UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 
 FORM
10-Q
 (Mark
One)
 [X]
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
the quarterly period ended March 29, 2009
 
 OR
 
 [  ]
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
the transition period from ________ to ________
  Commission
file number 1-16699
 
 OVERHILL
FARMS, INC.
 (Exact
name of registrant as specified in its charter)
 
 
 Nevada
                        
                        75-2590292(State
      or other jurisdiction of
                        
                        (IRS
      Employerincorporation
      or organization)
                        
                        Identification
      Number)2727
      East Vernon AvenueVernon,
      California
                        
                        90058(Address
      of principal executive offices)
                        
                        (Zip
      code)
 (323)
582-9977
 (Registrant’s
telephone number, including area code)
 
 Not
applicable
 (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 for
the past 90 days. Yes [X] No [  ]
   
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
  Large Accelerated Filer [  ]
                Accelerated
      Filer [ X]Non-Accelerated Filer [  ]
                Smaller
      Reporting Company [  ]
 (Do not check if smaller reporting
company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
[  ] No [X]
 
 As of May
7, 2009, there were 15,823,271 shares of the issuer’s common stock, $.01 par
value, outstanding.





OVERHILL
FARMS, INC.


FORM
10-Q


QUARTER
ENDED MARCH 29, 2009











TABLE OF CONTENTS





PART I – FINANCIAL
    INFORMATION
                  Page No.Item 1.  Financial StatementsCondensed Balance Sheets as of March 29,
      2009 (unaudited) and September 28, 2008
                  2Condensed Statements of Income (unaudited)
      for the Quarters Ended March 29, 2009 and March 30,
    2008
                  4Condensed Statements of Income (unaudited)
      for the Six Months Ended March 29, 2009 and March 30,
    2008
                  5Condensed Statements of Cash Flows
      (unaudited) for the Six Months Ended March 29, 2009 and March 30,
      2008
                  6Notes to Condensed Financial Statements
      (unaudited)
                  8Item 2.   Management’s Discussion and
      Analysis of Financial Condition and Results of
    Operations
                  14Item 3.   Quantitative and Qualitative
      Disclosures about Market Risk
                  22Item 4.   Controls and
      Procedures
                  22PART II – OTHER
      INFORMATIONItem 1.   Legal
      Proceedings
                  23Item 6.   Exhibits
                  23SIGNATURES
                  24EXHIBITS ATTACHED TO THIS FORM
      10-Q
                  25





1
 Table of Contents


Item 1.   Financial Statements





OVERHILL
FARMS, INC.


CONDENSED BALANCE SHEETS











Assets





March
      29,
                    2009
                  
                  
                  September
      28,
                    2008(Unaudited)Current
      assets:Cash
                  
                  $
                  7,648,663
                  
                  
                  $
                  6,637,576Accounts
      receivable, net of allowance for doubtful accounts of $9,000 and zero at
      March 29, 2009 and September 28, 2008, respectively
                  
                  
                  19,721,304
                  
                  
                  
                  20,253,633Inventories
                  
                  
                  16,273,572
                  
                  
                  
                  17,294,076Prepaid
      expenses and other
                  
                  
                  1,112,955
                  
                  
                  
                  1,492,977Deferred
      income taxes
                  
                  
                  1,223,241
                  
                  
                  
                  1,223,241Total
      current assets
                  
                  
                  45,979,735
                  
                  
                  
                  46,901,503Property
      and equipment, at cost:Fixtures
      and equipment
                  
                  
                  23,996,560
                  
                  
                  
                  23,705,525Leasehold
      improvements
                  
                  
                  10,432,663
                  
                  
                  
                  10,373,256Automotive
      equipment
                  
                  
                  50,854
                  
                  
                  
                  50,85434,480,077
                  
                  
                  
                  34,129,635Less
      accumulated depreciation and amortization
                  
                  
                  (17,757,709
                  )
                  
                  
                  (16,220,194
                  )Total
      property and equipment
                  
                  
                  16,722,368
                  
                  
                  
                  17,909,441Other
      non-current assets:Goodwill
                  
                  
                  12,188,435
                  
                  
                  
                  12,188,435Deferred
      financing costs, net of accumulated amortization of $379,000 and $339,000
      at March 29, 2009 and September 28, 2008, respectively
                  
                  
                  206,873
                  
                  
                  
                  247,127Other
                  
                  
                  2,047,701
                  
                  
                  
                  2,173,058Total
      other non-current assets
                  
                  
                  14,443,009
                  
                  
                  
                  14,608,620Total
      assets
                  
                  $
                  77,145,112
                  
                  
                  $
                  79,419,564









































The
accompanying notes are an integral part


of these
condensed financial statements.


2
 Table of Contents


OVERHILL
FARMS, INC.


CONDENSED
BALANCE SHEETS (continued)











Liabilities
and Stockholders’ Equity





March
      29,
                                                  2008
                                                
                                                
                                                September
      28,
                                                  2008(Unaudited)Current
      liabilities:Accounts
      payable
                                                
                                                $
                                                10,114,035
                                                
                                                
                                                $
                                                11,177,686Accrued
      liabilities
                                                
                                                
                                                3,922,443
                                                
                                                
                                                
                                                3,201,548Current
      maturities of long-term debt
                                                
                                                
                                                2,740,292
                                                
                                                
                                                
                                                6,228,881Total
      current liabilities
                                                
                                                
                                                16,776,770
                                                
                                                
                                                
                                                20,608,115Long-term
      accrued liabilities
                                                
                                                
                                                435,593
                                                
                                                
                                                
                                                406,309Deferred
      tax liabilities
                                                
                                                
                                                1,730,185
                                                
                                                
                                                
                                                1,730,185Long-term
      debt, less current maturities, net of unamortized debt discount of
      $698,000 and $861,000 at March 29, 2009 and September 28, 2008,
      respectively
                                                
                                                
                                                30,679,838
                                                
                                                
                                                
                                                33,479,461Total
      liabilities
                                                
                                                
                                                49,622,386
                                                
                                                
                                                
                                                56,224,070Commitments
      and contingenciesStockholders’
      equity:Preferred
      stock, $0.01 par value, authorized 50,000,000 shares, 4.43 designated as
      Series A convertible preferred stock, 0 shares issued and
      outstanding
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Common
      stock, $0.01 par value, authorized 100,000,000 shares, 15,823,271 shares
      issued and outstanding at March 29, 2009 and September 28,
      2008
                                                
                                                
                                                158,233
                                                
                                                
                                                
                                                158,233Additional
      paid-in capital
                                                
                                                
                                                11,558,479
                                                
                                                
                                                
                                                11,558,479Retained
      earnings
                                                
                                                
                                                15,806,014
                                                
                                                
                                                
                                                11,478,782Total
      stockholders’ equity
                                                
                                                
                                                27,522,726
                                                
                                                
                                                
                                                23,195,494Total
      liabilities and stockholders’ equity
                                                
                                                $
                                                77,145,112
                                                
                                                
                                                $
                                                79,419,564









































The
accompanying notes are an integral part


of these
condensed financial statements.


3
 Table of Contents


OVERHILL
FARMS, INC.


CONDENSED STATEMENTS OF INCOME


(Unaudited)











For
      the Quarter EndedMarch
      29,
                            2009
                          
                          
                          March
      30,
                            2008Net
      revenues
                          
                          $
                          51,583,412
                          
                          
                          $
                          66,447,684Cost
      of sales
                          
                          
                          45,815,774
                          
                          
                          
                          58,024,612Gross
      profit
                          
                          
                          5,767,638
                          
                          
                          
                          8,423,072Selling,
      general and administrative expenses
                          
                          
                          2,295,531
                          
                          
                          
                          2,058,353Operating
      income
                          
                          
                          3,472,107
                          
                          
                          
                          6,364,719Interest
      expense:Interest
      expense
                          
                          
                          (424,347
                          )
                          
                          
                          (874,974
                          )Amortization
      of debt discount and deferred financing costs
                          
                          
                          (101,504
                          )
                          
                          
                          (101,504
                          )Total
      interest expense
                          
                          
                          (525,851
                          )
                          
                          
                          (976,478
                          )Other
      income
                          
                          
                          -
                          
                          
                          
                          189Income
      before income taxes
                          
                          
                          2,946,256
                          
                          
                          
                          5,388,430Income
      taxes
                          
                          
                          1,151,986
                          
                          
                          
                          2,216,515Net
      income
                          
                          $
                          1,794,270
                          
                          
                          $
                          3,171,915Net
      income per share:Basic
                          
                          $
                          0.11
                          
                          
                          $
                          0.20Diluted
                          
                          $
                          0.11
                          
                          
                          $
                          0.20Shares
      used in computing net income per share:Basic
                          
                          
                          15,823,271
                          
                          
                          
                          15,739,055Diluted
                          
                          
                          16,011,493
                          
                          
                          
                          15,974,300















































The
accompanying notes are an integral part


of these
condensed financial statements.




