
Tax
|
|
|
Tax
|
|
|
Tax
|
|
|
Tax
|
|
|
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory and accounts receivable
|
|
$
|
250,720
|
|
|
$
|
-
|
|
|
$
|
367,189
|
|
|
$
|
-
|
|
Accrued liabilities
|
|
|
867,216
|
|
|
|
-
|
|
|
|
831,229
|
|
|
|
-
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
(250,552
|
)
|
|
|
-
|
|
|
|
(242,072
|
)
|
|
|
|
1,117,936
|
|
|
|
(250,552
|
)
|
|
|
1,198,418
|
|
|
|
(242,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits and deferrals
|
|
$
|
196,373
|
|
|
$
|
-
|
|
|
$
|
227,243
|
|
|
$
|
-
|
|
Depreciation
|
|
|
1,331,064
|
|
|
|
-
|
|
|
|
891,699
|
|
|
|
-
|
|
Amortization
|
|
|
376,845
|
|
|
|
-
|
|
|
|
387,037
|
|
|
|
-
|
|
Goodwill
|
|
|
-
|
|
|
|
(2,743,454
|
)
|
|
|
-
|
|
|
|
(2,735,828
|
)
|
Accrued liabilities
|
|
|
283,599
|
|
|
|
-
|
|
|
|
251,356
|
|
|
|
-
|
|
Valuation allowance
|
|
|
(3,293
|
)
|
|
|
-
|
|
|
|
(20,964
|
)
|
|
|
-
|
|
Other
|
|
|
-
|
|
|
|
(1,710
|
)
|
|
|
-
|
|
|
|
(1,742
|
)
|
|
|
|
2,184,588
|
|
|
|
(2,745,164
|
)
|
|
|
1,736,371
|
|
|
|
(2,737,570
|
)
|
Total deferred taxes net of valuation allowance
|
|
$
|
3,302,524
|
|
|
$
|
(2,995,716
|
)
|
|
$
|
2,934,789
|
|
|
$
|
(2,979,642
|
)
|
As of September 30, 2012, the Company had no net operating losses or alternative minimum tax credits available for carryforward for federal tax purposes.
10.
|
COMMITMENTS AND CONTINGENCIES
|
Commitments
The Company enters into monthly and long-term leases. Future minimum lease payments for all long-term operating leases, including facilities and equipment, at September 30, 2012 were as follows:
2013
|
|
$
|
2,522,158
|
|
2014
|
|
|
1,468,729
|
|
2015
|
|
|
1,143,867
|
|
2016
|
|
|
1,142,934
|
|
|
|
$
|
6,277,688
|
|
The Company leases its facilities, both Plant No. 1 and Plant No. 2, under operating leases expiring through September 30, 2016, and expiring December 2013, with an option for a 60-month extension, respectively. Both facilities operate in Vernon, California. Certain of the other leases provide for renewal options at substantially the same terms as the current leases.
The Company’s lease of its primary operating facility requires the premises to be restored to its original condition upon the termination of the lease. Accordingly, the Company has recorded a liability of $709,000 and $617,000 representing the present value of the estimated restoration costs at September 30, 2012 and October 2, 2011, respectively. The corresponding asset is being depreciated over 13 years, and the present value of the liability is being accreted over the term in order to establish a reserve at the end of the lease equal to the refurbishment costs.
Certain of the Company’s equipment leases provide for declining annual rental amounts. Rent expense is recorded on a straight-line basis over the term of the lease. Accordingly, deferred rent is recorded in the accompanying balance sheets in other assets as the difference between rent expense and amounts paid under the terms of the lease agreements.
Rent expense, including monthly equipment rentals, was approximately $2.6 million for fiscal years 2012 and 2011.
The Company maintains an employment agreement with its Chief Executive Officer, James Rudis. Mr. Rudis’ employment agreement expires on December 31, 2014. After the initial term, the relationship will be at-will and may be terminated by us at any time or by Mr. Rudis upon at least 60 days’ written notice. The value of the remaining compensation obligations under Mr. Rudis’ existing employment agreement as of September 30, 2012 was $1,192,986.
The Company’s open purchase orders for raw materials and contractual obligations to purchase raw protein in the year subsequent to September 30, 2012 totals $11.4 million.
Contingencies
The Company is involved in certain legal actions and claims arising in the ordinary course of business. Management believes (based, in part, on advice of legal counsel) that such contingencies, including the matters described below, will be resolved without materially and adversely affecting our financial position, results of operations or cash flows. We intend to vigorously contest all claims and grievances described below.
Agustiana, et al. v. Overhill Farms.
