##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 16, 2006
 OR
 o
    
    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 1-32439
 CUISINE SOLUTIONS, INC.
  DELAWARE
    
    52-0948383(State of other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification Number)
 85 S Bragg Street, Suite 600, Alexandria, VA 22312
 (703) 270-2900
  Yes þ No o
  o o þ
  Yes o No þ
   Class of Common Stock
    
    Number of SharesClass A 
Class B
    
    16,439,191
None




---



##### 



TABLE OF CONTENTS
 PART IItem 1. Financial Statements (unaudited)
    
    page   3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    page 12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    page 20Item 4. Controls and Procedures
    
    page 21PART IIItem 1. Legal Proceedings
    
    page 22Item 1A. Risk Factors
    
    page 22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    page 22Item 3. Defaults Upon Senior Securities
    
    page 22Item 4. Submission of Matters to a Vote of Security Holders
    
    page 22Item 5. Other Information
    
    page 22Item 6. Exhibits
    
    page 22SIGNATURES
    
    page 23EX-31.1: Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
    
    page 24EX-31.2: Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
    
    page 25EX-32.1: Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of theSarbanes-Oxley Act of 2002
    
    page 26
 2




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##### 



CUISINE SOLUTIONS, INC.
 PART I: FINANCIAL INFORMATION
 Item 1. Financial Statements (unaudited)
 CUISINE SOLUTIONS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
 September 16,
    
    
    June 24,2006
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    2,151,000
    
    
    $
    2,154,000Trade accounts receivable, net
    
    
    5,925,000
    
    
    
    5,360,000Inventory, net
    
    
    10,812,000
    
    
    
    9,461,000Prepaid expenses
    
    
    590,000
    
    
    
    373,000Accounts receivable, related parties
    
    
    29,000
    
    
    
    25,000Other current assets
    
    
    634,000
    
    
    
    616,000Assets from discontinued operations
    
    
    7,000
    
    
    
    6,000TOTAL CURRENT ASSETS
    
    
    20,148,000
    
    
    
    17,995,000Investments, non-current
    
    
    375,000
    
    
    
    375,000Fixed assets, net
    
    
    9,623,000
    
    
    
    8,321,000Restricted cash
    
    
    20,000
    
    
    
    5,000Other assets
    
    
    72,000
    
    
    
    70,000TOTAL ASSETS
    
    $
    30,238,000
    
    
    $
    26,766,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesLine-of-credit
    
    $
    3,000,000
    
    
    $
    1,000,000Current portion of long-term debt
    
    
    386,000
    
    
    
    356,000Accounts payable and accrued expenses
    
    
    6,986,000
    
    
    
    5,831,000Accrued payroll and related liabilities
    
    
    1,605,000
    
    
    
    2,455,000Liabilities from discontinued operations
    
    
    144,000
    
    
    
    150,000Total current liabilities
    
    
    12,121,000
    
    
    
    9,792,000Long-term debt, less current portion
    
    
    3,812,000
    
    
    
    3,321,000Asset retirement obligation
    
    
    398,000
    
    
    
    398,000TOTAL LIABILITIES
    
    
    16,331,000
    
    
    
    13,511,000Commitments and contingenciesStockholders equityCommon StockClass A Stock  $.01 par value, 20,000,000 shares authorized, 16,439,191 shares issued and
outstanding at September 16, 2006 and June 24, 2006
    
    
    165,000
    
    
    
    165,000Class B Stock  $.01 par value, 175,000 shares authorized, none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    27,587,000
    
    
    
    27,516,000Accumulated deficit
    
    
    (14,602,000
    )
    
    
    (15,127,000
    )Accumulated Other Comprehensive IncomeCumulative translation adjustment
    
    
    757,000
    
    
    
    701,000TOTAL STOCKHOLDERS EQUITY
    
    
    13,907,000
    
    
    
    13,255,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    30,238,000
    
    
    $
    26,766,000
  3




---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 Twelve Weeks EndedSeptember 16,
    
    
    September 17,2006
    
    
    2005Net sales
    
    $
    14,206,000
    
    
    $
    14,752,000Cost of goods sold
    
    
    11,036,000
    
    
    