4
 Table of Contents


OVERHILL
FARMS, INC.


CONDENSED STATEMENTS OF INCOME


(Unaudited)











For
      the Six Months EndedMarch
      29,
                          2009
                        
                        
                        March
      30,
                          2008Net
      revenues
                        
                        $
                        106,855,441
                        
                        
                        $
                        123,274,313Cost
      of sales
                        
                        
                        93,580,285
                        
                        
                        
                        108,863,938Gross
      profit
                        
                        
                        13,275,156
                        
                        
                        
                        14,410,375Selling,
      general and administrative expenses
                        
                        
                        4,829,746
                        
                        
                        
                        4,269,585Operating
      income
                        
                        
                        8,445,410
                        
                        
                        
                        10,140,790Interest
      expense:Interest
      expense
                        
                        
                        (1,136,931
                        )
                        
                        
                        (1,867,982
                        )Amortization
      of debt discount and deferred financing costs
                        
                        
                        (203,008
                        )
                        
                        
                        (203,008
                        )Total
      interest expense
                        
                        
                        (1,339,939
                        )
                        
                        
                        (2,070,990
                        )Other
      expenses
                        
                        
                        -
                        
                        
                        
                        (11,414
                        )Income
      before income taxes
                        
                        
                        7,105,471
                        
                        
                        
                        8,058,386Income
      taxes
                        
                        
                        2,778,239
                        
                        
                        
                        3,308,527Net
      income
                        
                        $
                        4,327,232
                        
                        
                        $
                        4,749,859Net
      income per share:Basic
                        
                        $
                        0.27
                        
                        
                        $
                        0.30Diluted
                        
                        $
                        0.27
                        
                        
                        $
                        0.30Shares
      used in computing net income per share:Basic
                        
                        
                        15,823,271
                        
                        
                        
                        15,679,663Diluted
                        
                        
                        16,014,916
                        
                        
                        
                        15,918,184















































The
accompanying notes are an integral part


of these
condensed financial statements.




5
 Table of Contents


OVERHILL
FARMS, INC.


CONDENSED STATEMENTS OF CASH
      FLOWS


(Unaudited)











For
      the Six Months EndedMarch
      29,
                        2009
                      
                      
                      March
      30,
                        2008Operating
      Activities:Net
      income
                      
                      $
                      4,327,232
                      
                      
                      $
                      4,749,859Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                      
                      
                      1,578,405
                      
                      
                      
                      1,486,884Amortization
      of debt discount and deferred financing costs
                      
                      
                      203,008
                      
                      
                      
                      203,008Loss
      on asset disposals
                      
                      
                      415
                      
                      
                      
                      61,614Loss
      on recalled product
                      
                      
                      -
                      
                      
                      
                      885,540Provision
      for doubtful accounts
                      
                      
                      9,000
                      
                      
                      
                      13,559Deferred
      income taxes
                      
                      
                      -
                      
                      
                      
                      12,647Loss
      on sale of marketable securities
                      
                      
                      -
                      
                      
                      
                      11,644Changes
      in:Accounts
      receivable
                      
                      
                      523,329
                      
                      
                      
                      (3,249,682
                      )Inventories
                      
                      
                      1,020,504
                      
                      
                      
                      2,873,162Prepaid
      expenses and other assets
                      
                      
                      505,379
                      
                      
                      
                      401,452Accounts
      payable
                      
                      
                      (1,063,651
                      )
                      
                      
                      (1,260,906
                      )Accrued
      liabilities
                      
                      
                      720,895
                      
                      
                      
                      1,586,048Net
      cash provided by operating activities
                      
                      
                      7,824,516
                      
                      
                      
                      7,774,829Investing
      Activities:Additions
      to property and equipment
                      
                      
                      (362,460
                      )
                      
                      
                      (1,044,541
                      )Sale
      of marketable securities
                      
                      
                      -
                      
                      
                      
                      53,976Net
      cash used in investing activities
                      
                      
                      (362,460
                      )
                      
                      
                      (990,565
                      )


















































The
accompanying notes are an integral part


of these
condensed financial statements.


6
 Table of Contents


OVERHILL
FARMS, INC.


CONDENSED
STATEMENTS OF CASH FLOWS (continued)


(Unaudited)











For
      the Six Months EndedMarch
      29,
                      2009
                    
                    
                    March
      30,
                      2008Financing
      Activities:Borrowings
      under financing arrangements
                    
                    $
                    -
                    
                    
                    $
                    1,000,000Principal
      payments on debt
                    
                    
                    (6,189,734
                    )
                    
                    
                    (4,000,000
                    )Principal
      payments on equipment loans
                    
                    
                    (111,404
                    )
                    
                    
                    (103,379
                    )Principal
      payments on capital lease obligation
                    
                    
                    (149,831
                    )
                    
                    
                    (138,141
                    )Exercise
      of stock options, including tax benefit
                    
                    
                    -
                    
                    
                    
                    335,662Net
      cash used in financing activities
                    
                    
                    (6,450,969
                    )
                    
                    
                    (2,905,858
                    )Net
      increase in cash
                    
                    
                    1,011,087
                    
                    
                    
                    3,878,406Cash
      at beginning of period
                    
                    
                    6,637,576
                    
                    
                    
                    1,325,868Cash
      at end of period
                    
                    $
                    7,648,663
                    
                    
                    $
                    5,204,274Supplemental
      Schedule of Cash Flow Information:Cash
      paid during the period for:Interest
                    
                    $
                    1,226,729
                    
                    
                    $
                    1,627,977Income
      taxes
                    
                    $
                    1,695,000
                    
                    
                    $
                    1,714,000










































































The
accompanying notes are an integral part


of these
condensed financial statements.


7
 Table of Contents


OVERHILL
FARMS, INC.


NOTES TO CONDENSED FINANCIAL
      STATEMENTS


March
      29, 2009


(Unaudited)








1.
            NATURE
      OF BUSINESS AND ORGANIZATIONAL
MATTERS





Overhill
Farms, Inc. (the “Company” or “Overhill Farms”) is a leading 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.
            BASIS
      OF PRESENTATION





The
accompanying unaudited condensed financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by U.S. generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the quarter and six months ended March 29,
2009 are not necessarily indicative of the results that may be expected for the
year ending September 27, 2009 or for any other period.





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 from those estimates.





The
condensed balance sheet at September 28, 2008 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by U.S. generally accepted accounting principles for
complete financial statements.





For
further information, refer to the financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
September 28, 2008.





3.
            RECENT
      ACCOUNTING PRONOUNCEMENTS





In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value
Measurements” (“SFAS 157”), which defines fair value, establishes a framework
for measuring fair value and requires enhanced disclosures about fair value
measurements. SFAS 157 requires companies to disclose the fair value of their
financial instruments according to a fair value hierarchy (i.e., levels 1, 2,
and 3, as defined). Additionally, companies are required to provide enhanced
disclosure regarding instruments in the level 3 category, including a
reconciliation of the beginning and ending balances separately for each major
category of assets and liabilities. SFAS 157 became effective for the Company’s
fiscal year that began on September 29, 2008.  The adoption of
SFAS 157 did not have a material impact on the Company’s financial position
or results of operations.  As of March 29, 2009, the
Company had financial assets in cash, which are measured at fair value using
quoted prices for identical assets in an active market (Level 1 fair value
hierarchy) in accordance with SFAS 157.





In
February 2008, the FASB issued FASB Staff Position FAS 157-2, "Effective Date of
FASB Statement No. 157," ("FSP SFAS 157-2") which permits a one-year
deferral of the application of SFAS 157 for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least
annually).  FSP SFAS 157-2 partially defers the effective date of SFAS
157 to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years for items within the scope of FSP SFAS 157-2.
 The Company is currently evaluating the potential impact of the adoption
FSP SFAS 157-2 on the Company's consolidated financial statements.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007)
(“SFAS 141(R)”), “Business Combinations,” which replaces FASB Statement
141. SFAS 141(R) establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any noncontrolling interest
in


8
 Table of Contents


the
acquiree and the goodwill acquired. SFAS 141(R) also modifies the
recognition for preacquisition contingencies, such as environmental or legal
issues, restructuring plans and acquired research and development value in
purchase accounting. SFAS 141(R) amends
SFAS No. 109, “Accounting for Income Taxes,” to require the acquirer to
recognize changes in the amount of its deferred tax benefits that are
recognizable because of a business combination either in income from continuing
operations in the period of the combination or directly in contributed capital,
depending on the circumstances. SFAS 141(R) also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. SFAS 141(R) is effective on or after the beginning
of the first annual reporting period beginning on or after December 15,
2008.  The impact to the Company of the adoption of SFAS
141(R) will depend on the nature and size of any potential future
acquisitions.





