SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 25, 2004
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _______________
Commission file number 0-8513
CHEFS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2058515
--------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
62 BROADWAY, POINT PLEASANT BEACH, NJ 08742
(Address of principal executive offices)
(Registrant's telephone number, including area code) (732) 295-0350
--------------
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 of the past 90 days. Yes X . No .
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:
CLASS OUTSTANDING SHARES AT MAY 14, 2004
--------------------------------- -----------------------------------
Common Stock, $.01 par value 3,926,126
CHEFS INTERNATIONAL, INC.
I N D E X
PAGE NO.
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PART I FINANCIAL INFORMATION
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ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheets - 1-2
April 25, 2004 (unaudited) and January 25, 2004
Consolidated Statements of Operations - 3
Three Months Ended April 25, 2004 and
April 27, 2003 (unaudited)
Consolidated Statements of Cash Flows - 4
Three Months Ended April 25, 2004 and
April 27, 2003 (unaudited)
Notes to Consolidated Financial Statements (unaudited) 5-6
ITEM 2. Management's Discussion and Analysis 7-10
of Financial Condition and Results of Operations
ITEM 3. Controls and Procedures 11
PART II OTHER INFORMATION
----------------------
ITEM 6. Exhibits and Reports on Form 8-K 12
SIGNATURE 13
CERTIFICATION 14-16
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM I - CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
APRIL 25, 2004 JANUARY 25, 2004
-------------- ----------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,473,289 $1,410,899
Available-for-sale securities 2,337,300 2,435,090
Miscellaneous receivables 74,749 79,076
Receivable - related party 40,000 40,000
Inventories 1,315,459 1,240,054
Deferred income taxes 596,000 654,000
Prepaid expenses and other 173,147 197,976
------------ ------------
TOTAL CURRENT ASSETS 6,009,944 6,057,095
----------- -----------
PROPERTY AND EQUIPMENT, at cost 20,226,521 20,076,717
Less: Accumulated depreciation 8,983,548 8,714,945
----------- -----------
PROPERTY AND EQUIPMENT, net 11,242,973 11,361,772
---------- ----------
OTHER ASSETS:
Asset held for sale 50,181 50,181
Receivable - related party 28,523 38,523
Liquor Licenses 839,732 839,732
Non-Compete agreement 36,824 39,980
Equity in life insurance policies 641,024 641,024
Deferred income taxes 370,000 370,000
Other 180,320 138,656
----------- -----------
TOTAL OTHER ASSETS 2,146,604 2,118,096
---------- ----------
$19,399,521 $19,536,963
=========== ===========
The accompanying notes are an integral part of these financial statements.
1
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
APRIL 25, 2004 JANUARY 25, 2004
-------------- ----------------
(Unaudited)
CURRENT LIABILITIES:
Notes and mortgages payable, current maturities $ 267,683 $ 266,346
Accounts payable 870,539 822,590
Accrued payroll 157,176 124,293
Accrued expenses 611,371 633,863
Gift certificates 390,556 523,167
---------- ----------
TOTAL CURRENT LIABILITIES 2,297,325 2,370,259
--------- ---------
NOTES AND MORTGAGES PAYABLE 1,656,223 1,694,092
--------- ---------
OTHER LIABILITIES:
Accrued retirement 587,802 589,720
Interest rate swap agreements 115,861 149,602
---------- ----------
OTHER LIABILITIES 703,663 739,322
---------- ----------
STOCKHOLDERS' EQUITY:
Capital stock - common $.01 par value,
Authorized 15,000,000 shares,
Issued and outstanding 3,926,126 39,261 39,261
Additional paid-in capital 31,488,831 31,488,831
Accumulated deficit (16,685,228) (16,815,013)
Accumulated other comprehensive (loss) income (100,554) 20,211
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 14,742,310 14,733,290
----------- -----------
$19,399,521 $19,536,963
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED APRIL 25, 2004 AND APRIL 27, 2003 (Unaudited)
2004 2003
---- ----
SALES $ 5,852,466 $ 5,678,794
COST OF GOODS SOLD 1,866,338 1,774,319
------------ ------------
GROSS PROFIT 3,986,128 3,904,475
------------ ------------
OPERATING EXPENSES:
Payroll and related expenses 1,772,525 1,782,007
Other operating expenses 1,291,838 1,369,050
Depreciation and amortization 271,759 293,657
General and administrative expenses 452,592 466,765
------------ ------------
TOTAL OPERATING EXPENSES 3,788,714 3,911,479
----------- -----------
INCOME (LOSS) FROM OPERATIONS 197,414 (7,004)
------------ -------------
OTHER INCOME (EXPENSE):
Interest expense (37,533) (42,273)
Investment income 35,904 36,631
------------ ------------
OTHER (EXPENSE), NET (1,629) (5,642)
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INCOME (LOSS) BEFORE INCOME TAXES 195,785 (12,646)
PROVISION (CREDIT) FOR INCOME TAXES 66,000 (9,000)
------------ -------------
NET INCOME (LOSS) $ 129,785 $ (3,646)
============ =============
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE $ .03 $ ---
============ =============
Weighted average number of shares outstanding 3,926,126 3,926,039
============ =============
The accompanying notes are an integral part of these financial statements.
3
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED APRIL 25, 2004 AND APRIL 27, 2003 (Unaudited)
2004 2003
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 129,785 $ (3,646)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 271,759 293,657
Deferred income taxes 58,000 (13,000)
Loss on sale of investments 5,640 ---
Changes in assets and liabilities:
(Increase) decrease in:
Miscellaneous receivables 14,327 1,918
Inventories (75,405) (62,020)
Prepaid expenses 24,829 (135,675)
Increase (decrease) in:
Accounts payable 47,949 163,672
Accrued expenses and other liabilities (4,138) 69,568
------------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 472,746 314,474
------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (149,804) (129,127)
Closing of restaurant (120,000) ---
Sale or redemption of investments 649,397 51,000
Purchase of investments (711,753) (4,482)
Other (41,664) (8,270)
------------- -----------
NET CASH (USED IN) INVESTING ACTIVITIES (373,824) (90,879)
------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (36,532) (42,035)
Purchase and retirement of treasury stock --- (59,600)
------------- -----------
NET CASH (USED IN) FINANCING ACTIVITIES (36,532) (101,635)
------------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 62,390 121,960
CASH AND CASH EQUIVALENTS:
Beginning 1,410,899 1,069,857
------------- -----------
Ending $ 1,473,289 $ 1,191,817
============= ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payment for:
Interest $ 37,564 $ 41,904
============= ===========
Noncash Transactions:
(Decrease) increase in fair value of securities available for sale $ (154,506) $ 72,265
============= ===========
Change in fair value of derivatives accounted for as hedges $ 33,741 $ (1,987)
============= ===========
The accompanying notes are an integral part of these financial statements.
4
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1: BASIS OF PRESENTATION
The accompanying financial statements have been prepared by Chefs
International, Inc. (the "Company") and are unaudited. In the opinion of
the Company's management, all adjustments (consisting solely of normal
recurring adjustments) necessary to present fairly the Company's
consolidated financial position, results of operations and cash flows for
the periods presented have been made. Certain information and footnote
disclosures required under generally accepted accounting principles have
been condensed or omitted from the consolidated financial statements
pursuant to the rules and regulations of the SEC. The consolidated
financial statements and notes thereto should be read in conjunction with
the Company's audited consolidated financial statements for the year ended
January 25, 2004 and notes thereto included in the Company's Annual Report
on Form 10-KSB filed with the SEC. The results of operations and the cash
flows for the three month period ended April 25, 2004 presented in the
consolidated financial statements are not necessarily indicative of the
results to be expected for any other interim period or the entire fiscal
year.
NOTE 2: EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number of
shares of common stock outstanding during the period. There are no common
stock equivalents.