    10,666,000Gross margin
    
    
    3,170,000
    
    
    
    4,086,000Selling and administration
    
    
    2,512,000
    
    
    
    2,486,000Depreciation and amortization
    
    
    65,000
    
    
    
    41,000Income from operations
    
    
    593,000
    
    
    
    1,559,000Non-operating income (expense)Investment income
    
    
    3,000
    
    
    
    25,000Interest expense
    
    
    (76,000
    )
    
    
    (36,000
    )Other income (expense), net
    
    
    11,000
    
    
    
    (26,000
    )Total non-operating expense
    
    
    (62,000
    )
    
    
    (37,000
    )Income before income tax
    
    
    531,000
    
    
    
    1,522,000Provision for income tax expense
    
    
    (6,000
    )
    
    
    NET INCOME
    
    $
    525,000
    
    
    $
    1,522,000Basic and diluted net income per common share:Net income per common share-basic
    
    $
    0.03
    
    
    $
    0.09Net income per common share-diluted
    
    $
    0.03
    
    
    $
    0.08Weighted average shares outstanding-basic
    
    
    16,439,191
    
    
    
    16,080,175Common stock equivalents
    
    
    1,763,703
    
    
    
    1,895,320Weighted average shares outstanding-diluted
    
    
    18,202,894
    
    
    
    17,975,495
  4




---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
 Retained
    
    
    Unrealized GainsAdditional
    
    
    Earnings
    
    
    (Losses) on Debt
    
    
    Cumulative
    
    
    TotalCommon
    
    
    Paid-In
    
    
    (Accumulated
    
    
    and Equity
    
    
    Translation
    
    
    StockholdersStock
    
    
    Capital
    
    
    Deficit)
    
    
    Investments
    
    
    Adjustment
    
    
    EquityBalance, June 24, 2006
    
    $
    165,000
    
    
    $
    27,516,000
    
    
    $
    (15,127,000
    )
    
    $
    
    
    
    $
    701,000
    
    
    $
    13,255,000Exercise of common stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    71,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,000Twelve weeks 2007 net income
    
    
    
    
    
    
    
    
    
    
    525,000
    
    
    
    
    
    
    
    
    
    
    
    525,000Other Comprehensive IncomeUnrealized loss on debt
and equity investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,000
    
    
    
    56,000Other Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,000Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    581,000Balance, September 16, 2006
    
    $
    165,000
    
    
    $
    27,587,000
    
    
    $
    (14,602,000
    )
    
    $
    
    
    
    $
    757,000
    
    
    $
    13,907,000
 Retained
    
    
    Unrealized GainsAdditional
    
    
    Earnings
    
    
    (Losses) on Debt
    
    
    Cumulative
    
    
    TotalCommon
    
    
    Paid-In
    
    
    (Accumulated
    
    
    and Equity
    
    
    Translation
    
    
    StockholdersStock
    
    
    Capital
    
    
    Deficit)
    
    
    Investments
    
    
    Adjustment
    
    
    EquityBalance, June 25, 2005
    
    $
    161,000
    
    
    $
    26,754,000
    
    
    $
    (18,781,000
    )
    
    $
    (7,000
    )
    
    $
    524,000
    
    
    $
    8,651,000Exercise of common stock options
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Stock-based compensation
    
    
    
    
    
    
    62,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,000Twelve weeks 2006 net income
    
    
    
    
    
    
    
    
    
    
    1,522,000
    
    
    
    
    
    
    
    
    
    
    
    1,522,000Other Comprehensive IncomeUnrealized loss on debt
and equity investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,000
    )
    
    
    
    
    
    
    (9,000
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,000
    
    
    
    33,000Other Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,000Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,546,000Balance, September 17, 2005
    
    $
    161,000
    
    
    $
    26,831,000
    
    
    $
    (17,259,000
    )
    
    $
    (16,000
    )
    
    $
    557,000
    
    
    $
    10,274,000
  5




---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 Year to dateTwelve weeks endedSeptember 16,
    
    
    September 17,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    525,000
    
    
    $
    1,522,000Adjustments to reconcile net income to net cash (used in) provided by operating activitiesDepreciation and amortization
    