On July 1, 2009, Bohemia Agustiana, Isela Hernandez, and Ana Munoz filed a purported “class action” against the Company in which they asserted claims for failure to pay minimum wage, failure to furnish wage and hour statements, waiting time penalties, conversion and unfair business practices. The plaintiffs are former employees who had been terminated one month earlier because they had used invalid social security numbers in connection with their employment with the Company. They filed the case in Los Angeles County on behalf of themselves and a class which they say includes all non-exempt production and quality control workers who were employed in California during the four-year period prior to filing their complaint. The plaintiffs seek unspecified damages, restitution, injunctive relief, attorneys’ fees and costs.
The Company filed a motion to dismiss the conversion claim, and the motion was granted by the court on February 2, 2010.
On May 12, 2010, Alma Salinas filed a separate purported “class action” in Los Angeles County Superior Court against the Company in which she asserted claims on behalf of herself and all other similarly situated current and former production workers for failure to provide meal periods, failure to provide rest periods, failure to pay minimum wage, failure to make payments within the required time, unfair business practice in violation of Section 17200 of the California Business and Professions Code and Labor Code Section 2698 (known as the Private Attorney General Act (“PAGA”)). Salinas is a former employee who had been terminated because she had used an invalid social security number in connection with her employment with the Company. Salinas sought allegedly unpaid wages, waiting time penalties, PAGA penalties, interest and attorneys’ fees, the amounts of which are unspecified. The Salinas action has been consolidated with the Agustiana action. The plaintiffs thereafter dropped their rest break and PAGA claims when they filed a consolidated amended complaint.
In about September 2011, plaintiffs Agustiana and Salinas agreed to voluntarily dismiss and waive all of their claims against the Company. They also agreed to abandon their allegations that they could represent any other employees in the alleged class. The Company did not pay them any additional wages or money.
The remaining plaintiff added four former employees as additional plaintiffs. Three of the four new plaintiffs are former employees that the Company terminated one month before this case was filed because they had used invalid social security numbers in connection with their employment with the Company. The fourth new plaintiff has not worked for the Company since February 2007.
On June 26, 2012, the court denied the plaintiffs’ motion to certify the case as a class action. The five remaining plaintiffs can pursue their individual wage claims against the Company, but the court has ruled that they cannot assert those claims on behalf of the class of current and former production employees they sought to represent. The Company believes it has valid defenses to the plaintiffs’ remaining claims, and that we paid all wages due to these employees.
On September 7, 2012, the plaintiffs filed a notice to appeal the denial of class certification. The case is stayed while their appeal is pending.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of trade receivables. The Company performs on-going credit evaluations of each customer’s financial condition and generally requires no collateral from its customers. The Company charges off uncollectible accounts at the point in time when no recovery is expected.
Receivables related to Panda Restaurant Group, Inc. (through its distributors), Bellisio Foods, Inc., Jenny Craig, Inc. and Safeway Inc., accounted for approximately 36%, 21%, 14% and 10% respectively of the Company’s total accounts receivable balance at September 30, 2012 and approximately 28%, 17%, 22% and 17% respectively, of the Company’s total accounts receivable balance at October 2, 2011.
Significant Customers
Significant customers accounted for the following percentages of the Company’s revenues:
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
October 2,
|
|
Customer
|
|
2012
|
|
|
2011
|
|
Panda Restaurant Group, Inc.
|
|
30%
|
|
|
26%
|
|
Jenny Craig, Inc.
|
|
20%
|
|
|
29%
|
|
Safeway Inc.
|
|
14%
|
|
|
16%
|
|
Concentration of Sources of Labor
The Company’s total hourly and salaried workforce consisted of approximately 707 employees at September 30, 2012. Approximately 78% of the Company’s workforce is covered by a 2 year collective bargaining agreement that was ratified by the union on August 7, 2011.
11.
|
EMPLOYEE BENEFIT PLANS
|
In April 1997, the Company introduced a retirement savings plan under Section 401(k) of the Internal Revenue Code. The plan covers substantially all non-union employees meeting minimum service requirements.
Effective March 1, 2005, the Company executed a new three-year contract with the UFCW Union, Local 770, that eliminated the need for a previous provision in its 401(k) plan established in January 2002 for its union employees that required an annual contribution to be made by the Company in the event that revenues exceeded specific thresholds. On January 1, 2009, the Company merged the union and non-union 401(k) plans into a single plan.
Employees voluntarily make contributions into the new plan. The Company does not provide for a match to the employees’ contributions, and expenses related to the plans have not been significant. The Company’s 2011 bonus program permitted a discretionary bonus equal to 3% of non-union employees’ gross W-2 earnings in the form of a 401(k) contribution. The total contribution under the 2011 bonus program of $323,000 was made during calendar year 2012. The Company’s 2012 bonus program permits a discretionary bonus equal to 3% of non-union employees’ gross W-2 earnings in the form of a 401(k) contribution to be made during calendar year 2013.
