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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549FORM 10-K
(MARK ONE)XX ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 ACT OF 1934 [FEE REQUIRED]FOR THE FISCAL YEAR ENDED: June 29, 2002
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ________________ TO ________________COMMISSION FILE NUMBER: 0-12800

CUISINE SOLUTIONS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)Delaware 52-0948383
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)85 South Bragg Street, Suite 600, Alexandria, VA 22312

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 270-2900

___________________

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

|                    |  |                      
|------------------- |  | ---------------------
|                    |  | NAME OF EACH EXCHANGE
|TITLE OF EACH CLASS |  | ON WHICH REGISTERED  
|                    |  |                      
|None                |  | None                 

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:Common Stock, par value $.01 per Share
(TITLE CLASS)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES X NO Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing sale price of the Common Stock on September
13, 2002 as reported on the NASDAQ/OTC Bulletin Board Market Quotation System,
was approximately $1,470,000. Shares of Common Stock held by each officer and
director and by each person who owns 5% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.

As of September 13, 2002, there were 15,824,588 shares outstanding of the
Registrants Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Parts of the following document are incorporated by reference in Parts III and
IV of this Form 10-K Report: Proxy Statement for Registrants 2002 Annual
Meeting of Stockholders to be filed  Items 10, 11, 12 and 13.

Exhibit Index is located on page 14.





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PART I

ITEM 1. BUSINESS

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

Cuisine Solutions produces and markets prepared foods to the Food Service
Industry to include sales channels such as airlines, passenger trains, harbor
cruise lines, retail supermarket in-store delis, national restaurants and hotel
banquets. During the fiscal year 1999, the Company started in a second industry
segment relating to international management services. The Company will provide
ongoing management advisory services under separate service contracts to
include global management and food manufacturing expertise. No fees were earned
for management services during fiscal year 2002.

GENERAL

Cuisine Solutions has been providing high quality entrees to the Foodservice
market for over twelve years. The company is recognized in the market place as
having the highest quality frozen food product line in the world.

Cuisine Solutions unique use of sous-vide processing allows Cuisine Solutions
to produce high quality entrees and sauces for use in hotel banquets,
restaurants, first class and business class meal service and retail frozen
foods and prepared products for retail in-store delis.

The Cuisine Solutions strategy began in 1988 when as Vie de France, Management
recognized the growing trend and future demand for high quality foods at value
prices.

In addition to quality, Management also saw the growing need for clean
ingredient statements, meaning reduced use of chemical and natural
preservatives to enhance flavor and shelf life.

The special cooking process involved preparation of Cuisine Solutions products
using chef developed recipes and only the finest quality ingredients. The
cooking process involves slowly cooking the products for a longer period of
time than most food companies and at lower cooking temperatures. This special
process is a culmination of culinary art and food science in that it requires
precise controls of the cooking process, and each precise control is applied to
each individual recipe. This process involved a decade of research and
development to produce the wide range of high quality products currently
offered by Cuisine Solutions. This entire process is managed through
computerized cooking equipment under the supervision of culinary professionals.

What does this mean to the market place? Todays consumer trends are moving
heavily towards fast food and convenience. What has suffered in the meantime is
culinary quality and nutrition. The trend also includes an increased demand for
high quality, unique ethnic recipes while consumers have lower cooking skills.

The Cuisine Solutions product line enables foodservice providers that require
exceptional quality to now purchase fully cooked, high quality products from
Cuisine Solutions rather than the alternative of preparing products from
scratch.

Cuisine Solutions products also enable foodservice providers to provide a wide
range of products and eliminate the need for raw materials and logistics,
especially for last minute events. They contribute to reduce the labor required
to prepare food products; increase food safety by reducing manual product
handling, reduce yield losses, and provide consistent portion sizes.

In addition to the above benefits, Cuisine Solutions products do not require
additional preservatives normally found in prepared foods due to our unique
cooking process. This makes Cuisine Solutions products especially attractive to
foodservice establishments, national restaurant chains, retail frozen and
in-store deli prepared foods, health care facilities, as well as large upscale
event caterers.

Supported by the best and most experience technical team in this cooking
technology` and enhanced by the collaboration of some of the best culinary
chefs in the industry, Cuisine Solutions provides a unique value to the market
place with its quality consistent products. It gives the struggling,
overworked, understaffed foodservice operators expanded menu lines, labor
savings, flexibility, serving time reduction, reduced yield losses and
increased food safety.

The Company has strategically positioned itself to be a high quality provider
of prepared foods, with unique product capabilities at competitive market
prices with three operating production facilities in Europe and in the USA.

Cuisine Solutions has a strong presence in both North America and Europe,
having the unique capability to service target airlines both to and from
Europe.

A significant part of the Cuisine Solutions strategy is to locate production
facilities in places where finished goods are in demand, as well as in
countries that are the most efficient source of quality raw materials such as
Norway for salmon, and Chile for white fish and seafood.

The Company maintains manufacturing facilities in the United States, Norway,
France and Brazil.





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Cuisine Solutions, USA:

Cuisine Solutions operates a thirty-nine thousand square feet manufacturing
facility located in Alexandria, Virginia. The facility is USDA and HACCP
certified, and has the ability to produce the complete range of Cuisine
Solutions products to include the new high volume enrobed pasta line.

Cuisine Solutions Norway:

Cuisine Solutions operates a sixteen thousand square feet facility located on a
fjord in Hjelmeland, Norway. The award winning facility produces fully cooked
salmon in a variety of sizes and flavors. This HACCP certified facility only
uses the highest quality Norwegian Salmon in its facility, and produces product
that is shipped to North America, Europe and Scandinavia.

Cuisine Solutions France:

Acquired by Cuisine Solutions in 1999, Cuisine Solutions France is
strategically located a short drive North from Paris in Louviers, France. This
fifteen thousand square feet HACCP certified facility produces a full range of
traditional French recipes for the European foodservice market as well as the
French retail market. The recently expanded facility can produce all of Cuisine
Solutions products with the addition of retail packaging capabilities. Cuisine
Solutions France is the training area for many Cuisine Solutions Operations
Managers since the facility has the most collective experience using the
sous-vide process, and adheres to strict culinary discipline, a culture that is
passed on to all of our facilities.

Cuisine Solutions Brazil:

The largest and newest facility, Cuisine Solutions Brazil, managed under a
joint venture agreement, has over forty-four thousand square feet of production
area and the capability to produce all Cuisine Solutions products. Cuisine
Solutions Brazil is located in the Brazilian federal capital city Brasilia. The
facility has been designed to handle large volume demand and was also designed
for expandability to meet future additional volume requirements. The Brazilian
facility initiated production at the end of fiscal year 2001 for test marketing
the retail product line in Brazil. The facility also received approval from the
European Community in May 2001, an approval that requires strict quality
control measures in order to have the approval to ship product to Europe. It
was Cuisine Solutions intent to take advantage of the lower cost of poultry,
beef and pork in Brazil, and ship product to the European market. However, this
venture was terminated by the Brazilian Partner during fiscal year 2002.
Management is in negotiations for repayment of the Companys investment and has
filed a civil lawsuit in the Federal District Court of Brasilia against the
Brazilian partner due to the continued lack of cooperation from the Brazilian
partner, the inability to obtain any financial disclosures and the Joint
Venture Partners termination of Cuisine Solutions Inc. business activity in
Brazil.

Cuisine Solutions Chile:

In June 2001 Cuisine Solutions entered into a joint venture agreement with a
Euro-Chilean partnership that will build a processing facility in Chile to
produce a wide range of seafood items. The sous-vide process works
exceptionally well with seafood, and the proximity to the source of high
quality, lower cost materials should place Cuisine Solutions with a significant
advantage in regard to both product quality and cost. Cuisine Solutions
anticipates the facility to be up and running by the end of fiscal 2003 and has
planned the initial facility to be approximately nineteen thousand square feet.
The joint venture agreement was not consummated yet as cash has not been
exchanged as of June 29, 2002.

Cuisine Solutions has been growing consistently since fiscal year 1998, until
the events of September 11, 2001 had negatively impacted the travel industry
which is a major source of the Companys revenue. As a result, the Company
consolidated the sales channels during fiscal year 2002, placing airlines,
national restaurant chains, hotels and banquets under one Management Group.
Cuisine Solutions has been able to successfully cut down on administrative cost
via elimination of positions and reduction of business travel. This cost
reduction has been aided by the creation of a call center that pro-actively
contacts customers to follow up on orders, a process that has been successful
in our French subsidiary for many years. Management continues its strategic
plan to provide product awareness in the retail and hotel banquet sales
channels as well as increased market share of the airline and railroad market
opportunities.

Cuisine Solutions currently serves product through the following sales
channels:

Foodservice

On Board Services: Airlines, Railroad and Cruise Lines;
Banquets: Hotel banquets, Convention Centers, Sport Stadiums and other Special
Events such as the Superbowl, and the Olympics;
Military: Sales through distributors supplying USA military
Restaurant Chains, local & national

Retail

Supermarket In-Store Deli
Premium frozen packaged foods





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The On Board Services (OBS) channel includes customers that provide
transportation services to the general public and serve meals. With chef
created high quality fully cooked pasteurized products, and the ability to make
changes quickly and easily, Cuisine
Solutions has become the preferred supplier to the worlds top airlines for
their business and first class services. Airlines and On Board Services
caterers also recognize the value of Cuisine Solutions global presence, which
allows them to design high-class menus to the United States from Europe. The ability to create high quality meals in three continents
gives Cuisine Solutions a strong competitive edge in the development of
standardized quality meals for non-USA and USA airlines with flight routes
departing from South America and Europe. Most USA carriers are now working with
Cuisine Solutions and the Company is developing commercial relations with large
European and South American airlines and caterers. The On Board Services sales
segment is also the supplier of choice for national railroad companies in the
USA and France. Focused effort and services towards this market has allowed
Cuisine Solutions to gain dominant market share. The On Board Services channel
experienced consistent growth over the past years, until the negative impact of
the September 11, 2001 terrorist attacks in the USA resulted in extremely
limited business travel during the subsequent months, a major source of Cuisine
Solutions sales revenue via sales to the airlines and the hotel banquet
industries. However, Cuisine Solutions reputation for high quality products and
services along with its international presence should allow the Company to
rebound as the airline industry recovers.

The Foodservice sales channel serves product to hotel banquets, hotel
restaurants, sports stadiums, large special event caterers, and national
restaurant chains. Cuisine Solutions products are attractive for foodservice
understaffed and overworked operators, as it improves both their revenue
capability and their meal costs. Revenue capability is improved as Cuisine
Solutions products and menu services enhance and enlarge food operators menu
offerings, increases their table rotation through faster delivery of meals, and
improves the quality, safety and consistency of their menu offerings. Cuisine
Solutions products facilitate the offerings of special menu and promotions
programs, which result in higher customer headcount and a higher average check
per customer. The cost of meals is reduced for the food operator as Cuisine
Solutions products and technical services reduce labor cost and yield losses,
while lowering utility and equipment use time. Cuisine Solutions products also
offer a unique way of controlling portion costs and recipe execution.
Pre-prepared entrees also offer additional savings in kitchen space, equipment,
capital investment and leasehold improvement costs.

There are many prepared food manufacturers in the industry, but most can be
classified as large processors with mass production and quality associated with
mass production frozen foods. They operate large, heavily capitalized
facilities, providing very little flexibility, variety and responsiveness to
the market place. Smaller manufacturers can provide more flexibility and
variety, but are limited in capacity, and do not have global expansion
opportunities. Our competitors do not have access to our sous-vide technology
that involves significant R&D in addition to specialized equipment and
equipment knowledge. The Foodservice channel currently provides the highest
gross margins to the Company. Objectives for Fiscal 2003 include continued
penetration into key national accounts, banquet centers and casinos. Management
intends to pursue larger accounts during fiscal 2003 since Cuisine Solutions
pricing, both current and future, will be affected by the number of products
and the efficiency and productivity of both the sales force and production
facilities. Management expects to return to double digit growth rates in
Europe, but is uncertain of the impact the slowdown in the US economy will have
on USA sales.