NOTE 3: INVENTORIES
Inventories consist of the following: APRIL 25, 2004 JANUARY 25, 2004
-------------- ----------------
Food $ 712,186 $ 644,547
Beverages 152,091 149,243
Supplies 451,182 446,264
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$ 1,315,459 $ 1,240,054
=========== ===========
NOTE 4: INCOME TAXES
At April 25, 2004, the Company had net deferred tax assets of approximately
$966,000 arising principally from net operating loss carryforwards.
Management has determined that it is more likely than not that future
taxable income will be sufficient to utilize the net operating loss
carryforwards. Therefore, no allowance has been established to offset these
assets.
NOTE 5: DEPRECIATION AND AMORTIZATION
The Company depreciates its property and equipment using the straight-line
method over the estimated useful lives of the assets, ranging from three to
forty years.
NOTE 6: RESTAURANT CLOSINGS
In June 2003 the Company closed one of its Mexican theme restaurants. In
connection with the closing, the Company wrote off leasehold improvements
and other equipment of $230,024 and entered into a
5
Surrender Agreement with the restaurant's landlord which required the
Company to pay $180,000, of which $60,000 was paid during the second
quarter ended July 27, 2003. The remaining balance of $120,000 was paid
during the first quarter ended April 25, 2004.
Additionally, the Company granted the landlord an option to purchase the
closed restaurant's liquor license. The landlord declined to exercise the
right to purchase the liquor license and subsequent to the quarter ended
April 25, 2004, the Company entered into an agreement with an unaffiliated
buyer to sell the license for approximately $675,000 pending government
approval of the license transfer. The closing is expected to take place
during calendar 2004.
Subsequent to the year ended January 25, 2004, the Company entered into a
contract to sell the restaurant and property located in Jensen Beach,
Florida. Pursuant to the terms of the contract, the restaurant was sold on
May 3, 2004 for $900,000 with the Company recognizing a gain of
approximately $390,000 which will be recorded during the second quarter
ended July 25, 2004.
NOTE 7: HEDGING INSTRUMENTS
The Company has interest rate swap agreements relating to a portion of its
variable rate debt. The interest rate swap agreements are designated as
cash flow hedges and are reflected at fair value in the consolidated
balance sheet and the related losses on these contracts are deferred in
stockholders' equity as a component of accumulated other comprehensive
(loss).
NOTE 8: OTHER
On November 21, 2003, the Company announced that it had received an offer
from the principal shareholders of the Company, who own approximately 61%
of the Company's outstanding common stock, of their intent to acquire all
of the remaining outstanding shares of common stock for a cash purchase
price of $1.75 per share. The Company's Board of Directors appointed a
Special Committee, consisting of the three directors independent of the
principal shareholders, to review and analyze the proposal. The initial
purchase price of $1.75 was rejected by the Special Committee. A subsequent
offer of $3.12 per share has been accepted by the Special Committee.
NOTE 9: RESIGNATION OF PRESIDENT, TREASURER, PRINCIPAL EXECUTIVE
AND PRINCIPAL FINANCIAL OFFICER
In April 2004, Anthony C. Papalia, the Company's president, treasurer,
principal executive and principal financial officer requested of the board
that he be released from his employment contract effective at the close of
business on June 28, 2004 "...in order to pursue personal interests ...."
The board agreed to release Mr. Papalia from his employment contract at
said date and he agreed to a one year non-competition agreement with the
Company. The board has elected Robert M. Lombardi as the new president of
the Company. Martin Fletcher, the Company's controller, will succeed Mr.
Papalia as the Company's treasurer and chief financial officer.
6
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Certain statements regarding future performance in this Quarterly Report on
Form 10-QSB constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. No assurance can be given that
the future results covered by the forward-looking statements will be
achieved. The Company cautions readers that important factors may affect
the Company's actual results and could cause those results to differ
materially from the forward-looking statements. Such factors include, but
are not limited to, changing market conditions, weather, the state of the
economy, substantial increases in insurance costs (in addition to those
substantial increases which commenced in April 2002), the impact of
competition to the Company's restaurants, pricing and acceptance of the
Company's food products.