In
December 2007, the FASB issued SFAS No. 160 (“SFAS 160”),
“Accounting for Noncontrolling Interests,” which clarifies the classification of
noncontrolling interests in consolidated statements of financial position and
the accounting for and reporting of transactions between the reporting entity
and holders of such noncontrolling interests. SFAS 160 will be effective
for fiscal years beginning after December 15, 2008.  The Company
currently is evaluating the impact adoption may have on its financial condition
or results of operations.





In May
2008, the FASB issued SFAS No. 162 (“SFAS 162”), “The Hierarchy of Generally
Accepted Accounting Principles.”  SFAS 162 is intended to improve financial
reporting by identifying a consistent hierarchy for selecting accounting
principles to be used in preparing financial statements that are prepared in
conformity with generally accepted accounting principles. Unlike Statement on
Auditing Standards No. 69, “The Meaning of Present Fairly in Conformity With
GAAP,” SFAS 162 is directed to the entity rather than the
auditor.  SFAS 162 is effective 60 days following approval by the U.S.
Securities and Exchange Commission of the Public Company Accounting Oversight
Board’s amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles.” The Company does not
expect SFAS 162 to have a material impact on its financial position or results
of operations.





4.
            INVENTORIES





Inventories
are summarized as follows:


March
      29,
                    2009
                  
                  
                  September
      28,
                    2008Raw
      ingredients
                  
                  $
                  5,844,179
                  
                  
                  $
                  5,287,858Finished
      product
                  
                  
                  8,551,329
                  
                  
                  
                  9,580,980Packaging
                  
                  
                  1,878,064
                  
                  
                  
                  2,425,238$
                  16,273,572
                  
                  
                  $
                  17,294,076





5.
            LONG-TERM
      DEBT





Long-term
debt of the Company as of March 29, 2009 and September 28, 2008 is summarized as
follows:





March
      29,
                    2009
                  
                  
                  September
      28, 2008Tranche
      A Term Loans payable to GCF
                  
                  $
                  20,600,028
                  
                  
                  $
                  23,989,762Tranche B
      Term Loans payable to GCF
                  
                  
                  12,850,000
                  
                  
                  
                  15,650,000Equipment
      loans
                  
                  
                  538,478
                  
                  
                  
                  649,882Capital
      lease
                  
                  
                  129,591
                  
                  
                  
                  279,42234,118,097
                  
                  
                  
                  40,569,066Less
      current maturities
                  
                  
                  (2,740,292
                  )
                  
                  
                  (6,228,881
                  )Less
      debt discount
                  
                  
                  (697,967
                  )
                  
                  
                  (860,724
                  )$
                  30,679,838
                  
                  
                  $
                  33,479,461





The
Company executed a senior secured credit agreement with Guggenheim Corporate
Funding, LLC (“GCF”) on April 17, 2006. Under the credit agreement, GCF acts as
collateral agent, administrative agent, arranger and syndication agent in
connection with loans made by various lenders, including affiliates of
GCF.  The facility was originally structured


9
 Table of Contents


as a $7.5
million non-amortizing revolving loan, a $25.0 million amortizing Tranche A Term
Loan and a $15.0 million non-amortizing Tranche B Term Loan.





On March
9, 2007, the Company executed a second amendment to the senior secured credit
agreement allowing for $7.0 million of additional capital expenditures to
facilitate new business by increasing plant capacity and improving line
efficiency, to be funded by increases of $3.5 million in each of the Tranche A
and Tranche B Term Loans.





As of
March 29, 2009, the facility with GCF, reflecting principal payments and the
March 9, 2007 amendment, was a $49.7 million senior secured credit facility
maturing in May 2011, secured by a first priority lien on substantially all of
the Company’s assets.  The facility was structured as a $7.5 million
non-amortizing revolving loan, a $26.5 million amortizing Tranche A Term Loan
and a $15.7 million non-amortizing Tranche B Term Loan. The facility bears
interest, adjustable quarterly, at the London Inter Bank Offered Rate (“LIBOR”)
plus the applicable margin for LIBOR loans or, at the Company’s option in the
case of the revolving loans, an alternate base rate equal to the greater of the
prime rate and the federal funds effective rate plus 0.50%, plus the applicable
margin for alternate base rate loans, as follows:




Applicable
      Margin for Alternate Base Rate Loans
                
                
                Applicable
      Margin for
                  LIBOR
      LoansTotal
      Debt to EBITDA Ratio for Last Twelve Months
                
                Revolving
      Loan
                
                
                Revolving
      Loan
                
                
                Tranche
      A
                  Term
      Loan
                
                
                Tranche
      B
                  Term
      LoanGreater
      than
                3.00:1.00
                
                
                2.50%
                
                
                
                3.50%
                
                
                
                3.75%
                
                
                
                6.25%Greater
      than or equal to but less than or equal to
                2.00:1.00
                  3.00:1.00
                
                
                2.25%
                
                
                
                3.25%
                
                
                
                3.50%
                
                
                
                6.00%Less
      than
                2.00:1.00
                
                
                2.00%
                
                
                
                3.00%
                
                
                
                3.25%
                
                
                
                5.75%


As of
March 29, 2009, the Company’s principal balances on the loans totaled $33.5
million, consisting of $20.6 million in Tranche A Term Loans and $12.9 million
in Tranche B Term Loans.  At March 29, 2009, interest rates on the
Tranche A Term Loans and Tranche B Term Loans were 3.7% and 6.2%,
respectively.  As of September 28, 2008, the Company’s total debt to
EBITDA ratio for the last twelve months was less than
2.00:1.00.  Therefore, for the quarter and six months ended March 29,
2009, the Company qualified for the lowest applicable margin for the alternate
base rate and LIBOR loans.  For the six months ended March 29, 2009,
the Company incurred $1.1 million in interest expense, excluding amortization of
deferred financing costs.  For the six months ended March 30, 2008,
the Company incurred $1.9 million in interest expense, excluding amortization of
deferred financing costs, net of $43,000 in capitalized
interest.  During the six months ended March 29, 2009, the outstanding
balance of the facility was reduced by mandatory principal payments on the
Tranche A Term Loan of $3.4 million and voluntary principal payments on the
Tranche B Term Loan of $2.8 million.  As of March 29, 2009, the
Company had $7.5 million available to borrow under the revolving loan, as the
balance was zero.





Initial
proceeds from the GCF facility, received on or about May 16, 2006, were used to
repay approximately $44.5 million in existing debt and related fees and expenses
in connection with the termination of the Company’s former financing
arrangements and to pay approximately $1.6 million in fees and expenses relating
to the new financing.  Of these fees, $698,000 is recorded as debt
discount, net of accumulated amortization, on the accompanying balance sheet as
of March 29, 2009.  The Company recorded a pretax charge of
approximately $176,000 in connection with the termination of the former
financing arrangements in the third quarter of fiscal year 2006.  The
Company paid GCF an additional $132,000 in fees and expenses on March 9, 2007
related to the second amendment, which was recorded as a debt
discount.





The GCF
facility contains covenants whereby, among other things, the Company is required
to maintain compliance with agreed levels of earnings before interest, taxes,
depreciation and amortization, interest coverage, fixed charge coverage,
leverage targets, annual capital expenditures and incremental indebtedness
limits.





Mandatory
prepayments under the facility are required based on excess cash flow, as
defined in the agreement, and upon receipt of proceeds from a disposition or
payment from a casualty or condemnation of the collateralized assets,
and


10
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voluntary
prepayments under the facility are generally permitted as provided in the
agreement (see note 11 for subsequent voluntary prepayment).  The
facility also contains customary restrictions on incurring indebtedness and
liens, making investments, paying dividends and making loans or
advances.





As of
March 29, 2009, the Company was in compliance with the covenant requirements of
the agreement with GCF.  The Company believes it is probable that it
will remain in compliance with all of those covenant requirements for the
foreseeable future.  However, if the Company fails to achieve certain
revenue, expense and profitability levels, a violation of the financial
covenants under its financing arrangements could result and interest rate
increases and acceleration of maturity of the loans could occur, which could
adversely affect its financial condition, results of operations and cash
flows.





The
Company entered into the following amortizing loans with Key Bank to finance the
purchase of machinery used for manufacturing processes: a 5-year loan in the
principal amount of $324,000 at a fixed interest rate of 7.5% on September 21,
2006, a 5-year loan in the principal amount of $216,617 at a fixed interest rate
of 7.5% on November 27, 2006 and a 4-year loan in the principal amount of
$476,043 at a fixed interest rate of 7.5% on January 9, 2007.





The
Company amended its existing operating lease agreements with General Electric
Capital Corporation on October 2, 2006. The amended lease resulted in a
three-year capital lease in the principal amount of $842,168 at a fixed interest
rate of 8.15%, with a $1 bargain purchase option at the expiration of the
lease.  As of March 29, 2009, the remaining balance of the capital
lease was due within 12 months.  The assets acquired under this
capital lease have an acquisition cost of $911,647.  As of March 29,
2009 the net book value of the assets was $474,634.