Cuisine Solutions initiated its strategic involvement in the retail sales
channel upon completion of the acquisition of the French subsidiary, Cuisine
Solutions France, in December 1999. Cuisine Solutions France has been achieving
considerable success with its retail partnership with French retailers in the
packaged, premium private label category. Cuisine Solutions France has had
consistent sales growth in the previous years in the retail channel. French
consumers are demanding when it involves food quality. Cuisine Solutions offers
better quality, consistency, cost reduction and food safety, as well as the
culinary expertise to help the retailer enhance product selections and seasonal
varieties. To evaluate retail opportunities in the USA, Cuisine Solutions
initiated a strategy to introduce its product line to the USA retailers via the
in-store deli market. The marketing strategy enabled Cuisine Solutions to take
advantage of the quality, consistency, cost and safety benefits provided to the
Companys Foodservice customers and initiate in-store deli programs in the USA
with minimal additional marketing investments. The deli program also caught the
attention of retail frozen food executives which resulted in the first packaged
product line sold in the USA under the Cuisine Solutions Brand. As of the close
of the fiscal year, Cuisine Solutions had multiple premium frozen food projects
underway, with further anticipated product rollout during fiscal year 2003.
Retail objectives for fiscal year 2003 include further penetration into the USA
in-store deli of targeted retailers as well as a planned national roll-out of
premium frozen retail products into the USA market.

Military sales involve sales through distributors for the USA armed forces with
an emphasis on sales to the US Navy. Military sales continue to be managed via
a broker/distributor. The Company has placed specific objectives for the broker
and eliminated a commission compensation structure, invoicing the broker direct
for all orders and placing the responsibility for inventory and accounts
receivable management on the broker/distributor. This resulted in the highest
sales growth in the United States compared with the other sales channels during
fiscal year 2002. The Company believes that a growing opportunity exists within
the military as the military faces a challenge to attract and retain personnel
and the demands for ethnic and special foods continue to increase within the
military.

Cuisine Solutions, Inc. was incorporated in the State of Delaware in 1974. Its
principal executive offices are located at 85 South Bragg Street, Suite 600,
Alexandria, VA 22312 and its telephone number at that location is (703)
270-2900.

The Company desires to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Therefore, this report
contains forward looking statements that are subject to risks and
uncertainties, including, but not limited to, the





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reliance on key customers, fluctuations in operating results and other risks
detailed from time to time in the Companys filings with the Securities and
Exchange Commission. These risks could cause the Companys actual results for
2002 and beyond to differ materially from those expressed in any forward
looking statements made by, or on behalf of, the Company.

BACKGROUND

The Company commenced operations in 1972 as a wholesale producer of French
bread for daily delivery to the Washington, DC area. The Company expanded its
markets throughout the 1970s. In fiscal year 1979, the Company began offering
its product through Company-owned retail bakeries where the products could be
freshly baked throughout the day. During the 1980s, the Company expanded its
frozen dough product line and developed processes to facilitate the baking of
these products at the point-of-sale. As of May 1994, the Company owned and
operated 31 retail units. The Company sold the Bakery Division and the
Restaurant Division to Vie de France Bakery Yamazaki, Inc. in 1991 and 1994,
respectively.

The Company began development of the Culinary Division business in 1987, in
conjunction with research previously performed by Nouvelle Carte France, a
related French Company. As a result of the growth in the application of high
quality frozen products in Europe, the Board authorized the establishment of
the Vie de France Culinary Corporation for the express purpose of the research
into and development of high quality frozen products for the U.S. market. This
Company was formed in 1987, and was later merged into Vie de France
Corporation. In 1989, construction began on a 30,000 square foot plant in
Alexandria, Virginia designed to manufacture its sous-vide product line under
the trade name Vie de France Culinary. The Culinary plant began operations in
May 1990, and expanded into a 39,000 square feet building. The Company
constructed a manufacturing facility in Norway, and initiated production in
August 1994. The primary focus of the Norwegian facility was to supply the
Company with all salmon products.

During fiscal years 1991 through 1996, the Culinary Division successfully built
its sales volume from zero to over $2 million in fiscal year 1991, and by
fiscal year 1996 to $16 million. During fiscal year 1997, the Company
restructured its sales organization to develop focused sales and marketing
strategy. The Company embarked on strategic marketing campaigns to educate the
market place to the advantages of sous-vide processing and increase awareness
of the existence of the Company and its product line. During this first year of
the strategic marketing effort and re-organization, fiscal year 1997 sales
declined to about $14 million. During fiscal year 1998 the Company continued
its reorganization while sales remained steady at $14 million. During fiscal
year 1999, sales increased to over $20 million, an increase of approximately
48%.

In 1998, the Company entered into a joint venture to construct a manufacturing
facility in Brasilia, Brazil to service airlines in the Mercusor markets, our
European retail customers that have a strong presence in Brazil, and for low
cost poultry and beef product exports to the European markets. The Brazilian
facility established regular operations at the beginning of fiscal year 2002.

In 1999, the Company acquired the French company, Nouvelle Carte, to supply
airline customers on the European side as well as supply global foodservice and
retail customers.

During fiscal year 2000, sales increased to $36 million, an increase of 30.2%
over fiscal 1999. Fiscal year 2001 sales slightly increased over $36 million
while fiscal year 2002 sales decreased by 21% to $29 million due to the
economic downturn during the fiscal year 2002 and especially considering the
impact on the travel industry after the September 11, 2001 terrorist attacks in
the USA.

Towards the end of fiscal year 2002, the Company has filed a civil lawsuit in
the Federal District Court of Brasilia against the controlling partner in the
Cuisine Solutions Inc. joint venture Cuisine Solutions do Brasil Ltda as a
result of the Brazilian partners failure to disclose financial information and
operating results of Cuisine Solutions do Brasil Ltda to Cuisine Solutions Inc.
according to both the joint venture agreement and Brazilian law. Due to the
continued lack of cooperation from the Brazilian partner, the inability to
obtain any financial disclosures and the Joint Venture Partners termination of
Cuisine Solutions Inc. business activity in Brazil, Cuisine Solutions, Inc has
written off 100% of its investment in Brazil through the end of fiscal year
ended June 29, 2002.

PRODUCTS

The Company develops, produces and markets chef-created fully cooked, fully
prepared entrees and sauces. The products are high quality items without the
high-end price since they can be produced in large volumes. The product line
consists of items not usually available to our customers such as Osso Buco,
Chilean Sea Bass, Beef Wellington and Stuffed Pork Chops as well as staple
items such as plain and stuffed chicken breast. The precise cooking process
allows the Company to prepare a perfect duck breast, rack of lamb or veal chop.
The combination of the unique cooking process, the internal culinary expertise
and international distribution has been critical to the sales success to date.

The sous-vide cooking process involves preparing a product with the required
spices, vacuum sealing the product, and cooking the product under water for
precise times at precise temperatures. This precision in time and temperature
allows the Company to produce the exact specification on any protein item
produced. The process is controlled by computerized systems, and each item is
exact every time. The cooking process also provides an eighteen-month shelf
life on most protein items without the need for any food additives or
preservatives. The product has enormous application with health conscience
retailers and health care organizations due to this lack of required additives.





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The Company packages its products in two ways, Foodservice packs and Retail
carton packs. Most Foodservice pack products are vacuum-sealed and frozen in
either single or multi-serving packaging and then case-packed. Single-pack
items provide maximum customer flexibility, while multi-serving packs provide
additional efficiency and economy for large-scale preparations. The USA and
French facility packages a retail carton for the frozen and refrigerated retail
sales area for retail supermarkets.

DISTRIBUTION

The majority of Company sales are frozen products shipped throughout the USA
and Europe. Cuisine Solutions Norway provides most of the salmon products
globally while France and the USA produce non-salmon products for Europe and
the USA respectively. All products are shipped frozen except for some retail
sales in France, which are refrigerated. The French retail sales are all final
sales, and the retailer bears the risk for any unsold product. The French
facility maintains one additional third party warehouse for storage, while the
USA maintains four third party outside warehouses at the end of fiscal year
2002. Most of the warehouses were created to support the Foodservice sales
requirements for short lead times and product availability. Four third party
warehouses were closed during fiscal year 2001 because of the initiated
strategy to reduce inventory levels and lower distribution cost. The Company
and internal systems can quickly and easily add or subtract additional outside
warehouses when and where it is deemed necessary.

The Company sells one hundred percent of its product through its own sales
personnel located in either France or the USA. Norway does not have a sales
force. Norwegian product is sold to either France or the USA as inter-company
sales, or sold by the sales team to ship direct from Norway to customers
located in Europe. All USA sales are to USA markets, and French sales to
European markets.

RAW MATERIAL STATUS

The Company historically purchased its raw materials from a number of different
suppliers at spot market prices except for USA poultry that the Company
initiated contract purchasing in fiscal 1999. The practice of spot market
purchasing and bidding out to suppliers does not allow the Company to take
advantage of annual low prices in certain commodity markets, nor does it allow
the Company to develop strategic partnerships with suppliers. Since systems now
provide forecast capabilities and the related material requirements, the
Company does engage in a more strategic approach to procurement and developed
strategic purchasing programs. During fiscal year 2002, the spot market price
of raw salmon remained relatively stable compared to last years forty percent
increase from the second quarter through the fourth quarter on the Norwegian
market.

PATENTS AND TRADEMARKS AND OTHER ITEMS IMPORTANT TO OPERATING SEGMENTS

The Company believes that its Cuisine Solutions, Inc. and Vie de France
Corporation trademarks are important to its business success. Accordingly, it
takes the necessary steps to protect them. During fiscal year 1998 the Company
assured its protection by transferring the ownership of all trademarks it owns
to Cuisine Solutions, Inc in addition to maintaining the Vie de France
Corporation trademark. The Company and Vie de France Bakery Yamazaki, Inc.
entered into a Trademark and Service Mark License Agreement in 1991 and, in
conjunction with the sale of the Restaurant Division, amended and restated this
agreement. In 1997, the Company secured the use of a packaging trademark called
MicroRoast and MicroRoti to be used in the U.S. and European market,
respectively. This new packaging is designed for use in microwave ovens and
imparts a roasted quality to our value-added entrees.

During fiscal year 2002, the company has secured in Europe and in the USA the
service trade mark Your Culinary Partner and Votre Partenaire Culinaire
which is currently being used in our global advertising campaign.

CUSTOMER DEPENDENCY

The Companys largest customers involve two airline distributors that pull
product from Company based upon the Companys direct sales efforts to the
airline and related demand from the airlines to these distributors. The Company
sells product to many major airline companies, and does not have a dependency
on any one airline.

The Foodservice channel consists of a wide base of hotel banquet and convention
centers in a decentralized purchase decision environment and no single customer
can have a material impact on the total Company.

SEASONALITY

The seasonality of the hotel banquet industry, which typically peak in
September through December, and March through June, no longer has a major
impact on the total Company due to growing sales of the other sales channels.

COMPETITION

The Company considers itself to be a leader in the sous-vide product line
within the food service industry in the USA. At present, limited competition
exists within the USA frozen wholesale component of this product line. Other
firms exist in France within the retail and refrigerated components of the
sous-vide prepared foods. As such, the Company primarily competes for sales
against food service providers in the frozen and raw segment, rather than
against other sous-vide suppliers. The Company offers value-added products, but
must offer these products in a price range that makes it economically
advantageous for its users to convert from other methods of food preparation.

The Company believes its products can compete against these other methods in
price, product performance and convenience. The Company also offers
implementation and menu development services, as well as equipment to its
customers as another means of





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building sales. The Company depends upon its product development, marketing,
and menu items as a means of maintaining its leadership position within the
sous-vide industry.

RESEARCH & DEVELOPMENT

For continuing operations, the Company invested $395,000, $593,000 and $447,000
in research and development activities in fiscal years 2002, 2001 and 2000,
respectively. The Company maintains a staff of experienced culinary and food
science professionals in order to provide the marketplace with innovative
products on a continuous basis. The international staffing in the USA and in
France provides the Company with the latest in culinary trends on both sides of
the Atlantic. The French facility provides a source of dedicated culinary
professionals since the French culinary training is known for its dedication to
the art of perfection with regards to food preparation.

REGULATION

The Company is subject to various Federal, state and local laws affecting its
business, including health, sanitation and safety regulations. The U.S. plant
operates under USDA supervision over the handling and labeling of its products.
The Company believes its operations comply in all material respects with
applicable laws and regulations. In addition to USDA standards, all subsidiary
facilities are HACCP certified.

The Companys production facilities in Norway, France and Brazil meet European
Community standards and regulations. The Norwegian products, along with certain
raw materials, are subject to import regulations.

EMPLOYEES

The Company employs approximately 210 people including full-time and part-time
workers and corporate staff.

GEOGRAPHIC SALES

The Companys sales are primarily focused in the United States, with sales
representing 63.2%, 70.4% and 67.6% of total sales for fiscal years 2002,
2001and 2000, respectively.