RECENT DEVELOPMENTS
On June 1, 2004, the Company announced that a Special Committee of its
Board of Directors, appointed to evaluate a proposal made by the Lombardi
Restaurant Group (owned by the principal stockholders of the Company) to
purchase the interests of the Company's minority stockholders at a cash
purchase price of $3.12 per share (increased from an initial offer of $1.75
per share), had determined to recommend that the Board accept the proposal.
As the proposal is subject to various conditions, no assurances can be
given that the proposed purchase will be completed.
The Company reported in its Annual Report on Form 10-KSB for the year ended
January 25, 2004 that the employment of Anthony C. Papalia as the Company's
president, principal executive officer, treasurer and principal financial
officer, was ending effective at the close of business on June 28, 2004, at
Mr. Papalia's request, to enable him "...to pursue personal interests...."
Robert M. Lombardi, chairman of the board, will succeed Mr. Papalia as
president and principal executive officer. Martin Fletcher, the Company's
controller, will succeed Mr. Papalia as treasurer and principal financial
officer.
OVERVIEW
The Company's principal source of revenue is from the operations of its
restaurants. The Company's cost of sales includes food and liquor costs.
Operating expenses include labor costs, supplies and occupancy costs (rent,
insurance and utilities), marketing and maintenance costs. General and
administrative expenses include costs incurred for corporate support and
administration, including the salaries and related expenses of personnel
and the costs of operating the corporate office at the Company's
headquarters in Point Pleasant Beach, New Jersey.
The Company currently operates nine restaurants on a year-round basis. The
Company closed its Escondido's Mexican Restaurant in the Monmouth Mall
during the second quarter of calendar year 2003 and sold its Jensen Beach,
Florida Lobster Shanty during the second quarter of calendar year 2004. The
Company opened its first seafood restaurant in November 1978 and currently
has six free-standing seafood restaurants in New Jersey and Florida
7
operating under the names "Jack Baker's Lobster Shanty" or "Baker's
Wharfside." The Company opened its first Mexican theme restaurant, located
in New Jersey, in April 1996, under the name "Garcia's." On February 1,
2002, Garcia's began to operate under the trade name Escondido's
("Monmouth"). The Company closed this restaurant during the second quarter
of fiscal 2004. In February 2000, the Company commenced the operation of
Moore's Tavern and Restaurant, ("Moore's"), a free-standing restaurant in
Freehold, New Jersey serving an eclectic American food type menu. On
January 29, 2002, the Company commenced operation of Escondido's Mexican
Restaurant ("Freehold"), a Mexican theme restaurant located in Freehold,
New Jersey, adjacent to Moore's. On April 1, 2002, the Company acquired the
operations of Mr. Manatee's Casual Grille ("Manatee's"), a casual theme
restaurant primarily featuring seafood items, located in Vero Beach,
Florida near the Company's Vero Beach, Florida Lobster Shanty. The sale of
the Jensen Beach restaurant in May 2004 has reduced the number of
restaurants operated by the Company to nine.
Generally, the Company's New Jersey seafood restaurants derive a
significant portion of their sales from May through September. The
Company's Florida seafood restaurants derive a significant portion of their
sales from January through April. Moore's experiences a seasonality factor
similar to but not as dramatic as the seasonality factor of the New Jersey
seafood restaurants. The Company's Freehold Escondido's experiences a
seasonality factor similar to Moore's. Manatee's follows the seasonality
pattern of the other Florida restaurants.
The Company operated eleven restaurants during the first quarter of last
year ended April 27, 2003.