6.
            PER
      SHARE DATA





The
following table sets forth the calculation of earnings per share (“EPS”) for the
periods presented:





Quarter
      EndedMarch
      29,
                  2009
                
                
                March
      30,
                  2008Basic
      EPS Computation:Numerator:Net
      income
                
                $
                1,794,270
                
                
                $
                3,171,915Denominator:Weighted
      average common shares outstanding
                
                
                15,823,271
                
                
                
                15,739,055Total
      shares
                
                
                15,823,271
                
                
                
                15,739,055Basic
      EPS
                
                $
                0.11
                
                
                $
                0.20Diluted
      EPS Computation:Numerator:Net
      income
                
                $
                1,794,270
                
                
                $
                3,171,915Denominator:Weighted
      average common shares outstanding
                
                
                15,823,271
                
                
                
                15,739,055Incremental
      shares from assumedexercise
      of stock options
                
                
                188,222
                
                
                
                235,245Total
      shares
                
                
                16,011,493
                
                
                
                15,974,300Diluted
      EPS
                
                $
                0.11
                
                
                $
                0.20





Six
      Months EndedMarch
      29,
                    2009
                  
                  
                  March
      30,
                    2008Basic
      EPS Computation:Numerator:Net
      income
                  
                  $
                  4,327,232
                  
                  
                  $
                  4,749,859Denominator:






11
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Weighted
      average common shares outstanding
                          
                          
                          15,823,271
                          
                          
                          
                          15,679,663Total
      shares
                          
                          
                          15,823,271
                          
                          
                          
                          15,679,663Basic
      EPS
                          
                          $
                          0.27
                          
                          
                          $
                          0.30Diluted
      EPS Computation:Numerator:Net
      income
                          
                          $
                          4,327,232
                          
                          
                          $
                          4,749,859Denominator:Weighted
      average common shares outstanding
                          
                          
                          15,823,271
                          
                          
                          
                          15,679,663Incremental
      shares from assumed
                            exercise
      of stock options
                          
                          
                          191,645
                          
                          
                          
                          238,521Total
      shares
                          
                          
                          16,014,916
                          
                          
                          
                          15,918,184Diluted
      EPS
                          
                          $
                          0.27
                          
                          
                          $
                          0.30


During
the quarter and six months ended March 29, 2009, there were no shares issued in
connection with the exercise of employee stock options.  During the
quarter and six months ended March 30, 2008, the Company issued 172,428 shares
of common stock in connection with the exercise of employee stock options for
total proceeds of approximately $274,000.





7.
            STOCK
      OPTIONS





In
December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment” (“SFAS
123R”), which requires the Company to measure the cost of all employee
stock-based compensation awards based on the grant date fair value of those
awards and to record 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).  Accordingly, with
the adoption of SFAS 123R, any future option awards will have an impact on the
Company’s results of operations.  The Company adopted SFAS 123R on
October 3, 2005 utilizing the modified prospective method.  The
Company’s adoption of SFAS 123R did not impact the Company’s income before
income tax expense, net income and basic and diluted earnings per share since no
options were granted during the quarters and six months ended March 29, 2009 and
March 30, 2008 and all of the Company’s outstanding options were fully vested at
the date of adoption of this standard.  No compensation expense
related to this standard was recorded to date.





8.
            INCOME
      TAXES





The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty of Income Taxes - An Interpretation of FASB Statement No. 109” (“FIN
48”) on October 1, 2007. FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise's financial statements in accordance
with SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”). FIN 48 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. FIN 48 also provides guidance on derecognition of tax benefits,
classification on the balance sheet, interest and penalties, accounting in
interim periods, disclosure and transition. The total amount of unrecognized tax
benefits as of the date of adoption was not material. The Company has
substantially concluded all U.S. federal income tax matters for years
through fiscal year 2007.  As a result of the implementation of FIN
48, the Company recorded no increase in the liability for unrecognized tax
benefits.  The balance of unrecognized tax benefits was zero at March
29, 2009 and September 28, 2008.





The
Company has adopted the accounting policy that interest recognized in accordance
with Paragraph 15 of FIN 48 and penalty recognized in accordance with Paragraph
16 of FIN 48 are classified as part of income taxes. The total amount of
interest and penalty recognized in the statement of income was zero for the
quarters and six months ended March 29, 2009 and March 30, 2008.





The
Company does not anticipate any significant change within 12 months of this
reporting date of its uncertain tax positions.





The
effective tax rates were 39.1% and 41.1% for the first six months of each of
fiscal years 2009 and 2008, respectively, which is consistent with the statutory
rate.


12
 Table of Contents





9.
            CONTINGENCIES





Legal
Proceedings





The
Company is involved in certain legal actions and claims arising in the ordinary
course of business.  Management believes that such contingencies will
be resolved without materially and adversely affecting the Company’s financial
position, results of operations or cash flows.





During
the first quarter of fiscal year 2008, the Company informed one of its
customers, American Pie, LLC, who distributes products under the name “Claim
Jumper,” that the Company intended to discontinue production for
them.  The decision was based on the Company’s evaluation of the
overall economics of that account.  The customer represented it would
pay price increases for continued manufacturing during a transition period to a
new manufacturer.  After completing production for the customer in
June 2008, the customer withheld payment of approximately $1.9 million for
product produced and shipped pursuant to the customer’s purchase
orders.  After several discussions and subsequent to the closing of
the Company’s third quarter of fiscal year 2008, the customer made a partial
payment of approximately $1.0 million against the outstanding receivable
balance.  However, prior to fiscal year end, the customer still
refused payment of the remaining outstanding receivable balance and the Company
filed a lawsuit against the customer as of September 23, 2008 (Overhill Farms,
Inc. v. American Pie (United States District Court for the Central District of
California, Case No. CV 0806268 R (CTx))).  This action involves a
complaint by the Company against customer American Pie and two of its officers,
William R. Collins and Robert G. Blume (collectively,
“defendants”).  The complaint asserts claims for: 1) breach of
contract; 2) breach of implied covenant of good faith and fair dealing; 3)
fraud; 4) unfair business practices; and 5) declaratory relief to recover
amounts American Pie refused to pay for goods delivered by the Company pursuant
to purchase orders and invoices reflecting price increases effective December 9,
2007 and thereafter.  On November 4, 2008, the defendants filed a
motion to dismiss the Company's third and fourth claims for fraud and unfair
business practices for failure to state a claim.  On December 1, 2008,
the United States District Court denied the defendants’ motion to dismiss the
Company's claims for fraud and unfair business practices.  The
defendants responded to the complaint on December 10, 2008 and
also filed a counterclaim against the Company alleging:  1) breach of
an oral contract; 2) breach of a written contract; and 3) breach of implied
warranties of merchantability and fitness for a intended purpose to recover
price increases, compensation for products the Company allegedly failed to
produce, and for purportedly contaminated product.  Discovery in the
litigation is expected to commence in the Company’s third quarter of
fiscal year 2009.  The Company and the defendants are pursuing
settlement discussions prior to initiating discovery and proceeding to trial,
which Judge Manuel L. Real set for August 4, 2009.  Based on the
information now available, the Company believes the customer’s claims lack merit
and that the balance due is collectible.





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.





A
significant portion of the Company’s total net revenues during the first six
months of fiscal years 2009 and 2008 was derived from five
customers.  Jenny Craig, Inc., Safeway Inc., Panda Restaurant Group,
Inc., H. J. Heinz Company and Pinnacle Foods Group LLC accounted for
approximately 24%, 17%, 17%, 15% and 9%, respectively, of the Company’s total
net revenues for the six months ended March 29, 2009 and approximately 24%, 11%,
18%, 19% and 5%, respectively, of the Company’s total net revenues for the six
months ended March 30, 2008.  Receivables related to Panda Restaurant
Group, Inc. (through its distributors), Jenny Craig, Inc., Pinnacle Foods Group
LLC, Safeway Inc. and H. J. Heinz Company accounted for approximately 22%, 18%,
16%, 15% and 8%, respectively, of the Company’s total accounts receivable
balance as of March 29, 2009 and approximately 15%, 24%, 10%, 10% and 22%,
respectively, of the Company’s total accounts receivable balance as of March 30,
2008.





10.
            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


13
 Table of Contents


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.  Fees paid to AAPR for services rendered under this
engagement during the first six months of fiscal years 2009 and 2008 were
immaterial.