ITEM 2. PROPERTIES

The Company owns the French facility and property, and leases its USA office
and its USA and Norwegian manufacturing facilities. The French facility located
in Louviers, France is approximately 15,000 square feet. The U.S. plant,
located in Alexandria, Virginia, is approximately 39,000 square feet. The
Norway plant, located in Hjelmeland, Norway, is approximately 16,000 square
feet. The Companys Norway plant is structured as a twenty-year capital lease
whereby the Company will own the facility at the end of the lease term on
August 31, 2014. The Company owns substantially all of the equipment used in
its facilities. Lease commitments and future minimum lease payments are shown
in Notes 7 and 10 to the Consolidated Financial Statements, which is included
in this Form 10-K.

ITEM 3. LEGAL PROCEEDINGS

At the end of fiscal year 2002, the Company has filed a civil lawsuit in the
Federal District Court of Brasilia against the controlling partner in the joint
venture, Cuisine Solutions do Brasil Ltda, as a result of the Brazilian
partners failure to disclose financial information and operating results of
Cuisine Solutions do Brasil Ltda to Cuisine Solutions Inc. according to both
the joint venture agreement and Brazilian law. We refer to note 5 of the notes
to the consolidated financial statements.

There are no other material pending legal proceedings, other than ordinary,
routine litigation incidental to the Companys business, to which the Company
is a party or to which any of its property is subject. Management does not
believe that any amounts it may be required to pay by reason thereof will have
a material effect on the Companys financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.





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PART II

ITEM 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER
MATTERS COMMON STOCK

The Companys capital stock is divided into two classes: Common Stock and Class
B Stock. The Class B Stock, which is reserved for issuance to employees under
stock options plans, is identical in all respects to the Common Stock except
that the holders thereof have no voting rights unless otherwise required by
law. The Companys Common Stock is traded in the over-the-counter market on the
NASD National Market System under the symbol CUIS. The following table sets
forth for the quarters indicated the high and low sales prices per share as
reported on the National Market System:

|                                  |  |   |       |  |  |   |      | 
|--------------------------------- |  | - | ----- |  |  | - | ---- | 
|Year ended June 29, 2002 High Low |  |   |       |  |  |   |      | 
|First Quarter                     |  | $ | 1.250 |  |  | $ | .880 | 
|Second Quarter                    |  |   | 1.070 |  |  |   | .550 | 
|Third Quarter                     |  |   | .900  |  |  |   | .250 | 
|Fourth Quarter                    |  |   | .800  |  |  |   | .500 | 

|                                  |  |   |       |  |  |   |       | 
|--------------------------------- |  | - | ----- |  |  | - | ----- | 
|                                  |  |   |       |  |  |   |       | 
|Year ended June 30, 2001 High Low |  |   |       |  |  |   |       | 
|First Quarter                     |  | $ | 1.625 |  |  | $ | 1.031 | 
|Second Quarter                    |  |   | 2.125 |  |  |   | 1.031 | 
|Third Quarter                     |  |   | 2.000 |  |  |   | 1.094 | 
|Fourth Quarter                    |  |   | 1.410 |  |  |   | .950  | 
|                                  |  |   |       |  |  |   |       | 
|Year ended June 24, 2000 High Low |  |   |       |  |  |   |       | 
|First Quarter                     |  | $ | 1.718 |  |  | $ | .937  | 
|Second Quarter                    |  |   | 1.875 |  |  |   | 1.156 | 
|Third Quarter                     |  |   | 3.062 |  |  |   | 1.437 | 
|Fourth Quarter                    |  |   | 2.625 |  |  |   | 1.218 | 

As of September 13, 2002 there were approximately 610 holders of record of the
Companys Common Stock.

No dividends were paid during fiscal year 2002, 2001and 2000.

On November 30, 1998, the Company was notified by NASDAQ that it no longer met
the minimum $1.00 bid requirement to be included in the NASDAQ National Market
and was delisted. The Company currently trades on the OTC Bulletin Board.

ITEM 6. SELECTED FINANCIAL DATA

FIVE YEAR SUMMARY
(in thousands, except per share amounts)

|                                          |  |      |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   |        |  
|----------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                          |  | 2002 |        | 2001 |  | 2000 |        | 1999 |  | 1998
|                                          |  |      |        |      |  |      |        |      |  |     
|Net Sales                                 |  | $    | 28,616 |      |  | $    | 36,138 |      |  | $    | 35,810 |   |  | $ | 27,492 |   |  | $ | 21,129 |  
|Loss from operations (1)                  |  |      | (4,944 | )    |  |      | (660   | )    |  |      | (2,313 | ) |  |   | (1,523 | ) |  |   | (4,406 | )
|Net loss (2)                              |  |      | (6,027 | )    |  |      | (861   | )    |  |      | (1,980 | ) |  |   | (634   | ) |  |   | (3,490 | )
|Loss from operations per share            |  |      | (0.31  | )    |  |      | (0.04  | )    |  |      | (0.16  | ) |  |   | (0.10  | ) |  |   | (0.29  | )
|Net loss per share                        |  |      | (0.38  | )    |  |      | (0.06  | )    |  |      | (0.13  | ) |  |   | (0.04  | ) |  |   | (0.23  | )
|Total assets                              |  |      | 18,197 |      |  |      | 22,761 |      |  |      | 24,357 |   |  |   | 26,874 |   |  |   | 28,910 |  
|Long term debt, including
current portion |  |      | 2,924  |      |  |      | 2,582  |      |  |      | 2,449  |   |  |   | 2,569  |   |  |   | 3,288  |  
|Stockholders Equity                      |  |      | 11,156 |      |  |      | 16,514 |      |  |      | 17,392 |   |  |   | 19,342 |   |  |   | 21,225 |  
|Dividends per share                       |  |      |       |      |  |      |       |      |  |      |       |   |  |   |       |   |  |   |       |  



|    |  |                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------
|(1) |  | Includes amortization of $95 and subsequent impairment of pre-operating capitalized web site development cost of $619 in 2002
|(2) |  | Includes loss in equity from investment in Brazil of $997 in 2002 and $661 in 2001 respectively                              





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##### 



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

Fiscal year 2002 revenue of $28,616,000 reflect a consolidated sales decrease
of 20.8% from fiscal year 2001 revenue of $36,138,000. The decrease in sales
were due to a 28.9% decrease in US sales, a 6.7% decrease in sales from France
and a 66.5% increase in non-inter-company sales from the Norwegian subsidiary. The sales decline was driven
by reduced travel and temporary cost saving programs of large Cuisine Solutions
customers, specifically by the airlines, which had a dramatic impact on the
Companys sales after the terrorist attacks in the USA in addition to the slow
down in the economy during the reporting period. The weeks following September
11, 2001 resulted in extremely limited business travel, a major source of
Cuisine Solutions revenue via sales to airlines and the hotel banquet
industries. Cuisine Solutions Norway gross sales in US dollars decreased by
30.6% due to the reduced demand of raw material in France and the USA, however,
third party sales in US dollars have been increased by 66.5% due to the
successful integration of new customers. Approximately 68% of the sales from
Cuisine Solutions Norway are inter-company sales to the USA and French
subsidiaries, and eliminated during the financial consolidation process.

Net losses for fiscal year 2002 were $6,027,000, $5,166,000 higher than fiscal
year 2001 losses of $861,000 due to the decline in USA sales, the amortization
and impairment of the FIVELEAF website in the amount of $95,000 and $619,000
respectively, and the additional recognition of losses in equity from the
investment in Brazil in the amount of $997,000. The Company was successful in
lowering cost by the reduction of personnel in Alexandria as well as to salary
cuts throughout the Company but these cost reductions could not cover overhead
cost due to the decreased sales and correspondent low production volume during
fiscal year 2002, resulting in higher cost of goods. As a result, more than $1
million of overhead cost could not be absorbed due to the low volumes in fiscal
year 2002. The Company did successfully reduce the inventory levels by
aggressive management but was not able to cycle a significant part of the
inventory which was produced for airline menus for the fall and winter but
which was never ordered due to the September 11, 2001 events and therefore
recorded a total obsolescence reserve of $504,000. The return of sales to the
airline industry to levels before September 11 have not been achieved yet by
the close of fiscal year 2002, however, new menus and products have been
developed to replace the high price items in the first and business class.

Cuisine Solutions France had the third consecutive profitable year since the
acquisition by Cuisine Solutions 1999. Since the acquisition, the French
subsidiary has contributed approximately one and a half million US dollars in
cash flow to the Company. In spite of the lackluster economy during fiscal year
2002, the French subsidiary reported profitable results and double digit growth
in the Foodservice channel in France. Although the overall travel industry
suffered declines during the past fiscal year, Management credits both the
thirty-five hour work week rule and its impact on labor cost in France for the
increase in demand for the Foodservice channel as well as aggressive cost
control for the delivery a positive net income in France.

Cuisine Solutions Norway recorded a loss of $19,000 for fiscal year 2002 after
a profitable fiscal year 2001. The loss was due to the decreased demand of the
Norway product line after the slowdown of the economy which in turn impacted
the ability to cover fixed production overhead cost due to the reduction in
production. However, all controllable costs in Norway have been managed during
fiscal year 2002.

Net losses for fiscal year 2001 and 2000 were $861,000 and $1,980,000
respectively against sales of $36,138,000 in fiscal 2001 and $35,810,000 in
fiscal 2000. The decrease in losses from 2000 to 2001 was due to improved
management of cost, and lower salmon material costs.

The company further developed the investment in the FIVELEAF brand during 2002
and launched the FIVELEAF product line in February 2002. Consumers are now able
to purchase a luxury line of prepared entrees, accompaniments, and desserts
created by an extraordinary consortium of the most distinguished chefs in the
United States over the telephone via call center, by catalog, and through the
FIVELEAF Web site. Access to this site can be made at www.fiveleaf.com.

This is the first time in American culinary history that chefs of this caliber
have been willing to associate their names and talents with a foodservice
company. They agreed to do so because of the Companys reputation for the
highest standards of production and quality as well as Cuisine Solutions
unique food preparation process, sous-vide, which allows faithful translation
of these recipes in a manner that is totally consistent with the chefs
original creations.

The Company begun to amortize the capitalized web site development cost for
FIVELEAF.comin accordance with SOP No. 98-1 after the web site was launched
in February 2002. The Company impaired the remaining balance of the capitalized
cost as at June 29, 2002 in accordance with SFAS No. 121 and SFAS No. 144 after
management performed an impairment test and considering the uncertainty with
respect to a long-term sales forecast at this time. However, the FIVELEAF
product line has profitable margins and plays an important role in the
Companys business and marketing strategy. Cuisine Solutions experienced
positive feedback and interest in these high quality products from customers
throughout all sales channels after the launch of the product line.

SALE AND GROSS MARGINS

The Companys sales of high-quality foods are sold to airlines, retail
supermarkets, hotel and convention center banquets, passenger rail lines and
harbor cruise lines. USA sales account for 63.2 % of total revenue, while
France and Norway account for 32.4% and 4.4% after elimination inter-company
sales respectively. Norway produces product for both France and the USA and
total Norwegian production accounts for approximately 14% of total Company
sales.

A comparison of net sales, gross margin percentages and losses from operations
as follows:





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##### 



|                        |  |          |            |          |  |            |            |   |  |   |            |  
|----------------------- |  | -------- | ---------- | -------- |  | ---------- | ---------- | - |  | - | ---------- | -
|                        |  |          |            |          |  | Year Ended |            |   |  |  
|                        |  | June 29, |            | June 30, |  | June 24,  
|                        |  | 2002     |            | 2001     |  | 2000      
|                        |  |          |            |          |  |           
|Net Sales               |  | $        | 28,616,000 |          |  | $          | 36,138,000 |   |  | $ | 35,810,000 |  
|Gross margin percentage |  |          | 16.4       | %        |  |            | 24.7       | % |  |   | 20.1       | %
|Loss from operations    |  | $        | (4,944,000 | )        |  | $          | (660,000   | ) |  | $ | (2,313,000 | )

The Companys net sales decreased by 20.8% to $28,616,000 in fiscal 2002 from
$36,138,000 in fiscal 2001 due to the negative impact of the September 11, 2001
terrorist attacks on the travel industry. This current year sales decreases did
primarily affect the Foodservices and On Board Services channel and were driven
by the reduced travel and temporary cost saving programs of large customers,
specifically by the airlines. During fiscal 2001, approximately 40% of Cuisine
Solutions global sales involved meals to airlines through airline caterers.
Fiscal year 2002 On Board Services and Foodservices sales decreased each by
37%. The New Business and Military channel achieved each growth rates of over
50% during fiscal 2002.