    
    255,000
    
    
    
    226,000Allowance for doubtful accounts
    
    
    (25,000
    )
    
    
    67,000Inventory obsolescence reserve
    
    
    81,000
    
    
    
    166,000Loss on investments
    
    
    
    
    
    
    5,000Stock-based compensation
    
    
    71,000
    
    
    
    62,000Changes in assets and liabilities, net of effects of non-cash transactions:Increase in accounts receivable
    
    
    (540,000
    )
    
    
    (997,000
    )Increase in inventory
    
    
    (1,432,000
    )
    
    
    (599,000
    )Increase in prepaid expenses
    
    
    (217,000
    )
    
    
    (145,000
    )(Increase) decrease in accounts receivable, related parties
    
    
    (4,000
    )
    
    
    28,000Increase in other assets
    
    
    (20,000
    )
    
    
    (37,000
    )Increase in accounts payable and accrued expenses
    
    
    1,155,000
    
    
    
    1,455,000(Decrease) increase in accrued payroll and related liabilities
    
    
    (850,000
    )
    
    
    510,000Changes in assets and liabilities of discontinued operations
    
    
    (7,000
    )
    
    
    (277,000
    )Net cash (used in) provided by operating activities
    
    
    (1,008,000
    )
    
    
    1,986,000CASH FLOWS FROM INVESTING ACTIVITIESProceeds from investments
    
    
    
    
    
    
    139,000Increase in restricted cash
    
    
    (15,000
    )
    
    
    Capital expenditures
    
    
    (1,557,000
    )
    
    
    (343,000
    )Net cash used in investing activities
    
    
    (1,572,000
    )
    
    
    (204,000
    )CASH FLOWS FROM FINANCING ACTIVITIESPayments on debt
    
    
    (69,000
    )
    
    
    (782,000
    )Proceeds from debt
    
    
    590,000
    
    
    
    Net borrowing (repayment) on line-of-credit
    
    
    2,000,000
    
    
    
    (374,000
    )Proceeds from stock issuance
    
    
    
    
    
    
    15,000Net cash provided by (used in) financing activities
    
    
    2,521,000
    
    
    
    (1,141,000
    )Net (decrease) increase in cash and cash equivalents
    
    
    (59,000
    )
    
    
    641,000Change in cumulative translation adjustment
    
    
    56,000
    
    
    
    33,000Cash and cash equivalents, beginning of period
    
    
    2,154,000
    
    
    
    2,171,000CASH and CASH EQUIVALENTS, END OF PERIOD
    
    $
    2,151,000
    
    
    $
    2,845,000SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATIONCash paid during the period for interest
    
    $
    67,000
    
    
    $
    29,000Cash paid during the period for income taxes
    
    $
    1,000
    
    
    $
    
  6




---



##### 



Cuisine Solutions, Inc.
   NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    Nature of Operations
  Principles of Consolidation
   Revenue Recognition
  Customer Dependency
  7




---



##### 



Impairment of Long-Lived Assets and Long-Lived Assets To Be Disposed Of
  Foreign Currency Translation
  NOTE 2  FISCAL PERIODS
  NOTE 3  ACCOUNTS RECEIVABLE
  September 16, 2006
    
    
    June 24, 2006Trade accounts receivable
    
    $
    6,562,000
    
    
    $
    6,022,000Allowance for doubtful accounts
    
    
    (637,000
    )
    
    
    (662,000
    )Trade accounts receivable, net
    
    $
    5,925,000
    
    
    $
    5,360,000
  NOTE 4
 INVENTORY
    September 16, 2006
    
    
    June 24, 2006Raw materials
    
    $
    3,475,000
    
    
    $
    3,371,000Frozen product & other finished goods
    
    
    6,657,000
    
    
    
    5,297,000Packing materials & supplies
    
    
    1,042,000
    
    
    
    1,074,00011,174,000
    
    
    
    9,742,000Less obsolescence reserve
    
    
    (362,000
    )
    