11.
            SUBSEQUENT
      EVENTS









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





Forward-Looking Statements





The
following discussion and analysis should be read in conjunction with our
condensed financial statements and notes to condensed financial statements
included elsewhere in this report. This report, and our condensed financial
statements and notes to our condensed financial statements, contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, which statements generally include the plans and
objectives of management for future operations, including plans and objectives
relating to our future economic performance and our current beliefs regarding
revenues we might earn if we are successful in implementing our business
strategies.  The forward-looking statements are based on current
expectations or beliefs.  For this purpose, statements of historical
fact may be deemed to be forward-looking statements.  Forward-looking
statements include statements which are predictive in nature, which depend upon
or refer to future events or conditions, or which include words such
as  “continue,” “efforts,” “expects,” “anticipates,” “intends,”
“plans,” “believes,” “estimates,” “projects,” “forecasts,” “strategy,” “will,”
“goal,” “target,” “prospects,” “optimistic,” “confident” or similar
expressions.  In addition, any statements concerning future financial
performance (including future revenues, earnings or growth rates), on-going
business strategies or prospects, and possible future company actions, which may
be provided by management, are also forward-looking statements.  We
caution that these statements by their nature involve risks and uncertainties,
and actual results may differ materially depending on a variety of important
factors, including, among others:





·
            the
      impact of competitive products and
pricing;





·
            fulfillment
      by suppliers of existing raw material
contracts;





·
            market
      conditions that may affect the costs and/or availability of raw materials,
      fuels, energy, logistics and labor as well as the market for our products,
      including our customers’ ability to pay and consumer
    demand;





·
            changes
      in our business environment, including actions of competitors and changes
      in customer preferences, as well as disruptions to our customers’
      businesses;




·
            seasonality
      in the retail category;





·
            loss
      of key customers due to competitive environment or production being moved
      in-house by customers;





·
            natural
      disasters that can impact, among other things, costs of fuel and raw
      materials;





·
            the
      occurrence of acts of terrorism, such as the events of September 11, 2001,
      or acts of war;





·
            changes
      in governmental laws and regulations, including income
    taxes;





·
            change
      in control due to takeover or other significant changes in
      ownership;





·
            financial
      viability of our customers during deep recessionary
    periods;





·
            ability
      to obtain additional financing as and when needed, and rising costs of
      credit that may be associated with new
  borrowings;





·
            voluntary
      or government-mandated food recalls;
and


14
 Table of Contents





·
            other
      factors as may be discussed in this report and other reports we file with
      the Securities and Exchange Commission (“Commission”), including those
      described in Item 1A of Part I of our annual report on Form 10-K for the
      fiscal year ended September 28, 2008 and any updates
    thereto.





We do not
undertake to update, revise or correct any forward-looking statements, except as
otherwise required by law.





Overview





We are a
leading value-added manufacturer of high quality, prepared frozen food products
for branded retail, private label, foodservice and airline
customers.  Our product line includes entrées, plated meals,
bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish
specialties, and organic and vegetarian offerings.  Our extensive
research and development efforts, combined with our extensive catalogue of
recipes and flexible manufacturing capabilities, provide customers with a
one-stop solution for new product ideas, formulations and product manufacturing,
as well as precise replication of existing recipes.  Our capabilities
allow customers to outsource product development, product manufacturing and
packaging, thereby avoiding significant fixed-cost and variable investments in
resources and equipment.  Our customers include prominent nationally
recognized names such as Jenny Craig, Inc., Safeway Inc., Panda Restaurant
Group, Inc., H. J. Heinz Company, Pinnacle Foods Group LLC, and American
Airlines, Inc.





Our goal
is to be a leading developer and manufacturer of value-added food products and
provider of custom prepared frozen foods.  We intend to create
superior value for our stockholders by continuing to execute our growth and
operating strategies, including:





·
            diversifying
      and expanding our customer base by focusing on sectors we believe have
      attractive growth characteristics, such as foodservice and
      retail;





·
            investing
      in and operating efficient production
  facilities;





·
            providing
      value-added ancillary support services to
  customers;





·
            offering
      a broad range of products to customers in multiple channels of
      distribution; and





·
            continuing
      to pursue growth through strategic acquisitions and
      investments.





The
current economic downturn, coupled with the impact of the previously announced
reduction in sales to one of our retail accounts, adversely impacted our
business during the second fiscal quarter of 2009, which ended March 29,
2009.  Net revenues for January and February of 2009 were well
below net revenues for the same months in 2008.  In March 2009, we
received increased orders resulting from a contract extension with higher volume
commitments from an existing foodservice account, as was previously anticipated
and disclosed in our first quarter Form 10-Q.  The delay in sales
contributed to the quarterly shortfall in net revenues, as these increased sales
were anticipated to begin in January 2009 but were delayed until March
2009 while the customer depleted its inventory from its other
suppliers.   In addition, sales increased from new accounts and
from existing accounts as customers replenished inventories that were reduced
beginning in December 2008.  While we continue to monitor the effects
of the economy, we remain confident that, based on our customer sales data and
the recent and anticipated acquisition of new business, our order volumes and
product introductions will normalize over the balance of the fiscal
year.





For the
quarter ended March 29, 2009, net revenues of $51.6 million reflected a 22.3%
decrease compared to the quarter ended March 30, 2008.  More than one-half
of the decrease in net revenues was due to the anticipated reduced volume from
one retail customer, H.J. Heinz Company, who moved a large portion of its
production to its own facilities.  Softness in the airline
industry, as well as in retail markets, offset partially by an increase in
foodservice net revenues, made up the balance of the reduction.  As
reported earlier, we expected an increase in foodservice net revenues to offset
the loss in net revenues from H.J. Heinz Company.  This increase in
net revenues did not occur until the end of March 2009 as the foodservice
customer depleted its inventory from its other suppliers.





For the
six months ended March 29, 2009, net revenues of $106.9 million reflected a
13.3% decrease compared to the six months ended March 30, 2008.  The
decrease in net revenues was due to the anticipated reduced volume from one
retail customer, as well as declines in foodservice and airline sales resulting
from reduced volume to one foodservice customer and softness in the airline
industry caused by a slowing economy.


15
 Table of Contents


Gross
profit was $5.8 million for the quarter ended March 29, 2009, compared to $8.4
million for the quarter ended March 30, 2008.  Gross profit as a
percentage of net revenues decreased to 11.2% for the quarter ended March 29,
2009 from 12.7% for the quarter ended March 30, 2008 due largely to lower
absorption of overhead costs due to lower sales volume.





Gross
profit was $13.3 million for the six months ended March 29, 2009, compared to
$14.4 million for the six months ended March 30, 2008.  Although gross
profit decreased due to lower revenues, it increased as a percentage of net
revenues to 12.4% for the six months ended March 29, 2009 from 11.7% for the six
months ended March 30, 2008.  Gross profit as a percentage of net
revenues increased due to higher margin sales along with on-going manufacturing
improvements, increased efficiencies and yields, improved and increased
financial reviews and controls and modest increases in sales prices to several
customers, offset partially by new product development
costs.   As previously disclosed, in order to improve our gross
profit margins, we continue to analyze our lower margin accounts in order to
increase margins or change to more profitable business.





Operating
income for the quarter ended March 29, 2009 was $3.5 million (6.8% of net
revenues), compared to $6.4 million (9.6% of net revenues) for the quarter ended
March 30, 2008.  The decrease was due to lower revenues, increased
total brokerage fees stemming from higher sales to Safeway Inc. and increased
professional fees.





Operating
income for the six months ended March 29, 2009 was $8.4 million (7.9% of net
revenues), compared to $10.1 million (8.2% of net revenues) for the six months
ended March 30, 2008.  The decrease was due to lower revenues,
increased total brokerage fees stemming from higher sales to Safeway Inc. and
increased professional fees.





Critical
Accounting Policies





Management’s
discussion and analysis of our financial condition and results of operations is
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States.  The
preparation of these financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes.  Actual results could differ from those
estimates.  See note 2 to the financial statements contained in our
2008 annual report on Form 10-K for the year ended September 28, 2008 for a
summary of our significant accounting policies.  Management believes
the following critical accounting policies are related to our more significant
estimates and assumptions used in the preparation of our financial
statements.





Inventories.  Inventories,
which include material, labor and manufacturing overhead, are stated at the
lower of cost, which approximates the first-in, first-out (“FIFO”) method, or
market.  We use a standard costing system to estimate our FIFO cost of
inventory at the end of each reporting period.  Historically, standard
costs have been materially consistent with actual costs.  We
periodically review our inventory for excess items, and write it down based upon
the age of specific items in inventory and the expected recovery from the
disposition of the items.





We
write-down our inventory for the estimated aged surplus, spoiled or damaged
products and discontinued items and components.  We determine the
amount of the write-down 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 in the write-down of our
inventory.





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 our 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 lives 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.





We assess
property and equipment for impairment whenever events or changes in
circumstances indicate that an asset’s carrying amount may not be
recoverable.





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.  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.