12.
|
FINANCIAL INSTRUMENTS
|
Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect assumptions about what market participants would use in pricing the asset or liability. These inputs would be based on the best information available, including the Company’s own data.
The carrying amount of the Company’s financial instruments, which are not marked to fair value at each reportable date and principally include trade receivables and accounts payable, approximate fair value due to the relatively short maturity of such instruments. The Company believes the carrying value of the debt approximates the fair value at both September 30, 2012 and October 2, 2011, as the debt bears interest at variable rates based on prevailing market conditions. As of September 30, 2012, the carrying value of all financial instruments was not materially different from fair value, as the interest rates on variable rate debt approximated rates currently available to the Company.
Long-lived assets, such as property, plant, and equipment, and purchased intangibles that are subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets that are to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by such asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of such asset exceeds its fair value. The fair value calculation requires management to apply judgment in estimating future cash flows and the discount rates that reflect the risk inherent in the future cash flows. The estimated cash flows used for this nonrecurring fair value measurement is considered a Level 3 input as defined above. The Company recorded no impairment charges related to long-lived assets during the fiscal year ended September 30, 2012. During the fiscal year ended October 2, 2011, the Company recorded an impairment charge in connection with a certain license arrangement as discussed in Note 2.
Goodwill is tested annually for impairment or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines its fair value and compares it to its carrying amount. The Company determines the fair value using a discounted cash flow analysis, which requires unobservable inputs (Level 3 as defined above). These inputs include selection of an appropriate discount rate and the amount and timing of expected future cash flows. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting units' goodwill and other intangibles over the implied fair value. The Company recorded no impairment charges related to goodwill during the fiscal years ended September 30, 2012 and October 2, 2011. The Company has no indefinite-lived intangible assets other than goodwill.
13.
|
COLLABORATIVE ARRANGEMENT
|
On November 4, 2010, the Company entered into an exclusive license agreement with Boston Market Corporation (“Boston Market”), whereby the Company has the right to manufacture, sell and distribute Boston Market frozen food products. The license agreement was effective July 1, 2011. The then existing Boston Market business was predominately located in the Eastern half of the United States. The Company’s initial plan was to develop an internal sales and administrative staff to handle the Boston Market business. Based on a previous relationship with Bellisio Foods, Inc. (“Bellisio”), the Company held discussions and determined that initially the most cost-effective way to maintain distributions to existing Boston Market accounts was to enter into a Co-Manufacturing, Sales, and Distribution Agreement with Bellisio. Bellisio operates a manufacturing and storage facility in Ohio, and has an existing sales force in place to manage consumer brands, and currently sells into 25,000 retail locations.
The initial term of the agreement is two years and commenced on July 1, 2011. The agreement automatically renews for one year periods, unless either party provides a six month notice of termination date prior to the renewal period. During the initial term, the Company will evaluate the overall cost-effectiveness of that relationship and actively consider all viable alternatives for the future.
The agreement is considered a collaborative arrangement between the Company and Bellisio regarding the co-manufacture, sale and distribution of Boston Market products. The agreement provides that the Company and Bellisio will each manufacture approximately 50% of the total production volume of current and future Boston Market products during the term of the agreement. The Company began its manufacturing in June 2011, and Bellisio began its manufacturing in August 2011 at its Jackson, Ohio facility.
In addition to its co-manufacturing responsibilities during the term of the agreement, Bellisio will be responsible for all sales and distribution responsibilities for all Boston Market products produced by both the Company and Bellisio. These responsibilities include marketing, sales, warehousing and handling, product distribution and all billing and collection activities. The Company has final approval rights for all sales and marketing promotion plans and expenses. Pursuant to the agreement, the Company will be responsible for development of all new items for the Boston Market line as well as maintaining the quality and consistency of all products produced. In addition, the Company maintains exclusive control and rights of the license.
The Company and Bellisio will share equally in the first $2 million of aggregate profits from the co-manufactured products, with the percentage shifting to 60% to the Company and 40% to Bellisio for any profits in excess of $2 million. Profits will be calculated after deducting from gross revenues: pre-established labor, material overhead costs relating to manufacturing of the products, all pre-approved sales and promotion expenses including a fixed sales and administrative fee charged by Bellisio as a percentage of sales; pre-negotiated warehouse charges; actual freight costs; interest expense on working capital; and any legitimate invoice deduction from retailers for spoilage, cash discounts, if any, or defective products. The Company has elected to recognize any settlements of profit or loss from this arrangement as net revenue in the statement of income.