RESULTS OF OPERATIONS
SALES
Sales for the three months ended April 25, 2004 (first quarter of
"fiscal 2005") were $5,852,500, an increase of $173,700 or 3.1 %, as
compared to $5,678,800 for the three months ended April 27, 2003 (first
quarter of "fiscal 2004"). Increased sales of $358,200 or 6.5% for the ten
restaurants that operated during the comparable periods were offset by
decreased sales of $184,500 at the Monmouth Escondido's ("Monmouth") which
was closed in June 2003. The Florida restaurants realized increased sales
of $232,400 or 8.3% due to a very strong tourist season in Florida and
improvement in the national economy. The six New Jersey restaurants that
operated during both periods realized increased sales of $125,800 or 4.7%
primarily due to a milder winter compared to last year and the improved
economy. The sales increase in both states were realized despite ongoing
concerns related to terrorism threats, the Iraq war and the record increase
in the cost of gasoline. The number of customers served in the ten
restaurants increased by 3% while the average check paid per customer
increased by 3.4% versus last year.
GROSS PROFIT; GROSS MARGIN
Gross profit was $3,986,100 or 68.1% of sales for the first quarter
ended April 25, 2004 compared to 68.8% of sales for the quarter ended April
27, 2003. The primary reasons for the decline were substantial increases in
commodity prices including beef, dairy, poultry and grains and the closing
of the Monmouth restaurant with its lower cost Mexican fare. Management has
raised some menu prices to compensate for the higher costs and made bulk
purchases of shrimp to take advantage of lower-cost market conditions.
OPERATING EXPENSES
Total operating expenses decreased by 3.1% from $3,911,500 for the
first quarter of fiscal 2004 to $3,788,700 for the first quarter of
8
fiscal 2005. Payroll and related expenses were 30.3% of sales versus 31.4%
of sales for the corresponding quarter of the previous year primarily due
to productivity improvements, lower health insurance costs and the
increased sales volume. Other operating expenses decreased to 22.1% of
sales for the first quarter this year versus 24.1% of sales primarily due
to decreases in costs directly attributable to the closing of Monmouth and
the increase in sales versus last year.
Depreciation and amortization expenses in the first quarter were lower
by approximately $21,900 versus last year due primarily to the closing of
Monmouth and the expiration of fully depreciated assets.
General and administrative expenses for the current quarter were
$14,200 lower versus last year primarily due to reductions in corporate
staff and lower health insurance costs.
OTHER INCOME AND EXPENSE
Interest expense was $4,700 lower for the quarter ended April 25, 2004
compared to the first quarter of last year due to debt reduction.
Investment income was $700 lower in the first quarter compared to last year
primarily due to a net loss of $5,600 realized on the sale of investments.
NET INCOME (LOSS)
The Company realized net income of $129,800 or $.03 per share for the
quarter ended April 25, 2004 as compared to a net loss of $3,600 for the
quarter ended April 27, 2003. The primary components of the improvement
this year are a 3% increase in sales due to a strong Florida tourist season
and a mild New Jersey winter and a decrease in total operating expenses
primarily due to the closing of Monmouth.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ratio of current assets to current liabilities was
2.62:1 at April 25, 2004 compared to 2.56:1 at the year ended January 25,
2004. Working capital was $3,712,600 at April 25, 2004 versus $3,686,800 at
the year end, an increase of $25,800. During the first quarter ended April
25, 2004, net cash increased by $62,400. Net cash provided by operating
activities was $472,700. The primary components were net income after
adjustment for depreciation, of $401,500, an increase in inventories of
$75,400 primarily related to bulk purchases of shrimp to take advantage of
market conditions and an increase of $47,900 in accounts payable due to
increased sales and the inventory purchases.
Investing activities during the first quarter of fiscal 2005 resulted
in a net cash outflow of approximately $373,800. The primary components
were capital expenditures of $149,800 for routine restaurant improvements,
a final payment of $120,000 paid as per the Surrender Agreement associated
with the closing of Monmouth (see Note 6) and investment purchases of
$711,800 for available-for-sale securities offset by $649,400 from the sale
of investments.
Financing activities for the quarter ended April 25, 2004 resulted in
a net cash outflow of $36,500 for debt repayment.