16
 Table of Contents





Goodwill.We
evaluate goodwill at least annually for impairment in accordance with Statement
of Financial Accounting Standards No. 142, “Goodwill and Other Intangible
Assets.”  We have one reporting unit and estimate fair value based on
a variety of market factors, including discounted cash flow analysis, market
capitalization, and other market-based data.  At March 29, 2009, we
had goodwill of $12.2 million.  A deterioration of our operating
results and the related cash flow effect could decrease the estimated fair value
of our business and, thus, cause our goodwill to become impaired and cause us to
record a charge against operations in an amount representing the
impairment.





Income Taxes.We
evaluate the need for a valuation allowance on our deferred tax assets based on
whether we believe that it is more likely than not that all deferred tax assets
will be realized.  We consider future taxable income and on-going
prudent and feasible tax planning strategies in assessing the need for valuation
allowances.  In the event we were to determine that we would not be
able to realize all or part of our deferred tax assets, we would record an
adjustment to the deferred tax asset and a charge to income at that
time.





We
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty of Income Taxes - An Interpretation of FASB Statement No. 109” (“FIN
48”) on October 1, 2007.  FIN 48 clarifies the accounting for uncertainty
in income taxes recognized in an enterprise's financial statements in accordance
with SFAS No. 109, “Accounting for Income Taxes.”  FIN 48 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.  FIN 48 also provides guidance on derecognition of tax
benefits, classification on the balance sheet, interest and penalties,
accounting in interim periods, disclosure and transition.  As a result
of the implementation of FIN 48, we recorded no increase in the liability for
unrecognized tax benefits, and the balance of unrecognized tax benefits was zero
at March 29, 2009.





We have
also adopted the accounting policy that interest recognized in accordance with
Paragraph 15 of FIN 48 and penalties recognized in accordance with Paragraph 16
of FIN 48 are classified as part of income taxes.  No interest and
penalties were recognized in the statement of income for the first six months of
fiscal year 2009.





Concentrations
of Credit Risk





Our
financial instruments that are exposed to concentrations of credit risk consist
primarily of trade receivables.  We perform on-going credit
evaluations of each customer’s financial condition and generally require no
collateral from our customers.  A bankruptcy or other significant
financial deterioration of any customer could impact its future ability to
satisfy its receivables with us.  Our allowance for doubtful accounts
is calculated based primarily upon historical bad debt experience and current
market conditions.  For the six months ended March 29, 2009 and March
30, 2008, our write-offs, net of recoveries, to the allowance for doubtful
accounts were immaterial.





A
significant portion of our total net revenues during the first six months of
fiscal years 2009 and 2008 was derived from five customers.  Jenny
Craig, Inc., Safeway Inc., Panda Restaurant Group, Inc., H. J. Heinz Company and
Pinnacle Foods Group LLC accounted for approximately 24%, 17%, 17%, 15% and 9%,
respectively, of our total net revenues for the six months ended March 29, 2009
and approximately 24%, 11%, 18%, 19% and 5%, respectively, of our total net
revenues for the six months ended March 30, 2008.  Receivables related
to Panda Restaurant Group, Inc. (through its distributors), Jenny Craig, Inc.,
Pinnacle Foods Group LLC, Safeway Inc. and H. J. Heinz Company accounted for
approximately 22%, 18%, 16%, 15% and 8%, respectively, of our total accounts
receivable balance as of March 29, 2009 and approximately 15%, 24%, 10%, 10% and
22%, respectively, of our total accounts receivable balance as of March 30,
2008.





Cash used
primarily for working capital purposes is maintained in two accounts with one
major financial institution. Account balances as of March 29, 2009 exceeded the
Federal Deposit Insurance Corporation insurance limits.  If the
financial banking markets experience disruption, we may need to temporarily rely
on other forms of liquidity, including borrowing under our credit
facility.





Other
Matters





We
manufactured for one of our customers, American Pie, LLC, who distributes
products under the name “Claim Jumper,” pursuant to a written manufacturing
agreement that expired on April 30, 2007.  Thereafter, we manufactured
for the customer on a purchase order basis pursuant to increased prices for some
products.  During the first quarter of fiscal year 2008, we informed
the customer that we intended to discontinue production for them.  The
decision was based on our evaluation of the overall economics of that
account.  The customer represented it would pay price increases for
continued manufacturing during a transition period to a new
manufacturer.  After completing production for the customer in
June


17
 Table of Contents


2008, the
customer withheld payment of approximately $1.9 million for product produced and
shipped pursuant to the customer’s purchase orders.  After several
discussions and subsequent to the closing of our third quarter of fiscal year
2008, the customer made a partial payment of approximately $1.0 million against
the outstanding receivable balance.  However, prior to fiscal year
end, the customer still refused payment of the remaining outstanding receivable
balance and we filed a lawsuit against the customer as of September 23, 2008
(Overhill Farms, Inc. v. American Pie (United States District Court for the
Central District of California, Case No. CV 0806268 R (CTx))).  This
action involves a complaint by us against customer American Pie and two of its
officers, William R. Collins and Robert G. Blume (collectively,
“defendants”).  The complaint asserts claims for: 1) breach of
contract; 2) breach of implied covenant of good faith and fair dealing; 3)
fraud; 4) unfair business practices; and 5) declaratory relief to recover
amounts American Pie refused to pay for goods delivered by us pursuant to
purchase orders and invoices reflecting price increases effective December 9,
2007 and thereafter.  On November 4, 2008, the defendants filed a
motion to dismiss our third and fourth claims for fraud and unfair business
practices for failure to state a claim.  On December 1, 2008, the
United States District Court denied the defendants’ motion to dismiss our claims
for fraud and unfair business practices.  The defendants responded to
the complaint on December 10, 2008, and also filed a counterclaim against
us.  The counterclaim alleges:  1) breach of an oral
contract; 2) breach of a written contract; and 3) breach of implied warranties
of merchantability and fitness for an intended purpose to recover price
increases, compensation for products not produced by us, and for purportedly
contaminated product.  Discovery in the litigation is expected
to commence in our third quarter of fiscal year 2009.  We and the
defendants are pursuing settlement discussions prior to initiating discovery and
proceeding to trial, which Judge Manuel L. Real set for August 4,
2009.  Based on the information now available, we believe the
customer’s claims lack merit and that the balance is collectible once the
complaint and counterclaim are resolved.





Results
of Operations





While we
operate as a single business unit, manufacturing various products on common
production lines, revenues from similar customers are grouped into the following
natural categories: retail, foodservice and airlines.





Quarter
Ended March 29, 2009 Compared to Quarter Ended March 30, 2008





The
quarters ended March 29, 2009 and March 30, 2008 were both 13-week
periods.





Net Revenues.Net
revenues for the quarter ended March 29, 2009 decreased $14.8 million (22.3%) to
$51.6 million from $66.4 million for the quarter ended March 30, 2008 due to a
decrease in airline and retail net revenues.





Retail
net revenues decreased $14.0 million (27.6%) to $36.8 million for the quarter
ended March 29, 2009 from $50.8 million for the quarter ended March 30,
2008.  More than one-half of the decrease in retail net revenues was due to
the anticipated reduced volume from one retail customer, H.J. Heinz Company, who
moved a large portion of its production to its own facilities, which we
previously projected could result in a revenue reduction of approximately $19
million for the current fiscal year, beginning in our second
quarter.





Foodservice
net revenues increased $1.4 million (13.1%) to $12.1 million for the quarter
ended March 29, 2009 from $10.7 million for the quarter ended March 30,
2008.  The increase was attributable to sales from a new customer and
increased volume from an existing customer in the latter part of the quarter, as
was previously anticipated and disclosed in our first quarter Form
10-Q.  We expect foodservice revenues to increase as we manufacture
full quarters of anticipated volume from new and existing
customers.





Airline
net revenues decreased $2.3 million (46.9%) to $2.6 million for the quarter
ended March 29, 2009 from $4.9 million for the quarter ended March 30,
2008.  Due to the current economic downturn and airline initiatives to
cut costs, airline net revenues may continue to decrease in subsequent
periods.





Gross
Profit.  Gross profit for the quarter ended March 29, 2009
decreased by $2.6 million (31.0%) to $5.8 million from $8.4 million for the
quarter ended March 30, 2008.    Gross profit as a
percentage of net revenues decreased to 11.2% for the quarter ended March 29,
2009 from 12.7% for the quarter ended March 30, 2008 due largely to lower
absorption of overhead costs due to lower sales volume partially offset by
favorable commodity prices and lower fuel surcharges.





Selling, General and Administrative
Expenses. Selling, general and administrative (“SG&A”) expenses
increased $200,000 (9.5%) to $2.3 million (4.5% of net revenues) for the quarter
ended March 29, 2009 from $2.1 million (3.2% of net revenues) for the quarter
ended March 28, 2008.  SG&A expenses were driven by higher
brokerage fees stemming from higher sales to Safeway Inc., and higher
professional fees.