Gross margins as a percent of sales decreased to 16.4% for fiscal 2002 compared
to 24.7% in fiscal 2001, and 20.1% in fiscal 2000. The current year decrease is
attributed to the decline in USA sales which in turn impacts distribution cost,
and the ability to cover fixed production overhead costs due to the reduction
in production. These forced production reductions were accentuated by a focused
sell-off of on hand inventory. In addition, fiscal year 2002 cost of goods sold
includes a significant obsolescence reserve of $504,000 for inventory related
to production for the fall and winter 2001 airline menus which were never
ordered due to the September 2001 terrorist attacks. The Company was successful
in lowering cost by the reduction of personnel in Alexandria as well as to
salary cuts throughout the Company but these cost reductions could not cover
overhead cost due to the decreased sales volume during fiscal year 2002.
Further cost reductions have been achieved through alternate sources of supply
and product mix changes.

Cuisine Solutions has strategically built other sales channels over the
previous years to include military and retail accounts and meals for passenger
trains, and has seen consistent results in its European subsidiaries.

While there are increased concerns in the marketplace, Management of Cuisine
Solutions will continue the execution of its strategic plans for fiscal 2003,
and remain pro-active during this period of uncertainty.

SELLING AND ADMINISTRATION EXPENSES

A comparison of selling and general administrative costs follows:

|                             |  |          |           |          |  |            |           |  |  |   |           | 
|---------------------------- |  | -------- | --------- | -------- |  | ---------- | --------- |  |  | - | --------- | 
|                             |  |          |           |          |  | Year Ended |           |  |  |  
|                             |  | June 29, |           | June 30, |  | June 24,  
|                             |  | 2002     |           | 2001     |  | 2000      
|                             |  |          |           |          |  |           
|Selling costs                |  | $        | 6,166,000 |          |  | $          | 6,861,000 |  |  | $ | 6,820,000 | 
|General administrative costs |  |          | 2,536,000 |          |  |            | 2,590,000 |  |  |   | 2,588,000 | 
|                             |  |          |           |          |  |            |           |  |  |   |           | 
|                             |  | $        | 8,702,000 |          |  | $          | 9,451,000 |  |  | $ | 9,408,000 | 

Selling and administration costs as a percentage of sales were 30.4% in fiscal
2002, 26.1% in fiscal 2001 and 26.3% in fiscal 2000. The percentage increase in
selling expenses from fiscal 2001 versus fiscal 2002 reflects the impact of
lower sales while the dollar expense decrease is attributed to the reduction of
sales and administrative staff and compensation plans tied to top line sales
and profit contribution. However, fiscal year 2002 includes significant
extraordinary expenses related to the restructuring of the sales departments
($268,000) and initial expenses related to the lawsuit against the Brazilian
Joint Venture partner ($45,000).

DEPRECIATION AND AMORTIZATION

The fiscal year 2002 depreciation and amortization costs increased by $133,000
over fiscal year 2001 to $1,255,000 as a result of machinery and equipment
added and the initial amortization of the FIVELEAF website since the launch of
the website in February 2002. Actual fiscal year 2001 depreciation and
amortization costs increased by $51,000 over fiscal year 2000 to $1,122,000 as
a result of equipment and leasehold improvements added to the facilities in
France and Norway.

NON-OPERATING INCOME AND EXPENSE

The non-operating loss for fiscal 2002 of $1,069,000 is primarily related to
the additional $997,000 loss on equity from the investment in Brazil.

Interest expense relates to the borrowings relating to the Companys U.S.,
Norwegian and French subsidiaries, including the Norwegian capital lease. At
June 29, 2002, the Company had borrowings of $2,924,000, bearing interest at
rates ranging from 5.6% to 9.5%. The majority of these borrowings of $2,478,000
were through its Norwegian facility. It is anticipated that these borrowings
will remain outstanding during the upcoming fiscal year. The French subsidiary has
two term loans with a principle balance of $138,000





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##### 



and $308,000 at 5.6%
interest rate and 6% respectively. The first loan was used to finance an
expansion of the raw materials storage area completed in fiscal 1999. The
original amount loan equated to approximately $500,000 at September, 1998. The
second loan was used to expand cooking capacity under a capital lease program
with a five year term. The lease agreement went effective in December 2000; the
related loan amounted to $428,000 at the beginning of the lease.

IMPACT OF INFLATION AND THE ECONOMY

Inflation in labor and ingredient costs can significantly affect the Companys
operations. Many of the Companys employees are paid hourly rates related to,
but generally higher than the federal minimum rates. The Companys sales
pricing structure allows for the fluctuation of raw material prices. As a
result, market price variations do not significantly affect the gross margin
realized on product sales. However, most customers require a sixty-day notice
for price changes in order to update their internal systems and evaluate the
impact of price changes. Therefore, in the event of a continuous accelerated
commodity price increase, the Company must either absorb the price increase
during that sixty day period or discontinue sales to the customer, and risk
losing the long term business relationship.

LIQUIDITY AND CAPITAL RESOURCES

In fiscal year 2002, the Company experienced an increase in its liquidity due
to decreases in inventory and Accounts Receivables. Inventories were decreased
consistently during fiscal 2002 as a result of the aggressive management and
well executed plan to minimize the effect of cash tied up in inventory and due
to improved co-ordination with production planning. Accounts Receivables
decreased due to the aggressive collection and as a result of the decreased
sales volume during fiscal 2002.

The Company held short-term cash positions of $1,958,000 and $773,000 at June
29, 2002 and June 30, 2001 respectively. Additionally, the Company held long
term investments, those with maturities greater than one year, of $2,608,000
and $2,491,000 at June 29, 2002 and June 30, 2001 respectively. No cash was
provided by investing activities from any sale of the long term investments
during fiscal 2002. The cash used by investing activities was primarily related
to investments in buildings as well as machinery and equipment during fiscal
2002.

In the fiscal years 2001 and 2000, the Company experienced an increase in its
liquidity through the sale of securities for capital gains. Inventory in both
years and receivables in 2000 increased due to the higher sales volume and
requirements to have adequate inventory on hand to meet customer demand
resulting in an increase in cash tied up in inventory and receivables. The
Company held short-term cash positions of $948,000 and investments with
maturities greater than one year of $4,715,000 at June 24, 2000.

Cash provided by operations in fiscal year 2002 amounted to $2,073,000 compared
to cash used in fiscal 2001 of $719,000, and cash used in fiscal year 2000 of
$2,854,000. The cash provided in fiscal year 2002 is a result of the aggressive
inventory and collection management as well as due to the low sales volume. The
cash used in fiscal year 2001 relates to the funds needed to finance the
Companys operations, investments in Brazil and increased inventories. The cash
used in fiscal year 2000 relates to the funds needed to finance the Companys
operations, increased in accounts receivables and Company operating losses.

During fiscal year 2002, the Company made capital expenditures of $1,230,000.
These investments involved investments in machinery and equipment, personal
computers and software upgrades. A portion of the investment in machinery and
equipment was related to the improvement of the refrigeration system and to a
packaging line for private labeling of retail products. A significant part of
the increased capital expenditures is due to the fact that the EURO and the
Norwegian Kroner gained between 15% and 20% value during fiscal 2002 which made
these investments more expensive converted in US Dollars. During fiscal year
2001, the Company made capital expenditures of $811,000. During fiscal year
2000, the Company made capital expenditures of $1,838,000. A new enrobed pasta
line with automated packaging equipment was included in this investment. The
line produces an enrobed pasta product that provides the customer with a pasta
and sauce combination that only need to be heated to serve. The Company
launched this product to airlines, passenger rail services, banquets and retail
during fiscal year 2001.

The Companys Norwegian subsidiary has secured a working capital commitment for
its liquidity needs in Norway in the form of an overdraft facility for
$1,422,000. As of June 29, 2002 $1,185,000 was outstanding under this overdraft
facility. The overdraft facility is protected by a letter of credit posted by
the U.S. operations banking institution that is renewed annually.

FUTURE PROSPECTS

During fiscal year 2002, the Company continued its focus on the existing sales
channels obtaining penetration into the airline industry, obtaining a large
portion of the market share of the passenger rail market, introducing the
Companys product to harbor cruise lines and becoming a retail supplier via the
in-store-deli market as well as supplier for premium frozen food products.
These objectives were in addition to gaining a larger share of the hotel and
convention center banquet business. However, due to the downturn of the economy
and especially after the impact of the September 11, 2001 terrorist attacks on
the travel industry did now allow the Company to realize their objectives
during fiscal 2002.

Cuisine Solutions plans to continue with the sales strategy and to return to
sales growth from the previous three years by continuing its strong sales
efforts in the airline business by a continued push for new USA accounts and a
new focus on the European airline
market. While there are increased concerns in the market place, management of
Cuisine Solutions will continue to strengthen the





---



##### 



business relationships with
most of the major airlines, passenger rail lines and harbor cruise lines
through continued value and increase in service by offering flexible solutions
upon the current demand in the industry.

The Foodservice/banquet channel will continue to spend more effort on large
food service contractors and event planners rather than sales to individual
smaller hotels. Demand for foodservice product in France increased
significantly during fiscal 2002 and expects further growth for fiscal 2003 due
to the continued customer satisfaction with the quality and variety of product
offered by Cuisine Solutions France. Foodservice operators in France are forced
to deal with the thirty-five hour work week constraint and have discovered the
Cuisine Solutions product line offers a solution to the limited availability
and higher cost of labor created as a result of the new mandated work hour
rules. Customers in the Foodservice sales channel place high value on the labor
savings, quality, consistency and food safety associated with Cuisine Solutions
product. Management believes this value increases in the current economic and
political situation challenging todays business environment. In the meantime,
Management has and will continue to initiate aggressive cost reduction programs
and product line changes to meet the changing needs of the industry.

The Retail Sales channel was formally created during fiscal year 2000 with the
objective of penetrating the In-Store Deli category of major North American
retailers. The sales channel and related growth is following a strategy plan
for large volume opportunities with high quality products. Cuisine Solutions is
providing retailers with a heat and serve program that allows supermarkets to
upgrade the variety and quality of meals offered. The Company is working with
retailers to develop best methodology to execute a larger scale roll-out of the
program and has already introduced the idea to some of the largest retailers in
the USA. The Company has also placed premium private label products
successfully into the retail industry, and industry that is experiencing a
significant increase in frozen food sales versus the traditional demand for
fresh products. A successful retail program would allow the Company to reap the
high volume benefits of USA retail without the marketing investment usually
required with doing business with USA retailers.

The increase in demand, especially from USA retailers, will also allow the
Company to move towards a customer base that has a higher purchase quantity per
order and away from small orders that disrupt the manufacturing process and add
costs due to changeover, start-up loss of efficiency and create poor
productivity.

Military sales continue to be managed very successfully via a
broker/distributor, adding very little in terms of sales and administrative
expenses. The Company will further support the growing opportunity for this
sales channel which currently has the highest growth rates as the military
faces new challenges to attract and retain personnel and the demands for ethnic
and special foods continue to increase within the military.

The Company has also had success with national restaurant chains that have
found that the Companys product, quality and ease of use makes an attractive
alternative for providing promotional menu items. The Company will continue
with further penetration of product sales to national restaurant chains with
entrees and special meals such as vegetarian dishes throughout fiscal year
2003.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal market risks (i.e., the risk of loss arising from adverse changes
in market rates and prices) to which we are exposed are:

Interest rates, foreign exchange rates, sales and marketing.

Interest Rate Exposure:

The Companys exposure to market risk for changes in interest rates relates
primarily to the Companys investment and debt portfolio. The Company has not
used derivative financial instruments in its investment portfolio. The Company
places its investments with high quality issuers. A portion of the debt
portfolio has fluctuating interest rates that change with changes in the
market. Information about the Companys investment portfolio is set forth in
Footnote 3 of Item 14(a) of the Form 10-k.

Foreign Currency Rate Exposure:

International operations constitute 37% of fiscal year 2002 Company sales. The
majority of the Companys sales are denominated in U.S. dollars, thereby
limiting the Companys risk to changes in foreign currency rates. The Norwegian
subsidiarys sales are denominated in Norwegian kroner while the French
subsidiary reports in EURO. As currency exchange rates change, translation of
the income statements of the Norway and French operations into U.S. dollars
affects year-over-year comparability of operating results. Sales that are
subject to these foreign currency fluctuations are approximately 37% of the
Companys sales. The net assets of the subsidiaries are approximately 37% of
the Companys net assets. The Company does not enter into hedges to minimize
volatility of reported earnings because it does not believe it is justified by
the exposure or the cost. Information about the Companys foreign currency
translation policy is set forth in Footnote 1 of Item 14(a)(1) of this Form
10-K.