    
    (281,000
    )$
    10,812,000
    
    
    $
    9,461,000
 8




---



##### 



NOTE 5  COMMITMENTS AND CONTINGENCIES
   NOTE 6  TRANSACTIONS WITH RELATED PARTIES
   NOTE 7  DISCONTINUED OPERATIONS
   September 16, 2006
    
    
    June 24, 2006Assets of discontinued operations:Cash
    
    $
    2,000
    
    
    $
    Other assets
    
    
    5,000
    
    
    
    6,000Total assets of discontinued operations
    
    $
    7,000
    
    
    $
    6,000Liabilities of discontinued operations:Accounts payable and accrued liabilities
    
    $
    144,000
    
    
    $
    150,000Total liabilities of discontinued operations
    
    $
    144,000
    
    
    $
    150,000
 NOTE 8  EARNINGS PER SHARE
  9




---



##### 



NOTE 9  ACCOUNTING FOR STOCK-BASED COMPENSATION
    Twelve weeks ended
    
    Twelve weeks endedSeptember 16, 2006
    
    September 17, 2005Expected dividend yield
    
    
    
    
    
    
    Risk-free interest rate
    
    
    5.1
    %
    
    
    3.7
    %Expected life (in years)
    
    
    5
    
    
    
    5Expected volatility
    
    
    95
    %
    
    
    209
    %
   Twelve weeks ended
    
    
    Twelve weeks endedSeptember 16, 2006
    
    
    September 17, 2005Weighted- Average
    
    
    
    
    
    
    Weighted- AverageOptions
    
    Shares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at beginning of the quarter
    
    
    2,448,099
    
    
    $
    0.99
    
    
    
    2,795,968
    
    
    $
    1.02Granted
    
    
    12,401
    
    
    $
    0.01
    
    
    
    10,758
    
    
    $
    0.01Exercised
    
    
    
    
    
    $
    
    
    
    
    (15,000
    )
    
    $
    0.95Forfeited or expired
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Outstanding at end of the quarter
    
    
    2,460,500
    
    
    $
    0.99
    
    
    
    2,791,726
    
    
    $
    1.01Exercisable at end of the quarter
    
    
    2,200,550
    
    
    $
    0.99
    
    
    
    2,242,597
    
    
    $
    1.03
  Stock Options OutstandingNumber
    
    
    Weighted-Average
    
    
    
    
    
    
    AggregateOutstanding
    
    
    Remaining
    
    
    Weighted-Avg
    
    
    IntrinsicRange of Exercise Prices
    
    9/16/2006
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Value$0.01 to $0.24
    
    
    173,903
    
    
    
    7.91
    
    
    $
    0.01
    
    
    $
    443,789$0.25 to $0.6561
    
    
    85,250
    
    
    
    6.10
    
    
    $
    0.25
    
    
    $
    $0.6562 to $1.030
    
    
    1,224,000
    
    
    
    6.37
    
    
    $
    0.88
    
    
    $
    19,050$1.031 to $1.37
    
    
    518,997
    
    
    
    3.92
    
    
    $
    1.14
    
    
    $
    $1.38 to $1.50
    
    
    338,350
    
    
    
    0.90
    
    
    $
    1.38
    
    
    $
    87,600$1.51 to $2.00
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    $2.01 to $2.50
    
    
    120,000
    
    
    
    8.11
    
    
    $
    2.10
    
    
    $
    2,460,500
    
    
    
    5.28
    
    
    $
    0.99
    
    
    $
    550,439
 10




---



##### 



Stock Options ExercisableNumber
    
    
    Weighted-Average
    
    
    
    
    
    
    AggregateExercisable
    
    
    Remaining
    
    
    Weighted-Avg
    
    
    IntrinsicRange of Exercise Prices
    
    at 9/16/2006
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Value$0.01 to $0.24
    
    
    167,703
    
    
    
    7.84
    
    
    $
    0.01
    
    
    $
    412,586$0.25 to $0.6561
    
    
    85,250
    
    
    
    6.10
    
    
    $
    0.25
    
    
    $
    $0.6562 to $1.030
    
    
    992,750
    
    
    
    6.16
    
    
    $
    0.88
    
    
    $
    14,288$1.031 to $1.37
    
    
    506,497
    
    
    