18
 Table of Contents





Operating
Income.Operating income decreased $2.9 million (45.3%) to
$3.5 million for the quarter ended March 29, 2009 from $6.4 million for the
quarter ended March 30, 2008.  The decrease in operating income was
the result of the decrease in gross profit as noted above.





Total Interest Expense.
Total interest expense for the quarter ended March 29, 2009 was $526,000,
compared to $976,000 for the quarter ended March 30, 2008.  The
decrease in interest expense is due to lower debt balances and lower variable
interest rates.





Income Tax
Provision.  Income tax expense was $1.2 million for the quarter
ended March 29, 2009, compared to $2.2 million for the quarter ended March 30,
2008.  The difference was a result of income before taxes decreasing
$2.5 million from $5.4 million for the quarter ended March 30, 2008 to $2.9
million for the quarter ended March 29, 2009.  The effective tax rates
were 39.1% for the quarter ended March 29, 2009 and 41.1% for the quarter ended
March 30, 2008.  The effective tax rates for the quarters ended March
29, 2009 and March 30, 2008 did not materially differ from the statutory
rate.





Net Income.Net income for
the quarter ended March 29, 2009 was $1.8 million, or $0.11 per basic and
diluted share, compared to net income of $3.2 million, or $0.20 per basic and
diluted share, for the quarter ended March 30, 2008.





Six
Months Ended March 29, 2009 Compared to Six Months Ended March 30,
2008





The six
month periods ended March 29, 2009 and March 30, 2008 were both 26-week
periods.





Net Revenues.Net
revenues decreased $16.4 million (13.3%) to $106.9 million for the six months
ended March 29, 2009 from $123.3 million for the six months ended March 30,
2008, due to a decrease in retail, airline and foodservice net
revenues.





Retail
net revenues decreased $8.0 million (9.2%) to $79.3 million for the six months
ended March 29, 2009 from $87.3 million for the six months ended March 30,
2008.  The decrease in retail net revenues was largely due to the
anticipated reduced volume from one retail customer, H.J. Heinz Company, who
moved a large portion of its production to its own facilities, as previously
discussed.





Foodservice
net revenues decreased $3.8 million (14.7%) to $21.6 million for the six months
ended March 29, 2009 from $25.4 million for the six months ended March 30,
2008.  The decrease was largely due to anticipated reduced volume from
one customer for the first three months of the fiscal year and softness in the
foodservice industry caused by a slowing economy, partially offset by sales from
a new customer.  For the six months ended March 29, 2009, the
foodservice category as a percentage of net revenues decreased to 20% from
21%.  However, we continue our sales efforts in this category and
continue to believe that foodservice represents a significant opportunity for
us.





Airline
net revenues decreased $4.7 million (44.3%) to $5.9 million for the six months
ended March 29, 2009 from $10.6 million for the six months ended March 30,
2008.  Given record high fuel costs in 2008, the current economic
downturn and airline initiatives to cut costs, going forward we expect a further
decrease in airline net revenues.





Gross
Profit.Gross profit decreased by $1.1 million (7.6%) to $13.3
million for the six months ended March 29, 2009 from $14.4 million for the six
months ended March 30, 2008.  However, gross profit as a percentage of
revenues increased to 12.4% for the six months ended March 29, 2009 from 11.7%
for the six months ended March 30, 2008 due to on-going manufacturing
improvements, increased efficiencies and yields, improved and increased
financial reviews and controls and modest increases in sales prices to several
customers, offset partially by costs incurred for new product development and
lower absorption of overhead costs due to lower volume.





Selling, General and Administrative
Expenses. SG&A expenses increased $500,000 (11.6%) to $4.8 million
(4.5% of net revenues) for the six months ended March 29, 2009 from $4.3 million
(3.5% of net revenues) for the six months ended March 28,
2008.  SG&A expenses were driven by higher brokerage fees stemming
from higher sales to Safeway Inc., and higher professional fees.





Operating
Income.Operating income decreased $1.7 million
(16.8%) to $8.4 million for the six months ended March 29, 2009 from $10.1
million for the six months ended March 30, 2008.  The decrease in
operating income was the result of the decrease in gross profit as noted
above.


19
 Table of Contents





Total Interest Expense.
Total interest expense for the six months ended March 29, 2009 was $1.3 million,
compared to $2.1 million for the six months ended March 30, 2008.  The
decrease in interest expense was due to lower debt balances and lower variable
interest rates.





Income Tax
Provision.  Income tax expense was $2.8 million for the six
months ended March 29, 2009, compared to $3.3 million for the six months ended
March 30, 2008.  The difference was a result of income before taxes
decreasing $1.0 million from $8.1 million for the six months ended March 30,
2008 to $7.1 million for the six months ended March 29, 2009.  The
effective tax rates were 39.1% for the six months ended March 29, 2009 and 41.1%
for the six months ended March 30, 2008.  The effective tax rates for
the six months ended March 29, 2009 and March 30, 2008 did not materially differ
from the statutory rate.




Net Income.Net income for
the six months ended March 29, 2009 was $4.3 million, or $0.27 per basic and
diluted share, compared to net income of $4.7 million, or $0.30 per basic and
diluted share, for the six months ended March 30, 2008.





Liquidity
and Capital Resources





During
the six month periods ended March 29, 2009 and March 30, 2008, our operating
activities provided cash of $7.8 million.  Cash generated from
operations before working capital changes for the first six months of fiscal
year 2009 was $6.1 million.  Cash provided by changes in working
capital was $1.7 million during the first six months of fiscal year 2009 and
resulted from decreases in accounts receivable, inventory and prepaid expenses
of $523,000, $1.0 million and $505,000, respectively, as well as an increase in
accrued liabilities of $721,000.  This was partially offset by cash
used to decrease accounts payable by $1.1 million.  As of March 29,
2009, we had working capital of $29.2 million compared to working capital of
$26.3 million at fiscal year end 2008.  We were able to fund our
growth in sales in the first six months of fiscal year 2009 internally while
decreasing our external debt.





During
the first six months of fiscal year 2009, our investing activities, consisting
primarily of capital expenditures, resulted in a net use of cash of
approximately $362,000, compared to a net use of cash of approximately $991,000
during the first six months of fiscal year 2008.  The net use of cash
during the first six months of fiscal year 2008 was higher than the net use of
cash during the first six months of fiscal year 2009 due to prior year additions
of property and equipment related to the expansion of the manufacturing capacity
of our entrée plant to accommodate additional business opportunities, meet
anticipated growth and improve operating efficiency.





During
the first six months of fiscal year 2009, our financing activities resulted in a
use of cash of $6.5 million, compared to a use of cash of $2.9 million during
the first six months of fiscal year 2008.  The increased use of cash
was largely due to a $2.8 million voluntary principal payment we made on our
Tranche B Term Loan and $3.4 million of required principal payments we made on
our Tranche A Term Loan as of March 29, 2009.





We
believe that our cash and financial liquidity positions are sufficient to fund
current working capital needs and future growth initiatives.  We
intend to reduce our debt with regularly scheduled debt reduction payments and
additional voluntary prepayments where liquidity and loan agreements
allow.  In May 2009, we notified Guggenheim Corporate Funding, LLC ("GCF"),
our principal lender, that we would be making a $5 million voluntary principal
prepayment that will be applied to our Tranche A Term Loan balance.  The
voluntary principal prepayment is scheduled to be paid by the end of May
2009.





On March
9, 2007, we executed a second amendment to the senior secured credit agreement
with GCF allowing for $7.0 million of additional capital expenditures to
facilitate new business by increasing plant capacity and improving line
efficiency, to be funded by increases of $3.5 million in each of the Tranche A
and Tranche B Term Loans.