Sales and Marketing Risks:

The future performance of the Companys efforts will depend on a number of
factors. One is the recovery of the travel industry, and
specifically the airlines, which have been a major source of Cuisine Solutions
revenue and formal business strategy. The others





---



##### 



involve the introduction and
roll-out of new product lines into the Retail sector. Although the economic
situation with the airlines is believed to be temporary, Management cannot
forecast the length and total impact of the current economic cycle. Cuisine
Solutions will position itself to provide maximum value to our airline partners
during this difficult period and remain prepared to resume business growth when
the industry recovers. Cuisine Solutions Management has positioned additional
focus on the opportunities available in the retail sector and the success rate
will be contingent upon market acceptance of the product line, price points and
execution of its marketing strategy.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is included at Item 14(a)(1) and (2).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required under this Item 10 is shown in the Proxy Statement to
be filed under Regulation 14A, under the caption Election of Directors, and
such information is incorporated herein by reference.

EXECUTIVE OFFICERS

The following list and narrative sets forth the name and age of each present
executive officer of the Company, all positions held by the person with the
Company, the year in which the person first became an officer, and the
principal occupations of each person named.

|                         |  |     |    |                          |  |                                                                     |  |     
|------------------------ |  | --- | -- | ------------------------ |  | ------------------------------------------------------------------- |  | ----
|Name                     |  | Age |    | Office held with Company |  | Since                                                              
|                         |  |     |    |                          |  |                                                                    
|Stanislas Vilgrain       |  |     | 43 |                          |  | President and Chief Executive Officer                               |  | 1994
|Robert Murphy            |  |     | 39 |                          |  | Vice President, Chief Operating and
Financial Officer and Treasurer |  | 1997
|Françoise Perrier-Madani |  |     | 39 |                          |  | Corporate Secretary                                                 |  | 1999
|Andreas Pfann            |  |     | 36 |                          |  | Vice President Finance                                              |  | 2001
|Gerard Bertholon         |  |     | 42 |                          |  | President of FIVELEAF                                               |  | 2002

Mr. Vilgrain was appointed President and Chief Executive Officer in October
1993, having served as President and Chief Operating Officer since June 1991
and as a director since 1991. He served as President of the Vie de France
Culinary Division from July 1987 to June 1991. Previously, he was employed by
Vie de France Corporation as Director of Staff Operations from August 1986
through June 1987. He was Manager of the Vie de France Corporations San
Francisco bakery from January 1986 through August 1986, after having served as
Assistant Manager of the Denver bakery from July 1984 through December 1985.
Prior to joining Vie de France Corporation, he was Assistant to the Director of
Research & Development for the Bakery Division of Grands Moulins de Paris from
June 1983 to July 1984, and was Regional Manager of Operations and Sales from
July 1982 through May 1983 for O.F.U.P., a publication distributor in Paris,
France.

Mr. Murphy was appointed Chief Operating Officer in April 2002 and joined the
Company in November 1997 as Vice President and Chief Financial Officer. Mr
Murphy has 22 years of food experience, 16 of which are in the manufacturing
sector. Prior to joining the Company, Mr. Murphy was the Senior Director of
Acquisitions and Integration for Edwards Baking Company. He also held the
positions of Operations Controller and Manager of Financial Systems and
Development. Prior to Edwards, Mr. Murphy was a Controller with Bunge Foods
working in the Bakery and Dairy Industrial Ingredient Divisions.

Ms. Perrier-Madani was appointed Corporate Secretary for Cuisine Solutions in
October 1999 and Vice President of Marketing for Fiveleaf in January 2002. Ms
Perrier-Madani joined the Company in September 1998 as Project Manager and then
as International Sales and Marketing Manager in December 2000. Prior to joining
the Company, Ms Perrier-Madani was the Marketing Manager for Sanofi Beauté, Inc
and previously a Legal Associate for Euro-Australian Legal Associates in
Sydney, Australia.

Mr. Pfann was appointed Vice President Finance in July 2001 and joined the
Company in October 2000 as Corporate Controller. Mr. Pfann has over eight years
of experience in public accounting with KPMG in Europe and previously as an
audit manager with Ernst & Young in Germany and the United States.





---



##### 



Mr. Bertholon joined Cuisine Solutions in August 1989 as Director of Research &
Development then VP of International Sales in 1997 and VP of Marketing in
December 2000. Mr. Bertholon was appointed President for Fiveleaf in January
2002. He has over 26 years of experience in the international foodservice
industry. Prior to joining the Company, Mr. Bertholon was Executive Chef for 9
years in the United States.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this Item 11 is shown in the Proxy Statement to
be filed under Regulation 14A, under the caption Executive Compensation, and
such information, except for the information required by Item 402(k) and Item
402(l) of Regulation
S-K, is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required under this Item 12 is shown in the Proxy Statement to
be filed under Regulation 14A, under the caption Voting Securities and
Principal Holders Thereof, and such information is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required under this Item 13 is shown in the Proxy Statement to
be filed under Regulation 14A, under the caption Certain Transactions, and
such information is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 10-K

(a)  Index to Financial Statements

|                                  |                                                                                                                               |  |      |    | 
|--------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                  |                                                                                                                               |  | Page
|(1) Financial Statements          |                                                                                                                               |  |      |   
|                                 
|                                  | Report of Independent Accountants                                                                                             |  |      |    | 
|                                  | Grant Thornton LLP as of and for the year ended June 29, 2002, June 30, 2001 and June 24, 2000                                |  |      | 18 | 
|                                 
|                                  | Consolidated Balance Sheets  June 29, 2002 and June 30, 2001                                                                 |  |      | 19 | 
|                                 
|                                  | Consolidated Statement of Operations  Fiscal Years Ended June 29, 2002, June 30, 2001 and June 24, 2000                      |  |      | 20 | 
|                                 
|                                  | Consolidated Statement of Changes in Stockholders Equity  Fiscal Years Ended June 29, 2002, June 30, 2001 and June 24, 2000 |  |      | 21 | 
|                                 
|                                  | Consolidated Statement of Cash Flows  Fiscal Years Ended June 29, 2002, June 30, 2001 and June 24, 2000                      |  |      | 22 | 
|                                 
|                                  | Notes to Consolidated Financial Statements  June 29, 2002                                                                    |  |      | 23 | 
|                                 
|(2) Financial Statement Schedule: |                                                                                                                               |  |      |   
|                                 
|                                  | Schedule II  Valuation and Qualifying Accounts                                                                               |  |      | 35 | 

All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

(3)  Exhibits:

The following exhibits are incorporated in this report by reference from
identically numbered exhibits to the Companys Amendment to its Annual Report
for the year ended June 27, 1992 on Form 8 dated February 26, 1993:





---



##### 



|        |  |                                                                     
|------- |  | --------------------------------------------------------------------
|Exhibit |  |                                                                     
|No.     |  | Description of Exhibit                                              
|        |  |                                                                     
|3-A     |  | The Certificate of Incorporation of the Company, as amended to date.
|3-B     |  | The By-Laws of the Company, as amended to date.                     

The following exhibits are incorporated in this report by reference from an
identically numbered exhibit to the Companys Annual Report on Form 10-K for
the year ended June 29, 1991:

|      |  |                                                                                                                                                                                                                                                   
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.46 |  | The Companys Proxy Statement for a Special
Meeting of Stockholders, dated June 7, 1991,
together with a conformed copy of the Asset
Purchase Agreement between Cuisine Solutions, Inc.
and Vie de France Bakery Yamazaki, Inc. dated May 7, 1991.

The following exhibits are incorporated in this report by reference from the
Companys two Registration Statements on Form S-8, dated April 5, 1993:

|      |  |                                                  
|----- |  | -------------------------------------------------
|10.52 |  | The Companys 1986 Stock Option Plan, as amended.
|10.53 |  | The Companys 1992 Stock Option Plan.            
|10.54 |  | The Companys 1999 Stock Option Plan.            

The following exhibits are filed as exhibits to this report in the indicated
sections.

22 Written statement of Chief Executive Officer and Chief Financial Officer
pursuant to section 906 of the Sarbanes-Oxley Act of 2002

23 Consent of Independent Accountants.

(b)  Exhibits:

Exhibits required to be filed in response to this paragraph of Item 13 are
listed above in subparagraph (a)(3).

(c)  Financial Statement Schedule:

Schedules and reports thereon by independent accountants required to be filed
in response to this paragraph of Item 13 are listed in Item 13(a)(2).





---



##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

CUISINE SOLUTIONS, INC.
(Registrant)

|                                                                                                                
|----------------------------------------------------------------------------------------------------------------
|By: /s/ Stanislas VilgrainStanislas Vilgrain
President
and Chief Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                                           |  |                                                                                                                             |  |                   
|------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------- |  | ------------------
|Signature                                  |  | Title                                                                                                                       |  | Date              
|                                           |  |                                                                                                                             |  |                   
|                                          
|/s/ Jean-Louis VilgrainJean-Louis Vilgrain |  | Chairman of the Board                                                                                                       |  | September 20, 2002
|                                          
|                                          
|/s/ Stanislas VilgrainStanislas Vilgrain   |  | President,
Chief Executive Officer                                                                                          |  | September 20, 2002
|                                          
|                                          
|/s/ Sebastien VilgrainSebastien Vilgrain   |  | Director                                                                                                                    |  | September 20, 2002
|                                          
|                                          
|/s/ Charles McGettiganCharles McGettigan   |  | Director                                                                                                                    |  | September 20, 2002
|                                          
|                                          
|/s/ David JordanDavid Jordan               |  | Director                                                                                                                    |  | September 20, 2002
|                                          
|                                          
|/s/ Robert van RoijenRobert van Roijen     |  | Director                                                                                                                    |  | September 20, 2002
|                                          
|                                          
|/s/ Robert MurphyRobert Murphy             |  | Director, Vice President, Chief
Operating and Financial Officer
and Treasurer (Principal Financial
And Accounting Official) |  | September 20, 2002





---



##### 



Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

I, Stanislas Vilgrain, certify that:

1.     I have reviewed this annual report on Form 10-K of Cuisine Solutions, Inc.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.

Date: September 20, 2002

/s/ Stanislas VilgrainStanislas Vilgrain
President
and Chief Executive Officer
(Principal Executive Officer)

I, Robert Murphy, certify that:

1.     I have reviewed this annual report on Form 10-K of Cuisine Solutions, Inc.;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report.

Date: September 20, 2002

/s/ Robert MurphyRobert Murphy
Director, Vice President, Chief Operating
and Financial Officer and Treasurer
(Principal Financial and Accounting Official)





---



##### 



Independent Auditors Report

The Board of Directors and Stockholders
CUISINE SOLUTIONS, INC.:

We have audited the accompanying consolidated balance sheets of Cuisine
Solutions, Inc., and subsidiaries as of June 29, 2002 and June 30, 2001, and
the related consolidated statements of operations, comprehensive income,
changes in stockholders equity and cash flow for each of the three years in
the period ended June 29, 2002. In connection with our audit of the
consolidated financial statements we also have audited the financial statement
schedule for each of the three years in the period ended June 29, 2002 as
listed in the accompanying index. These consolidated financial statements and
financial statement schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cuisine Solutions,
Inc., and subsidiaries as of June 29, 2002 and June 30, 2001, and the results
of their operations, comprehensive income, and their cash flows for each of the
three years in the period ended June 29, 2002, in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the related financial statement schedule for each of the three years
in the period ended June 29, 2002, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.