    3.83
    
    
    $
    1.14
    
    
    $
    $1.38 to $1.50
    
    
    338,350
    
    
    
    0.90
    
    
    $
    1.38
    
    
    $
    87,600$1.51 to $2.00
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    $2.01 to $2.50
    
    
    110,000
    
    
    
    8.11
    
    
    $
    2.10
    
    
    $
    2,200,550
    
    
    
    5.00
    
    
    $
    0.99
    
    
    $
    514,474
   NOTE 10  RECENT ACCOUNTING PRONOUNCEMENTS
    NOTE 11  RECLASSIFICATIONS
  11




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  The following analysis of our financial condition and results of operations should be read in
conjunction with our financial statements and the notes thereto contained elsewhere in this report.
 BUSINESS OVERVIEW
   
    
    On Board Services: Airlines, railroad and cruise lines;
 
    
    Foodservice: Hotel banquets, convention centers, sport stadiums and other special events such as the Olympics;
 
    
    Retail: Supermarket in-store deli, premium packaged foods;
 
    
    Military: Naval carriers, Army field feeding, and military dining halls and clubs; and
 
    
    National Restaurant Chains: Upscale multi-unit restaurants.
 CRITICAL ACCOUNTING ESTIMATES AND POLICIES
    12




---



##### 



RECENT ACCOUNTING PRONOUNCEMENTS
    RESULTS OF OPERATIONS
 Comparison of the twelve weeks ended September 16, 2006 to the twelve weeks ended September 17,
2005
   13




---



##### 



Net Sales
  Q1 Fiscal 2007
    
    
    Q1 Fiscal 2006
    
    
    $ Change
    
    
    %ChangeU.S.
    
    $
    9,897,000
    
    
    $
    10,592,000
    
    
    $
    (695,000
    )
    
    
    (6.6
    %)France
    
    
    4,309,000
    
    
    
    4,160,000
    
    
    
    149,000
    
    
    
    3.6
    %Total Net Sales
    
    $
    14,206,000
    
    
    $
    14,752,000
    
    
    $
    (546,000
    )
    
    
    (3.7
    %)
    Q1 Fiscal 2007
    
    
    Q1 Fiscal 2006
    
    
    $ Change
    
    
    %ChangeFood Service
    
    $
    2,413,000
    
    
    $
    2,142,000
    
    
    $
    271,000
    
    
    
    12.7
    %On Board Services
    
    
    4,128,000
    
    
    
    4,603,000
    
    
    
    (475,000
    )
    
    
    (10.3
    %)Retail
    
    
    3,055,000
    
    
    
    1,774,000
    
    
    
    1,281,000
    
    
    
    72.2
    %Military
    
    
    3,833,000
    
    
    
    5,718,000
    
    
    
    (1,885,000
    )
    
    
    (33.0
    %)National Restaurant Chain / Other
    
    
    777,000
    
    
    
    515,000
    
    
    
    262,000
    
    
    
    50.9
    %Total
    
    $
    14,206,000
    
    
    $
    14,752,000
    
    
    $
    (546,000
    )
    
    
    (3.7
    %)
  U.S. Sales
  Q1 Fiscal 2007
    
    
    Q1 Fiscal 2006
    
    
    $ Change
    
    
    %ChangeFood Service
    
    $
    1,459,000
    
    
    $
    1,211,000
    
    
    $
    248,000
    
    
    
    20.5
    %On Board Services
    
    
    2,126,000
    
    
    
    2,323,000
    
    
    
    (197,000
    )
    
    
    (8.5
    %)Retail
    
    
    1,707,000
    
    
    
    838,000
    
    
    
    869,000
    
    
    
    103.7
    %Military
    
    
    3,833,000
    
    
    
    5,718,000
    
    
    
    (1,885,000
    )
    
    
    (33.0
    %)National Restaurant Chain
    
    
    772,000
    
    
    
    502,000
    
    
    
    270,000
    
    
    
    53.8
    %Total
    
    $
    9,897,000
    
    
    $
    10,592,000
    
    
    $
    (695,000
    )
    