As of
March 29, 2009, the facility with GCF, reflecting principal payments and the
March 9, 2007 amendment, was a $49.7 million senior secured credit facility
maturing in May 2011, secured bya first priority lien on
substantially all of our assets.  The facility was structured as a
$7.5 million non-amortizing revolving loan, a $26.5 million amortizing Tranche A
Term Loan and a $15.7 million non-amortizing Tranche B Term Loan.  The
facility bears interest, adjustable quarterly, at the London Inter Bank Offered
Rate (“LIBOR”) plus the applicable margin (listed below) for LIBOR loans or, at
our option in the case of the revolving loans, an alternate base rate equal to
the greater of the prime rate and the federal funds effective rate plus 0.50%,
plus an applicable margin, as follows:


20
 Table of Contents


Applicable
      Margin for Alternate Base Rate Loans
                
                
                Applicable
      Margin for
                  LIBOR
      LoansTotal
      Debt to EBITDA Ratio for Last Twelve Months
                
                Revolving
      Loan
                
                
                Revolving
      Loan
                
                
                Tranche
      A
                  Term
      Loan
                
                
                Tranche
      B
                  Term
      LoanGreater
      than
                3.00:1.00
                
                
                2.50%
                
                
                
                3.50%
                
                
                
                3.75%
                
                
                
                6.25%Greater
      than or equal to but less than or equal to
                2.00:1.00
                  3.00:1.00
                
                
                2.25%
                
                
                
                3.25%
                
                
                
                3.50%
                
                
                
                6.00%Less
      than
                2.00:1.00
                
                
                2.00%
                
                
                
                3.00%
                
                
                
                3.25%
                
                
                
                5.75%


As of
March 29, 2009, our principal balances on the loans totaled $33.5 million,
consisting of $20.6 million in Tranche A Term Loans and $12.9 million in Tranche
B Term Loans.  At March 29, 2009, interest rates on the Tranche A Term
Loans and Tranche B Term Loans were 3.7% and 6.2%, respectively.  As
of September 28, 2008, our total debt to EBITDA ratio for the last twelve months
was less than 2.00:1.00 and, therefore, for the quarter and six months ended
March 29, 2009, we qualified for the lowest applicable margin for the alternate
base rate and LIBOR loans.  For the six months ended March 29, 2009,
we incurred $1.1 million in interest expense, excluding amortization of deferred
financing costs.  For the six months ended March 30, 2008, we incurred
$1.9 million in interest expense, excluding amortization of deferred financing
costs, net of $43,000 in capitalized interest.  During the six months
ended March 29, 2009, the outstanding balance of the facility was reduced by
mandatory principal payments on the Tranche A Term Loan of $3.4 million, which
included a required excess cash payment of $2.4 million, and voluntary principal
payments on the Tranche B Term Loan of $2.8 million.  As of March 29,
2009, we had $7.5 million available to borrow under the revolving loan, as the
balance was zero.





Initial
proceeds from the GCF facility, received on or about May 16, 2006, were used to
repay approximately $44.5 million in existing debt and related fees and expenses
in connection with the termination of our former financing arrangements and to
pay approximately $1.6 million in fees and expenses relating to the new
financing.  Of these fees, $698,000 is recorded as debt discount, net
of accumulated amortization, on our balance sheet as of March 29,
2009.  We recorded a pretax charge of approximately $176,000 in
connection with the termination of the former financing arrangements in the
third quarter of fiscal year 2006.  We paid GCF an additional $132,000
in fees and expenses on March 9, 2007 related to the second amendment, which we
recorded as a debt discount.




The GCF
facility contains covenants whereby, among other things, we are required to
maintain compliance with agreed levels of earnings before interest, taxes,
depreciation and amortization, interest coverage, fixed charge coverage,
leverage targets, annual capital expenditures and incremental indebtedness
limits.  Mandatory prepayments under the facility are required based
on excess cash flow, as defined in the agreement, and upon receipt of proceeds
from a disposition or payment from a casualty or condemnation of the
collateralized assets, and voluntary prepayments under the facility are
generally permitted as provided in the agreement.  The facility also
contains customary restrictions on incurring indebtedness and liens, making
investments, paying dividends and making loans or advances.




As of
March 29, 2009, we were in compliance with the covenant requirements of the
agreement with GCF.  We believe it is probable that we will remain in
compliance with all of those covenant requirements for the foreseeable
future.  However, if we fail to achieve certain revenue, expense and
profitability levels, a violation of the financial covenants under our financing
arrangements could result and interest rate increases and acceleration of
maturity of the loans could occur, which could adversely affect our financial
condition, results of operations or cash flows.





We
entered into the following amortizing loans with Key Bank to finance the
purchase of machinery used for manufacturing processes: a 5-year loan in the
principal amount of $324,000 at a fixed interest rate of 7.5% on September 21,
2006, a 5-year loan in the principal amount of $216,617 at a fixed interest rate
of 7.5% on November 27, 2006 and a 4-year loan in the principal amount of
$476,043 at a fixed interest rate of 7.5% on January 9, 2007.


21
 Table of Contents





We
amended our existing operating lease agreements with General Electric Capital
Corporation on October 2, 2006. The amended lease resulted in a three-year
capital lease in the principal amount of $842,168 at a fixed interest rate of
8.15%, with a $1 bargain purchase option at the expiration of the
lease.  As of March 29, 2009, the remaining balance of the capital
lease was due within 12 months.  The assets acquired under this
capital lease have an acquisition cost of $911,647.  As of March 29,
2009 the net book value of the assets was $474,634.





Following
is a summary of our contractual obligations at March 29, 2009:





Payments
      Due By PeriodContractual
                      Obligations
                    
                    Total
                    
                    
                    Remainder
      of Fiscal Year 2009
                    
                    
                    2-3
      Years
                    
                    
                    4-5
      Years
                    
                    
                    More
      than
                      5
      YearsDebt
      maturities
                    
                    $
                    33,988,505
                    
                    
                    $
                    1,240,648
                    
                    
                    $
                    32,739,257
                    
                    
                    $
                    8,600
                    
                    
                    $
                    -Interest
      expense(1)
                    
                    
                    4,565,115
                    
                    
                    
                    1,104,159
                    
                    
                    
                    3,460,875
                    
                    
                    
                    81
                    
                    
                    
                    -Capital
      leaseobligation
                    
                    
                    129,592
                    
                    
                    
                    129,592
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Operating
      leaseobligations
      (2)
                    
                    
                    17,872,040
                    
                    
                    
                    1,705,919
                    
                    
                    
                    6,576,425
                    
                    
                    
                    4,837,738
                    
                    
                    
                    4,751,958Other
      contractualobligations
                    
                    
                    542,505
                    
                    
                    
                    445,003
                    
                    
                    
                    97,502
                    
                    
                    
                    -
                    
                    
                    
                    -Open
      purchase orders
                    
                    
                    33,057,977
                    
                    
                    
                    24,629,862
                    
                    
                    
                    8,428,115
                    
                    
                    
                    -
                    
                    
                    
                    -Total
      contractualobligations
                    
                    $
                    90,155,734
                    
                    
                    $
                    29,255,183
                    
                    
                    $
                    51,302,174
                    
                    
                    $
                    4,846,419
                    
                    
                    $
                    4,751,958


____________


(1)
            Assumes
      only mandatory principal pay-downs and the use of LIBOR as of March 29,
      2009 on the GCF debt and fixed rate interest payments on equipment loans
      and capital lease obligation.


(2)
            Includes
      real estate leases.





Item
      3.
            Quantitative
      and Qualitative Disclosures about Market Risk





Interest Rate Risk
– Obligations. We are subject to
interest rate risk on variable interest rate obligations.  A
hypothetical 10% increase in average market interest rates would increase by
approximately $162,477 the annual interest expense on our debt outstanding as of
March 29, 2009.  We are also subject to interest rate risk on our
fixed interest rate obligations.  Based upon outstanding amounts of
fixed rate obligations as of March 29, 2009, a hypothetical 10% decrease in
average market interest rates would increase the fair value of outstanding fixed
rate debt by approximately $4,000.





Item
      4.
            Controls
      and Procedures





OurChief Executive Officer and Interim Chief Financial Officer
(our principal executive officer and principal financial officer, respectively)
have concluded, based on their evaluation as of March 29, 2009, that the design
and operation of our “disclosure controls and procedures” (as defined in Rule
13a-15(e) under the Exchange Act) are effective at a reasonable assurance level
to ensure that information required to be disclosed by us in the reports filed
or submitted by us under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms,
including to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is accumulated and communicated
to our management, including our Chief Executive Officer and Interim Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.






22
 Table of Contents










PART II - OTHER INFORMATION





Item
      1.
            Legal
      Proceedings





We are involved in various lawsuits, claims and proceedings
related to the conduct of our business. Management does not believe that the
disposition of any pending claims is likely to have a material adverse effect
our financial condition, results of operations, or cash flows.





Item
      6.
            Exhibits





(a)
            Exhibits





Number
              Description31.1(1)
              Certification
      of Chief 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 200231.2(1)
              Certification
      of Interim Chief 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 200232(1)
              Certification
      of Chief Executive Officer and Interim Chief Financial Officer Pursuant to
      18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002(1)
              Attached
      hereto.








23
 Table of Contents


SIGNATURES








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.








OVERHILL
      FARMS, INC.(Registrant)Date:  May
      8, 2009
            
            
            
            
            
            
            
            
            
            
            
            
            By:
            /s/
      James RudisJames
      RudisChairman,
      President andChief
      Executive OfficerDate:  May
      8, 2009
            
            
            
            
            
            
            
            
            
            
            
            
            By:
            /s/
      Tracy E. QuinnTracy
      E. QuinnInterim
      Chief Financial Officer





24
 Table of Contents


EXHIBITS ATTACHED TO THIS FORM 10-Q











Number
              Description31.1
              Certification
      of Chief 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 200231.2
              Certification
      of Interim Chief 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 200232
              Certification
      of Chief Executive Officer and Interim Chief Financial Officer Pursuant to
      18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002


25