| | GRANT THORNTON LLP
| | ------------------

Vienna, Virginia
August 27, 2002





---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS

|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |            |            |            |            | 
|-------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | -------------------- | -------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | 
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            | June 29,   |            | June 30,  
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            | 2002       |            | 2001      
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|ASSETS                                                                                       |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|Current Assets                                                                               |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       | Cash and cash equivalents                  |                      | $                          | 1,958,000  |            |            | $          | 773,000    |           
|                                                                                             |                                                                                                                                                                                                       | Trade Accounts receivable, net             |                      |                            | 3,272,000  |            |            |            | 4,916,000  |           
|                                                                                             | Inventory                                                                                                                                                                                             |                                            |                      | 4,419,000                  |            |            |            | 6,401,000  |           
|                                                                                             | Prepaid expenses                                                                                                                                                                                      |                                            |                      | 291,000                    |            |            |            | 296,000    |           
|                                                                                             | Current portion of notes receivable, related party                                                                                                                                                    |                                            |                      | 5,000                      |            |            |            | 10,000     |           
|                                                                                             | Other current assets                                                                                                                                                                                  |                                            |                      | 477,000                    |            |            |            | 415,000    |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       |                                            | TOTAL CURRENT ASSETS |                            |            | 10,422,000 |            |            |            | 12,811,000 |           
|Investments, non current                                                                     |                                                                                                                                                                                                       |                                            | 2,608,000            |                            |            |            | 2,491,000  |           
|Fixed assets, net                                                                            |                                                                                                                                                                                                       |                                            | 5,121,000            |                            |            |            | 5,051,000  |           
|Note receivable, officer and related party,
including accrued interest, less current portion |                                                                                                                                                                                                       |                                            | 38,000               |                            |            |            | 450,000    |           
|Investments and Advances to Cuisine Solutions Brazil                                         |                                                                                                                                                                                                       |                                            |                     |                            |            |            | 944,000    |           
|Other assets                                                                                 |                                                                                                                                                                                                       |                                            | 8,000                |                            |            |            | 1,014,000  |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       |                                            | TOTAL ASSETS         |                            | $          | 18,197,000 |            |            | $          | 22,761,000 |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|LIABILITIES AND STOCKHOLDERS EQUITY                                                         |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|Current liabilities                                                                          |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       | Current portion of long-term debt          |                      | $                          | 1,585,000  |            |            | $          | 1,082,000  |           
|                                                                                             |                                                                                                                                                                                                       | Accounts payable and accrued expenses      |                      |                            | 2,811,000  |            |            |            | 2,766,000  |           
|                                                                                             |                                                                                                                                                                                                       | Accrued payroll and related liabilities    |                      |                            | 1,306,000  |            |            |            | 896,000    |           
|                                                                                             |                                                                                                                                                                                                       | Other accrued taxes                        |                      |                            |           |            |            |            | 3,000      |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      | Total current liabilities  |            |            | 5,702,000  |            |            |            | 4,747,000  | 
|Long-term debt, less current portion                                                         |                                                                                                                                                                                                       |                                            | 1,339,000            |                            |            |            | 1,500,000  |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      | TOTAL LIABILITIES          |            |            | 7,041,000  |            |            |            | 6,247,000  | 
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|Stockholders equity                                                                         |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             | Common stock  $.01 par value, 20,000,000 shares authorized, 15,824,788
shares and 15,647,370 issued and 15,824,588 shares and 14,824,588
outstanding at June 29, 2002 and June 30, 2001 respectively |                                            |                      | 159,000                    |            |            |            | 157,000    |           
|                                                                                             | Class B Stock  $.01 par value, 175,000 shares authorized,
none issued                                                                                                                                |                                            |                      |                           |            |            |            |           |           
|                                                                                             | Additional paid-in capital                                                                                                                                                                            |                                            |                      | 26,284,000                 |            |            |            | 28,333,000 |           
|                                                                                             | Accumulated deficit                                                                                                                                                                                   |                                            |                      | (15,394,000                | )          |            |            | (9,367,000 | )         
|                                                                                             | Accumulated Other Comprehensive Income                                                                                                                                                                |                                            |                      |                            |            |            |            |            |           
|                                                                                             | Unrealized losses on debt and equity investments                                                                                                                                                      |                                            |                      | 10,000                     |            |            |            | (107,000   | )         
|                                                                                             | Cumulative translation adjustment                                                                                                                                                                     |                                            |                      | 97,000                     |            |            |            | (455,000   | )         
|                                                                                             | Treasury stock, at cost (0 shares at June 29, 2002
and 822,782 shares at June 30, 2001)                                                                                                               |                                            |                      |                           |            |            |            | (2,047,000 | )         
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      | TOTAL STOCKHOLDERS EQUITY |            |            | 11,156,000 |            |            |            | 16,514,000 | 
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           
|                                                                                             |                                                                                                                                                                                                       | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                      | $                          | 18,197,000 |            |            | $          | 22,761,000 |           
|                                                                                             |                                                                                                                                                                                                       |                                            |                      |                            |            |            |            |           

See accompanying notes to consolidated financial statements.





---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |            |  
|------------------------------------------------ | ---------------------------------------- | - | ---------- | ---------- | -------- | - | ---------- | ---------- | - | - | ---------- | ---------- | -
|                                                 |                                          |   | YEAR ENDED
|                                                 |                                          |   |           
|                                                 |                                          |   | June 29,   |            | June 30, |   | June 24,  
|                                                 |                                          |   | 2002       |            | 2001     |   | 2000      
|                                                 |                                          |   |            |            |          |   |           
|                                                 | NET SALES                                |   | $          | 28,616,000 |          |   | $          | 36,138,000 |   |   | $          | 35,810,000 |  
|                                                 | Cost of goods sold                       |   |            | 23,928,000 |          |   |            | 27,212,000 |   |   |            | 28,627,000 |  
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|GROSS MARGIN                                     |                                          |   | 4,688,000  |            |          |   | 8,926,000  |            |   |   | 7,183,000  |           
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|                                                 | Selling and administration               |   |            | 8,702,000  |          |   |            | 9,451,000  |   |   |            | 9,408,000  |  
|                                                 | Depreciation and amortization            |   |            | 377,000    |          |   |            | 250,000    |   |   |            | 201,000    |  
|                                                 | Impairment FIVELEAF asset                |   |            | 619,000    |          |   |            |           |   |   |            |           |  
|                                                 | Other operating income                   |   |            | (66,000    | )        |   |            | (115,000   | ) |   |            | (113,000   | )
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|LOSS FROM OPERATIONS                             |                                          |   | (4,944,000 | )          |          |   | (660,000   | )          |   |   | (2,313,000 | )         
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|Non operating income (expense)
Investment income |                                          |   | 172,000    |            |          |   | 202,000    |            |   |   | 250,000    |           
|                                                 | Interest expense                         |   |            | (195,000   | )        |   |            | (199,000   | ) |   |            | (215,000   | )
|                                                 | Loss in equity from investment in Brazil |   |            | (997,000   | )        |   |            | (661,000   | ) |   |            |           |  
|                                                 | Other income (expense)                   |   |            | (49,000    | )        |   |            | 460,000    |   |   |            | 309,000    |  
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|TOTAL NON-OPERATING INCOME (EXPENSE)             |                                          |   | (1,069,000 | )          |          |   | (198,000   | )          |   |   | 344,000    |           
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|                                                 | Loss before income taxes                 |   |            | (6,013,000 | )        |   |            | (858,000   | ) |   |            | (1,969,000 | )
|                                                 | Provision for income tax expense         |   |            | (14,000    | )        |   |            | (3,000     | ) |   |            | (11,000    | )
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|NET LOSS                                         |                                          | $ | (6,027,000 | )          |          | $ | (861,000   | )          |   | $ | (1,980,000 | )         
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           
|Basic and diluted net loss per common share:     |                                          |   |            |            |          |   |            |            |   |   |            |           
|                                                 | Net loss per common share                |   | $          | (0.38      | )        |   | $          | (0.06      | ) |   | $          | (0.13      | )
|Weighted average shares outstanding              |                                          |   | 15,824,588 |            |          |   | 14,776,215 |            |   |   | 14,762,761 |           
|                                                 |                                          |   |            |            |          |   |            |            |   |   |            |           

See accompanying notes to consolidated financial statements.





---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |   |  |          |  
|------------------------------------- | -------------------------------- | --------------------------------- | ----------------------------------------------- | ----- | ------ | - | ---------- | ---------- | ------------ | - | ----------- | ---------- | ---------- | - | -------- | - |  | -------- | -
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            | Retained   |   |          |   | 
|                                      |                                  |                                   |                                                 |       |        |   |            |            | Additional   |   | Earnings    |            | Cumulative
|                                      |                                  |                                   |                                                 |       | Common |   | Paid-In    |            | (Accumulated |   | Translation
|                                      |                                  |                                   |                                                 |       | Stock  |   | Capital    |            | Deficit)     |   | Adjustment 
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |            
|BALANCE, JUNE 26,1999                 |                                  | $                                 | 156,000                                         |       |        | $ | 28,276,000 |            |              | $ | (6,526,000  | )          |            | $ | (34,000  | )
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|                                      | 2000 net loss                    |                                   |                                                 |      |        |   |            |           |              |   |             | (1,980,000 | )          |   |          |  | 
|                                      |                                  | Other Comprehensive Income        |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |   |  |         
|                                      |                                  |                                   | Unrealized gains on debt and equity investments |       |        |  |            |            |              |  |             |            |            |  |          |   |  |         |  
|                                      |                                  |                                   | Translation adjustment                          |       |        |  |            |            |              |  |             |            |            |  |          |   |  |         |  
|                                      |                                  | Other Comprehensive Income/(Loss) |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |   |  |         
|COMPREHENSIVE INCOME/(LOSS)           |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|Treasury Shares Purchases             |                                  |                                   |                                                |       |        |   |           |            |              |   |            |            |            |   |         |  
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|BALANCE, JUNE 24, 2000                |                                  | $                                 | 156,000                                         |       |        | $ | 28,276,000 |            |              | $ | (8,506,000  | )          |            | $ | (34,000  | )
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|                                      | Exercise of common stock options |                                   | $                                               | 1,000 |        |   | $          | 57,000     |              |   |             |            |            |   |          |   | 
|                                      | 2001 net loss                    |                                   |                                                 |      |        |   |            |           |              |   |             | (861,000   | )          |   |          |  | 
|                                      |                                  | Other Comprehensive Income        |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |   |  |         
|                                      |                                  |                                   | Unrealized gains on debt and equity investments |       |        |  |            |            |              |  |             |            |            |  |          |   |  |         |  
|                                      |                                  |                                   | Translation adjustment                          |       |        |  |            |            |              |  |             |            |            |  |          |   |  | (421,000 | )
|                                      |                                  | Other Comprehensive Income/(Loss) |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |   |  |         
|COMPREHENSIVE INCOME/(LOSS)           |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|BALANCE, JUNE 30, 2001                |                                  | $                                 | 157,000                                         |       |        | $ | 28,333,000 |            |              | $ | (9,367,000  | )          |            | $ | (455,000 | )
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|Issuance of unregistered common stock |                                  | $                                 | 2,000                                           |       |        | $ | (2,000     | )          |              |   |             |            |            |   |          |  
|                                      | and treasury shares              |                                   |                                                 |       |        |   |            | (2,047,000 | )            |   |             |            |            |   |          |   | 
|                                      | 2002 net loss                    |                                   |                                                 |      |        |   |            |           |              |   |             | (6,027,000 | )          |   |          |  | 
|                                      |                                  | Other Comprehensive Income        |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |   |  |         
|                                      |                                  |                                   | Unrealized gains on debt and equity investments |       |        |  |            |            |              |  |             |            |            |  |          |   |  |         |  
|                                      |                                  |                                   | Translation adjustment                          |       |        |  |            |            |              |  |             |            |            |  |          |   |  | 552,000  |  
|                                      |                                  | Other Comprehensive Income/(Loss) |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |   |  |         
|COMPREHENSIVE INCOME/(LOSS)           |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  
|BALANCE, JUNE 29, 2002                |                                  | $                                 | 159,000                                         |       |        | $ | 26,284,000 |            |              | $ | (15,394,000 | )          |            | $ | 97,000   |  
|                                      |                                  |                                   |                                                 |       |        |   |            |            |              |   |             |            |            |   |          |  