    
    (6.6
    %)
    14




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##### 



France Sales
  Q1 Fiscal 2007
    
    Q1 Fiscal 2006
    
    $ Change
    
    %ChangeSales in U.S. dollars
    
    $
    4,309,000
    
    
    $
    4,160,000
    
    
    $
    149,000
    
    
    
    3.6
    %Sales in Euros
    
    
    3,384,000
    
    
    
    3,408,000
    
    
    
    (24,000
    )
    
    
    (0.7
    %)Average exchange rate
    
    
    0.785
    
    
    
    0.819
  
  Q1 Fiscal 2007
    
    
    Q1 Fiscal 2006
    
    
    $ Change
    
    
    %ChangeFood Service
    
    $
    954,000
    
    
    $
    931,000
    
    
    $
    23,000
    
    
    
    2.5
    %On Board Services
    
    
    2,002,000
    
    
    
    2,280,000
    
    
    
    (278,000
    )
    
    
    (12.2
    %)Retail
    
    
    1,348,000
    
    
    
    936,000
    
    
    
    412,000
    
    
    
    44.0
    %Others
    
    
    5,000
    
    
    
    13,000
    
    
    
    (8,000
    )
    
    
    (61.5
    %)Total
    
    $
    4,309,000
    
    
    $
    4,160,000
    
    
    $
    149,000
    
    
    
    3.6
    %
    Gross Margin
  Twelve weeks endedSeptember 16, 2006
    
    September 17, 2005
    
    % Change(Dollars in thousands)Net sales
    
    $
    14,206
    
    
    $
    14,752
    
    
    
    (3.7
    %)Gross margin
    
    $
    3,170
    
    
    $
    4,086
    
    
    
    (22.4
    %)Gross margin percentage
    
    
    22.3
    %
    
    
    27.7
    %
 15




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##### 



Selling and Administrative Expenses
  Q1 Fiscal 2007
    
    
    Q1 Fiscal 2006
    
    
    $ Change
    
    
    %ChangeU.S.
    
    $
    1,890,000
    
    
    $
    1,767,000
    
    
    $
    123,000
    
    
    
    7.0
    %France
    
    
    622,000
    
    
    
    719,000
    
    
    
    (97,000
    )
    
    
    (13.5
    %)Total Selling and Administrative Expenses
    
    $
    2,512,000
    
    
    $
    2,486,000
    
    
    $
    26,000
    
    
    
    1.0
    %
  Depreciation and Amortization
  Non-operating Income and Expense
  Provision for Taxes
  Liquidity and Capital Resources
  16




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##### 




 
  
   
  
 
 17




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##### 



 
 FUTURE PROSPECTS
  Food Service
  On Board Services
  Retail
  Military
  18




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##### 



National Restaurant Chains
  19




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##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Exposure
  Foreign Currency Risk
  20




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##### 



Item 4. Controls and Procedures
    21




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##### 



CUISINE SOLUTIONS, INC.
 PART II: OTHER INFORMATION
 Item 1. Legal Proceedings.
  Item 1A. Risk Factors.
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3. Defaults Upon Senior Securities
  Item 4. Submission of Matters to a Vote of Security Holders
  Item 5. Other Information
  Item 6. Exhibits
 EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    Restated Certificate of Incorporation, as amended. (1)3.2
    
    Certificate of Amendment of Restated Certificate of Incorporation. (2)3.3
    
    By-laws. (3)31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Incorporated by reference to exhibit 3-A of the Registrants Form 10-K/A for the year
ended June 27, 1992, filed with the Commission on April 2, 1993.(2)
    
    Incorporated by reference to exhibit 3.2 of the Registrants Registration Statement
on Form 8-A , filed with the Commission on February 22, 2005.(3)
    
    Incorporated by reference to exhibit 3-B of the Registrants Form 10-K/A for the year
ended June 27, 1992, filed with the Commission on April 2, 1993. 22




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##### 



SIGNATURES
  CUISINE SOLUTIONS, INC.Date: October 26, 2006
    
    By:
    
    /s/ Stanislas VilgrainStanislas VilgrainChief Executive OfficerBy:
    
    /s/ Y. Tristan KuoY. Tristan KuoChief Financial Officer, Treasurer andCorporate Secretary
 23