During the corresponding quarter ended April 27, 2003, working capital
increased by $124,100 and net cash increased by $122,000. The primary
components of the first quarter of
9
last year's cash flow were net income, after adjustment for depreciation of
$290,000, an increase in prepaid expenses of $135,600 due to a change in
the financing of the Company's property insurance renewal, an increase of
$163,700 in accounts payable primarily due to the timing of several prepaid
expenses including insurance and accounting, capital expenditures of
$129,100 for restaurant improvements, debt repayment of $42,000 and $59,600
for the repurchase of 40,000 shares of the Company's Common Stock pursuant
to a December 24, 2002 Board of Directors authorization which expired on
January 29, 2004.
Subsequent to the quarter ended April 25, 2004, the Company sold the
restaurant and property located in Jensen Beach, Florida for $900,000 to an
unrelated party. The sale resulted in a gain of approximately $390,000
which will be recorded in the second quarter this year.
Also, subsequent to the quarter ended April 25, 2004, the Company
entered into an agreement to sell the liquor license used at Monmouth for
$675,000. The agreement is contingent on the purchaser meeting certain
requirements.
Management anticipates that funds from operations will be sufficient
to meet obligations for the balance of fiscal 2005, including planned
capital expenditures of approximately $395,000 in addition to those
incurred during the first quarter.
INFLATION
It is not possible for the Company to predict with any accuracy the
effect of inflation upon the results of its operations in future years. In
general, the Company is able to increase menu prices to counteract the
majority of the inflationary effects of increasing costs with the exception
of the substantial increase in insurance costs that the Company has had to
absorb over the last two years.
10
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 3 - CONTROLS AND PROCEDURES
(a) EXPLANATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company's
principal executive and principal financial officer after evaluating the
effectiveness of the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14(c) and 15d-14(c) as of a date within
90 days of the filing date of this quarterly report (the "Evaluation
Date")) has concluded that as of the Evaluation Date, the Company's
disclosure controls and procedures were adequate and effective to ensure
that material information relating to the Company and its consolidated
subsidiaries would be made known to him by others within those entities,
particularly during the period in which this quarterly report was being
prepared.
(b) CHANGES IN INTERNAL CONTROLS. There were no significant changes in
the Company's internal controls or in other factors that could
significantly affect the Company's disclosure controls and procedures
subsequent to the Evaluation Date, nor any significant deficiencies or
material weaknesses in such disclosure controls and procedures requiring
corrective actions. As a result, no corrective actions were taken.
11
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
31 - Certification of Principal Executive and Principal Financial
Officer
32 - Certification pursuant to 18 U.S.C. Section 1350 of Principal
Executive and Principal Financial Officer
(b) REPORTS ON FORM 8-K
During the quarter ended April 25, 2004, the Company filed the following
current reports on Form 8-K
DATE ITEM NO.
January 30, 2004 5- Reporting the retention by the
Special Committee, appointed by the
Board of Directors to evaluate the
offer by the Lombardi Restaurant
Group to purchase the shares of the
Company's minority stockholders, of
the investment banking firm of
Houlihan Lokey Howard & Zukin
Financial Advisors, Inc. to opine
to the Committee as to the
fairness, from a financial point of
view, of the offer.
March 8, 2004 5- Reporting the rejection by the
Special Committee of the initial
$1.75 cash purchase price per share
offer of the Lombardi Restaurant
Group.
March 15, 2004 5- Reporting the increase of the
offer by the Lombardi Restaurant
Group to a cash purchase price of
$2.50 per share.
April 19, 2004 5- Reporting the rejection by the
Special Committee of the $2.50 per
share offer of the Lombardi
Restaurant Group.
Subsequent to the close of the quarter ended April 25, 2004, the Company
filed the following current report on Form 8-K.
June 1, 2004 5- Reporting the determination of
the Special Committee to recommend
that the Board of Directors accept
the increased offer of the Lombardi
Restaurant Group to purchase the
stock of the Company's minority
stockholders at a cash purchase
price of $3.12 per share.
12
CHEFS INTERNATIONAL, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHEFS INTERNATIONAL, INC.
/S/ ANTHONY C. PAPALIA
------------------------
ANTHONY C. PAPALIA
Principal Executive and Financial Officer
DATED: JUNE 9, 2004
13