|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |       |            |          |          |  
|--------------------------- | ------------------------------------- | ------------- | --------------------------------- | ----------------------------------------------- | - | ----------- | ---------- | --------- | - | ------------- | ---------- | ----- | ---------- | -------- | -------- | -
|                            |                                       |               |                                   |                                                 |   | Unrealized  |            |           |   |               |            |       |            |         
|                            |                                       |               |                                   |                                                 |   | Gains       |            |           |   |               |            |       |            |         
|                            |                                       |               |                                   |                                                 |   | (Losses)    |            |           |   |               |            |       |            |         
|                            |                                       |               |                                   |                                                 |   | on Debt     |            |           |   |               |            | Total
|                            |                                       |               |                                   |                                                 |   | and Equity  |            | Treasury  |   | Stockholders'
|                            |                                       |               |                                   |                                                 |   | Investments |            | Stock     |   | Equity       
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |              
|BALANCE, JUNE 26,1999       |                                       | $             | (513,000                          | )                                               |   | $           | (2,017,000 | )         |   | $             | 19,342,000 |      
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|                            |                                       | 2000 net loss |                                   |                                                 |  |             |            |           |  |               |            |       | (1,980,000 | )       
|                            |                                       |               | Other Comprehensive Income        |                                                 |   |             |            |           |   |               |            |       |            |          |         
|                            |                                       |               |                                   | Unrealized gains on debt and equity investments |   |             | 60,000     |           |   |               |           |       |            |          | 60,000   |  
|                            |                                       |               |                                   | Translation adjustment                          |   |             |           |           |   |               |           |       |            |          |         |  
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|                            |                                       |               | Other Comprehensive Income/(Loss) |                                                 |   |             |            |           |   |               |            |       |            | 60,000   |         
|COMPREHENSIVE INCOME/(LOSS) |                                       |               |                                   |                                                 |   |             |            |           |   |               | (1,920,000 | )    
|Treasury Shares Purchases   |                                       |               |                                  |                                                 |   |             | (30,000    | )         |   |               | (30,000    | )    
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|BALANCE, JUNE 24, 2000      |                                       | $             | (453,000                          | )                                               |   | $           | (2,047,000 | )         |   | $             | 17,392,000 |      
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|                            |                                       |               | Exercise of common stock options  |                                                 |   |             |            |           |   |               |            |       |            | 58,000   |         
|                            |                                       |               | 2001 net loss                     |                                                 |   |            |            |           |   |              |            |       |            | (861,000 | )       
|                            |                                       |               | Other Comprehensive Income        |                                                 |   |             |            |           |   |               |            |       |            |          |         
|                            |                                       |               |                                   | Unrealized gains on debt and equity investments |   |             | 346,000    |           |   |               |           |       |            |          | 346,000  |  
|                            |                                       |               |                                   | Translation adjustment                          |   |             |           |           |   |               |           |       |            |          | (421,000 | )
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|                            |                                       |               | Other Comprehensive Income/(Loss) |                                                 |   |             |            |           |   |               |            |       |            | (75,000  | )       
|COMPREHENSIVE INCOME/(LOSS) |                                       |               |                                   |                                                 |   |             |            |           |   |               | (936,000   | )    
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|BALANCE, JUNE 30, 2001      |                                       | $             | (107,000                          | )                                               |   | $           | (2,047,000 | )         |   | $             | 16,514,000 |      
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|                            | Issuance of unregistered common stock |               |                                   |                                                |   |             |            |          |   |               |            |      |           
|                            | and treasury shares                   |               |                                   |                                                 |   |             |            | 2,047,000 |   |               |            |      |           
|                            |                                       | 2002 net loss |                                   |                                                 |  |             |            |           |  |               |            |       | (6,027,000 | )       
|                            |                                       |               | Other Comprehensive Income        |                                                 |   |             |            |           |   |               |            |       |            |          |         
|                            |                                       |               |                                   | Unrealized gains on debt and equity investments |   |             | 117,000    |           |   |               |           |       |            |          | 117,000  |  
|                            |                                       |               |                                   | Translation adjustment                          |   |             |           |           |   |               |           |       |            |          | 552,000  |  
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|                            |                                       |               | Other Comprehensive Income/(Loss) |                                                 |   |             |            |           |   |               |            |       |            | 669,000  |         
|COMPREHENSIVE INCOME/(LOSS) |                                       |               |                                   |                                                 |   |             |            |           |   |               | (5,358,000 | )    
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      
|BALANCE, JUNE 29, 2002      |                                       | $             | 10,000                            |                                                 |   | $           |           |           |   | $             | 11,156,000 |      
|                            |                                       |               |                                   |                                                 |   |             |            |           |   |               |            |      

See accompanying notes to consolidated financial statements.





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##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |            |            |  
|------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------------------------------------------- | ---------- | ---------- | --------- | -------- | -------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | -
|                                                                                      |                                                                             |                                                                |            | YEAR ENDED
|                                                                                      |                                                                             |                                                                |            |           
|                                                                                      |                                                                             |                                                                |            | June 29,   |           | June 30, |          | June 24,  
|                                                                                      |                                                                             |                                                                |            | 2002       |           | 2001     |          | 2000      
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |           
|CASH FLOWS FROM OPERATING ACTIVITIES                                                  |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|Net loss                                                                              |                                                                             | $                                                              | (6,027,000 | )          |           | $        | (861,000 | )          |            | $ | (1,980,000 | )         
|Adjustments to reconcile net loss to net cash (used) provided
by operating activities |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|                                                                                      | Depreciation and amortization                                               |                                                                |            | 1,255,000  |           |          |          | 1,122,000  |            |   |            | 1,071,000  |           
|                                                                                      | Loss on sale of investments                                                 |                                                                |            |           |           |          |          | 158,000    |            |   |            |           |           
|                                                                                      | Loss in equity from investment in Brazil                                    |                                                                |            | 944,000    |           |          |          | 661,000    |            |   |            |           |           
|                                                                                      | Change in cumulative translation adjustment                                 |                                                                |            | 552,000    |           |          |          | (421,000   | )          |   |            |           |           
|                                                                                      | Changes in assets and liabilities, net of
effects of non-cash transactions: |                                                                |            |            |           |          |          |            |            |   |            |            |           
|                                                                                      |                                                                             | Decrease (increase) in trade accounts receivable, net          |            |            | 1,644,000 |          |          |            | 945,000    |   |            |            | (1,476,000 | )
|                                                                                      |                                                                             | Decrease (increase) in inventory                               |            |            | 1,982,000 |          |          |            | (1,218,000 | ) |            |            | (92,000    | )
|                                                                                      |                                                                             | Decrease (increase) in prepaid expenses                        |            |            | 5,000     |          |          |            | (237,000   | ) |            |            | 187,000    |  
|                                                                                      |                                                                             | Decrease (increase) in notes receivable, related party         |            |            | 417,000   |          |          |            | 239,000    |   |            |            | (186,000   | )
|                                                                                      |                                                                             | Decrease (increase) in other assets                            |            |            | 849,000   |          |          |            | (256,000   | ) |            |            | 69,000     |  
|                                                                                      |                                                                             | Increase (decrease) in accounts payable
and accrued expenses   |            |            | 45,000    |          |          |            | (619,000   | ) |            |            | (51,000    | )
|                                                                                      |                                                                             | Increase (decrease) in accrued payroll and related liabilities |            |            | 410,000   |          |          |            | (204,000   | ) |            |            | (150,000   | )
|                                                                                      |                                                                             | Decrease in other non current liabilities                      |            |            |          |          |          |            | (22,000    | ) |            |            | (214,000   | )
|                                                                                      |                                                                             | Decrease in other accrued taxes                                |            |            | (3,000    | )        |          |            | (6,000     | ) |            |            | (32,000    | )
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                      |                                                                             |                                                                | 2,073,000  |            |           |          | (719,000 | )          |            |   | (2,854,000 | )         
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|CASH FLOWS FROM INVESTING ACTIVITIES                                                  |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|                                                                                      | Sale of investments                                                         |                                                                |            |           |           |          |          | 2,412,000  |            |   |            | 4,281,000  |           
|                                                                                      | Increase in investment in Brazil                                            |                                                                |            |           |           |          |          | (1,248,000 | )          |   |            | (357,000   | )         
|                                                                                      | Purchase of Treasury Stock                                                  |                                                                |            |           |           |          |          |           |            |   |            | (30,000    | )         
|                                                                                      | Capital expenditures                                                        |                                                                |            | (1,230,000 | )         |          |          | (811,000   | )          |   |            | (1,838,000 | )         
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES                                      |                                                                             |                                                                | (1,230,000 | )          |           |          | 353,000  |            |            |   | 2,056,000  |           
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                                  |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|                                                                                      | Increase in capital                                                         |                                                                |            |           |           |          |          | 58,000     |            |   |            |           |           
|                                                                                      | Additions to debt                                                           |                                                                |            | 691,000    |           |          |          | 133,000    |            |   |            | 278,000    |           
|                                                                                      | Reductions of debt                                                          |                                                                |            | (349,000   | )         |          |          |           |            |   |            | (398,000   | )         
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                      |                                                                             |                                                                | 342,000    |            |           |          | 191,000  |            |            |   | (120,000   | )         
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|                                                                                      | Net increase (decrease) in cash and cash equivalents                        |                                                                |            | 1,185,000  |           |          |          | (175,000   | )          |   |            | (918,000   | )         
|                                                                                      | Cash and cash equivalents, beginning of period                              |                                                                |            | 773,000    |           |          |          | 948,000    |            |   |            | 1,866,000  |           
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                              |                                                                             | $                                                              | 1,958,000  |            |           | $        | 773,000  |            |            | $ | 948,000    |           
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                     |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|Cash paid during the year for:                                                        |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|                                                                                      | Interest                                                                    |                                                                | $          | 196,000    |           |          | $        | 129,000    |            |   | $          | 206,000    |           
|                                                                                      | Income taxes, net                                                           |                                                                | $          |           |           |          | $        |           |            |   | $          |           |           
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|Non-cash activities                                                                   |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           
|                                                                                      | Machine purchased under capital lease                                       |                                                                | $          | 87,000     |           |          | $        | 73,000     |            |   | $          |           |           
|                                                                                      | Unrealized income on debt and equity investments                            |                                                                | $          | 117,000    |           |          | $        | 346,000    |            |   | $          | 60,000     |           
|                                                                                      | Issuance of unregistered common stock and treasury shares                   |                                                                | $          |           |           |          | $        |           |            |   | $          |           |           
|                                                                                      |                                                                             |                                                                |            |            |           |          |          |            |            |   |            |           

See accompanying notes to consolidated financial statements





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##### 



CUISINE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

The Company develops produces and markets chef-created fully cooked, fully
prepared entrees and sauces for the banquet, airline, passenger rail service,
retail and restaurant industries.

The Company services the airlines in both the USA and Europe. The Norwegian and
French facilities distribute product throughout Europe servicing the
Foodservice customers through distributors and Cuisine Solutions France, a
French manufacturer and distributor of sous-vide products. Norway production
supplies most salmon sales in the USA and France.

PRINCIPLES OF CONSOLIDATION

The financial statements include the consolidated accounts of Cuisine
Solutions, Inc. and its subsidiaries, Cuisine Solutions Norway and Cuisine
Solutions France, (collectively the Company). All significant inter-company
transactions have been eliminated in the financial statements. The consolidated
financial statements were restated for all periods presented to reflect the
merger with Nouvelle Carte, accounted for in a manner similar to the pooling of
interests method.

FISCAL YEAR

The Company utilizes a 52/53 week fiscal year which ends on the last Saturday
in June.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company recognizes revenue at the time products are shipped to its
customers, with the exception of some of its United States airline
distributors. For U.S. airline distributors that purchase salmon products
directly from the Companys Norway facility, the Company recognizes revenue
when the customer receives the products.

SEGMENT REPORTING

The Company intends to operate in two segments, Food Service Industry and
International Management Services. No management service fees were earned
during fiscal 2002.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments with original maturities
of three months or less.

As of June 29, 2002 and June 30, 2001, $1,085,000 and $560,000
respectively were held in foreign financial institutions.

INVESTMENTS

Investment securities consist of U.S. Treasury, mortgage-backed instruments,
corporate debt and equity securities. The Company has classified its
investments as available-for-sale. Securities classified as available for
sale include securities which could be sold in response to changes in interest
rates or for general liquidity needs. Such securities are carried at estimated
fair value with unrealized gains or losses recorded as a separate component of
equity.

BASIS OF CONSOLIDATION AND ACCOUNTING FOR INVESTMENTS

The consolidated financial statements include 100% of the assets, liabilities,
revenues, expenses, income, loss and cash flows of Cuisine Solutions, Inc. and
all companies in which Cuisine Solutions, Inc. has a controlling voting
interest (subsidiaries), as if Cuisine Solutions, Inc. and its subsidiaries
were a single company. Significant inter-company accounts and transactions
between the consolidated companies have been eliminated.

Investments in companies in which Cuisine Solutions, Inc. has significant
influence, but less than a controlling voting interest, are accounted for using
the equity method. Under the equity method, only Cuisine Solutions, Inc.
investment in and amounts due to and from the equity investee are included in
the consolidated balance sheet; only Cuisine Solutions, Inc.s share of the
investees earnings is included in the consolidated operating results; and only
the dividends, cash distributions, loans other cash received from the investee,
less any additional cash investments, loan repayments or other cash paid to the
investee, are included in the consolidated cash flows.





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##### 



INVENTORY

Inventories are valued at the lower of cost, determined by the first-in,
first-out method, or market. Included in inventory costs are raw materials,
labor and manufacturing overhead.

During the fourth quarter of fiscal year 2002, the Company recorded an
obsolescence reserve of $504,000 for inventory related to production for the
fall and winter 2001 airline menus which were never ordered due to the
September 2001 terrorist attacks.