The Company recognizes revenue and expenses related to the collaborative arrangement in accordance with authoritative guidance, which directs participants in collaborative arrangements to report costs incurred and revenue generated from transactions with third parties (that is, parties that do not participate in the arrangement) in each entity’s respective income statement line items for revenues and expenses. Revenues from the collaborative arrangement consist of sales to third party supermarkets.
The following tables illustrate the Company’s portion of the income statement, classification and activities attributable to transactions arising from the agreement for each period presented:
|
|
For the fiscal Years Ended
|
|
|
|
September 30, 2012
|
|
|
October 2, 2011
|
|
Net Revenues
|
|
$
|
32,416,925
|
|
|
$
|
7,684,202
|
|
Cost of Sales
|
|
|
(28,572,984
|
)
|
|
|
(7,234,292
|
)
|
Gross Profit
|
|
|
3,843,941
|
|
|
|
449,910
|
|
Selling, general and administrative expenses
|
|
|
(3,297,214
|
)
|
|
|
(773,467
|
)
|
Net income (loss)
|
|
$
|
546,727
|
|
|
$
|
(323,557
|
)
|
In addition to the expenses noted above, during fiscal year 2012 and 2011, the Company incurred marketing expenses of $241,000 and $190,000, respectively. During fiscal 2011, the Company also incurred one-time management fees of $175,000 and start-up costs of $179,000 related to the test runs and initial product launch of the Boston Market brand, which are not included in the expenses noted above.
The Company has completed an evaluation of all subsequent events through the issuance date of these financial statements, and concluded no subsequent events occurred that require recognition or disclosure.
15.
|
QUARTERLY FINANCIAL DATA (unaudited)
|
|
|
For the Fiscal Year Ended September 30, 2012
|
|
|
|
January 1,
|
|
|
April 1,
|
|
|
July 1,
|
|
|
September 30,
|
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
|
(13 weeks)
|
|
|
(13 weeks)
|
|
|
(13 weeks)
|
|
|
(13 weeks)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
47,509,710
|
|
|
$
|
50,201,781
|
|
|
$
|
50,364,881
|
|
|
$
|
46,312,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,685,080
|
|
|
|
4,703,146
|
|
|
|
4,114,356
|
|
|
|
3,544,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
1,870,329
|
|
|
|
1,622,001
|
|
|
|
1,185,492
|
|
|
|
475,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
1,119,992
|
|
|
|
974,401
|
|
|
|
698,125
|
|
|
|
322,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – basic
(1)
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – diluted
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
(1) EPS totals may not add due to rounding.
|
|
For the Fiscal Year Ended October 2, 2011
|
|
|
|
January 2,
|
|
|
April 3,
|
|
|
July 3,
|
|
|
October 2,
|
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
2011
|
|
|
|
(14 weeks)
|
|
|
(13 weeks)
|
|
|
(13 weeks)
|
|
|
(13 weeks)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
44,761,458
|
|
|
$
|
40,539,552
|
|
|
$
|
39,666,756
|
|
|
$
|
44,250,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,970,423
|
|
|
|
4,530,830
|
|
|
|
1,973,813
|
|
|
|
1,478,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
2,695,533
|
|
|
|
2,491,798
|
|
|
|
(546,332
|
)
|
|
|
(2,039,875
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
1,609,101
|
|
|
|
1,521,829
|
|
|
|
(331,971
|
)
|
|
|
(1,357,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share – basic
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share – diluted
(1)
|
|
$
|
0.10
|
|
|
$
|
0.09
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.09
|
)
|
(1) EPS totals may not add due to rounding.
Schedule II
OVERHILL FARMS, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
|
|
Balance at
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
Beginning
|
|
|
|
|
|
|
|
|
End
|
|
Description
|
|
of Year
|
|
|
Additions
|
|
|
Deductions
(1)
|
|
|
of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Doubtful Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
$
|
(43,000
|
)
|
|
$
|
(125,000
|
)
|
|
$
|
166,000
|
|
|
$
|
(2,000
|
)
|
2011
|
|
$
|
-
|
|
|
$
|
(42,000
|
)
|
|
$
|
(1,000
|
)
|
|
$
|
(43,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Valuation Allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
$
|
(21,000
|
)
|
|
$
|
-
|
|
|
$
|
(18,000
|
)
|
|
$
|
(3,000
|
)
|
2011
|
|
$
|
(21,000
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(21,000
|
)
|
(1)
Deductions to the allowance for doubtful accounts consist of write-offs, net of recoveries.
Exhibit
Number
|
Index of Exhibits Attached to this Report
|
|
|
|
Description of Employment Arrangement with Robert C. Bruning
|
|
|
23
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
Certification of Principal Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Certification of Principal Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
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