Inventory consisted of:

|                                      |  |          |           |          |  |   |           |  
|------------------------------------- |  | -------- | --------- | -------- |  | - | --------- | -
|                                      |  | JUNE 29, |           | JUNE 30,
|                                      |  | 2002     |           | 2001    
|                                      |  |          |           |         
|RAW MATERIAL                          |  | $        | 1,207,000 |          |  | $ | 1,401,000 |  
|FROZEN PRODUCT & OTHER FINISHED GOODS |  |          | 3,252,000 |          |  |   | 4,718,000 |  
|PACKAGING                             |  |          | 464,000   |          |  |   | 385,000   |  
|                                      |  |          |           |          |  |   |           |  
|                                      |  |          | 4,923,000 |          |  |   | 6,504,000 |  
|LESS OBSOLESCENCE RESERVE             |  |          | (504,000  | )        |  |   | (103,000  | )
|                                      |  |          |           |          |  |   |           |  
|                                      |  | $        | 4,419,000 |          |  | $ | 6,401,000 |  
|                                      |  |          |           |          |  |   |           |  

FIXED ASSETS

Machinery, equipment, furniture and fixtures are depreciated using the
straight-line method over estimated useful lives which range from two to ten
years. Leasehold improvements are amortized using the straight-line method over
the shorter of terms of the leases which range from four to twenty years, or
the estimated useful life of the improvement.

Expenditures for maintenance and repairs are charged to expense, and
significant improvements are capitalized. Maintenance and repairs charged to
expense approximated $362,000 in 2002, $418,000 in 2001 and $413,000 in 2000.

Included in fixed assets are assets located in Europe, totaling approximately
$2,971,000 and $2,667,000 as of June 29, 2002 and as of June 30, 2001,
respectively.

The components of fixed assets were as follows:

|                                               |  |          |             |          |  |   |             |  
|---------------------------------------------- |  | -------- | ----------- | -------- |  | - | ----------- | -
|                                               |  | JUNE 29, |             | JUNE 30,
|                                               |  | 2002     |             | 2001    
|                                               |  |          |             |         
|LAND                                           |  | $        | 61,000      |          |  | $ | 51,000      |  
|BUILDING                                       |  |          | 1,781,000   |          |  |   | 1,438,000   |  
|BUILDING UNDER CAPITAL LEASE                   |  |          | 1,505,000   |          |  |   | 1,211,000   |  
|MACHINERY & EQUIPMENT                          |  |          | 10,953,000  |          |  |   | 9,832,000   |  
|MACHINERY & EQUIPMENT UNDER CAPITAL LEASE      |  |          | 482,000     |          |  |   | 403,000     |  
|LEASEHOLD IMPROVEMENTS                         |  |          | 2,318,000   |          |  |   | 2,290,000   |  
|FURNITURES & FIXTURES                          |  |          | 227,000     |          |  |   | 219,000     |  
|COMPUTER SOFTWARE                              |  |          | 1,037,000   |          |  |   | 910,000     |  
|CONSTRUCTION IN PROGRESS                       |  |          | 28,000      |          |  |   | 75,000      |  
|                                               |  |          |             |          |  |   |             |  
|                                               |  |          | 18,392,000  |          |  |   | 16,429,000  |  
|LESS ACCUMULATED DEPRECIATION AND AMORTIZATION |  |          | (13,271,000 | )        |  |   | (11,378,000 | )
|                                               |  |          |             |          |  |   |             |  
|                                               |  | $        | 5,121,000   |          |  | $ | 5,051,000   |  
|                                               |  |          |             |          |  |   |             |  

WEB SITE DEVELOPMENT COSTS

The Company capitalizes web site development costs in accordance with EITF 00-2
Accounting Web Site Development Costs and therefore adopted AICPA SOP No.
98-1, Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use, as





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##### 



the company plans to use the web site internally. The SOP No. 98-1 requires
that certain external costs and internal payroll and payroll-related costs be
capitalized during the application development and implementation stages of a
software development project and amortized over the softwares useful life.
Training and research and development costs are to be expensed as incurred.
Capitalized amounts are to be amortized straight-line over the remaining
estimated economic life beginning when the software is ready for its intended
use. The web site was launched in February 2002 and the Company therefore begun
to amortize the capitalized cost on a straight line basis during the third and
fourth quarter of fiscal year 2002. Management performed an impairment test at
the end of the fiscal year and decided to impair the remaining balance of
$619,000 in accordance with SFAS No. 121 and the newly adopted SFAS No. 144 due
to the uncertainty with respect to a long-term sales forecast as at June 29,
2002. $646,000 of the capitalized web site development costs were included in
Other Assets as at June 30, 2001.

INCOME AND OTHER TAXES

The Company computes income taxes using the asset and liability method whereby
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company adopted the provisions of SFAS No. 121 and the in August 2001
issued SFAS No. 144, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of (Statement 121 and Statement 144), on
June 30, 1996 (fiscal year 1997) and June 29, 2002 (fiscal year 2002)
respectively. Statement 121 and Statement 144 require that long-lived assets
and certain identifiable intangibles be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amounts of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell. The Company recorded an impairment of capitalized web
site development costs of $619,000 as at June 29, 2002.

ACCOUNTING FOR STOCK-BASED COMPENSATION

Prior to June 30, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board Opinion No. 25
(APB Opinion 25), Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date of
grant only if the current market price of the underlying stock exceeded the
exercise price. On June 30, 1996 the Company adopted Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation
(Statement 123), which permits entities to recognize as expense over the
vesting period the fair value of all stock-based awards on the date of grant.
Alternatively, Statement 123 also allows entities to continue to apply the
provisions of APB Opinion 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1996
and future years as if the fair-value based method defined in Statement 123 had
been applied. The Company has elected to continue to apply the provisions of
APB Opinion 25 and provide the pro forma disclosure provisions of Statement 123
(see note 7). In addition, in accordance with Statement 123, the Company
applies fair value as the measurement basis for transactions in which equity
instruments are issued to non-employees.

EARNINGS PER SHARE

Basic earnings (loss) per common share is computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding during the
period. Diluted earnings (loss) per common share also includes common
equivalent shares outstanding during the period if dilutive. The Companys
common equivalent shares consist of stock options. The weighted average number
of shares outstanding related to stock options were 1,680,375 for the year
ended June 29, 2002. For the fiscal years ended June 29, 2002, June 30, 2001
and June 24, 2000, the assumed exercise price of the Companys outstanding
stock options are not included in the calculation as the effect would be
anti-dilutive.

FOREIGN CURRENCY TRANSLATION

The statements of operations of the Companys Norwegian and French subsidiaries
(the Subsidiaries) have been translated to U.S. dollars using the average
currency exchange rates in effect during the year. The Subsidiaries balance
sheet has been translated using the currency exchange rate as of the end of the
fiscal year. The impact of currency exchange rate changes on the translation of
the Subsidiarys balance sheet is charged directly to stockholders equity.

COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income
(Statement 130). Statement 130 establishes standards for the reporting and
display of comprehensive income and its components in the financial statements.
The Company adopted the provisions of the statement during fiscal year 1999.
Components of other comprehensive income include foreign currency translation
gains and losses and unrealized gains and losses on debt and equity securities.
Comprehensive income is shown on the consolidated statement of changes in
stockholders equity.





---



##### 



FAIR VALUE OF FINANCIAL INSTRUMENTS

Under Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments, effective for fiscal years that end after
December 15, 1996, the Company is required to provide fair value disclosures of
its financial instruments. The Company estimates the fair value of its
financial instruments using the following methods and assumptions: (1) quoted
market prices, when available, are used to estimate the fair value of
investments in marketable debt and equity securities; (2) carrying amounts in
the balance sheet approximate fair value for cash, notes receivable and short
term borrowings.

RECENT ACCOUNTING PRONOUNCEMENTS

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business Combinations,
and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. This Statement eliminates
the pooling-of interests method of accounting and further clarifies the
criteria for recognition of intangible assets separately from goodwill. SFAS
142 eliminates the amortization of goodwill and indefinite-lived intangible
assets and initiates an annual review for impairment and whenever there is an
impairment indicator. This Statement is effective for fiscal years beginning
after December 15, 2001; however, certain provisions of this Statement apply to
goodwill and other intangible assets acquired between July 1, 2001 and the
effective date of SFAS 142. The adoption of these Statements did not have a
material impact on the Companys financial positions, results of operations, or
liquidity.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which addresses the financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. In August 2001, the FASB issues SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets, which
addresses the financial accounting and reporting for the impairment or disposal
of long-lived assets. The Company adopted both Statements in fiscal year 2002.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This pronouncement is effective for exit or
disposal activities that are initiated after December 31, 2002, and requires
these cost to be recognized when the liability is incurred and not a project
initiation. The Company is reviewing the provisions of this Statement, but does
not expect it to have a material impact on the Companys financial statements.

NOTE 2  ACQUISITION  NOUVELLE CARTE FRANCE

During fiscal year 2000, Cuisine Solutions completed the acquisition of
Nouvelle Carte France in which Nouvelle Carte France became a wholly owned
subsidiary of Cuisine Solutions, Inc. Simultaneous with the acquisition,
Nouvelle Carte France changed its name to Cuisine Solutions France. Subsequent
to the acquisition, Cuisine Solutions France adopted a thirteen period
accounting calendar similar to the Cuisine Solutions, Inc. The Companys 1999
financial statements have been restated to retroactively combine the financial
performance of Cuisine Solutions France at the beginning of the earliest period
presented. The fiscal year 2002 results sustained the fact that the acquisition
enabled the Company to expand sales through existing distribution channels and
to meet increased demand from food service customers in Europe.

In connection with the acquisition of Nouvelle Carte, the Company issued
1,500,000 unregistered shares of the Companys Common Stock to Food Research
Corporation, the majority shareholder of the Company. The shares were issued in
exchange for all the issued and outstanding equity interest in NOUVELLE CARTE
FRANCE pursuant to agreements dated as of October 29, 1999. Prior to giving
effect to the acquisition, Food Research Corporation was the beneficial owner
of 7,020,588 shares, or 52.9%, of the Companys common stock. Food Research
Corporation is owned by Jean Louis Vilgrain, Chairman of the Board of Directors
of the Company, Stanilas Vilgrain, President and Chief Executive Officer and a
member of the Board of Directors of the Company and Sebastien Vilgrain, a
member of the Board of Directors of the Company. After giving effect to the
issuance of 1,500,000 shares of common stock as a result of the transaction,
Food Research Corporation is the beneficial owner of approximately 57.8% of the
Companys outstanding common stock.

Pursuant to the Agreement, the Company also agreed to issue additional Common
Stock in an amount to be determined based upon Nouvelle Cartes operating
performance for the two years ending June 30, 2001. The additional
consideration to be paid was determined as follows: if Nouvelle Cartes
operating income is less than FFr 1,500,000 for the year ended June 30, 2000,
no additional shares will be issued in respect of such year; if operating
income is more than FFr 1,500,000 (equivalent to US$ 194,152 based upon the
currency exchange rate as at June 30, 2001), but less than FFr 2,000,000
(equivalent to US$ 258,870) for such year, 375,000 shares of Common Stock will
be issued; if operating income exceeds FFr 2,000,000 for such year, 500,000
shares of Common Stock will be issued; if Nouvelle Cartes operating income is
less than FFr 2,000,000 for the year ended June 30, 2001, no additional shares
will be issued in respect of such year; if operating income is more than FFr
2,000,000, but less than FFr 2,500,000 (equivalent to US$ 323,587) for such
year, 375,000 shares of Common Stock will be issued; and if operating income
exceeds FFr 2,500,000 for such year, 500,000 shares of Common Stock will be
issued. Accordingly, an aggregate additional 1,000,000 shares of Common Stock
are issuable if the maximum performance targets are achieved for both years.
The purchase price was negotiated between a committee of independent directors
of the Company who are not affiliated with the Companys majority stockholder,
and such majority stockholder, and was intended to approximate the book value
of the net assets acquired.

The Board of Directors of the Company approved extending the earn-out target to
a combined two-year objective rather than a year-





---



##### 



by-year objective. The subsidiary did not reach the maximum earn-out objective
for fiscal year 2000 due to increased product costs for salmon items. The Board
agreed that since Cuisine Solutions mandated that the French subsidiary use
product exclusively from the Norwegian subsidiary, it affected the operating
costs of the French subsidiary. Therefore, the consolidated target remained the
same but for a consolidated two-year period.

Cuisine Solutions France had achieved the target for the 1,000,000 shares as of
June 31, 2001. The additional shares were issued to the seller during the third
quarter of fiscal year 2002 by using 100% of the Companys treasury stock and
issuance of unregistered common stock.

Net sales and net losses of Cuisine Solutions, Inc. and Nouvelle Carte
pre-merger and post-merger were as follows:

|                        |             |                          |        |            |        |  
|----------------------- | ----------- | ------------------------ | ------ | ---------- | ------ | -
|                        |             |                          |        | Year Ended
|                        |             |                          |        | June 24,  
|In thousands of dollars |             | 2000                    
|                        |             |                         
|Net Sales:              |             |                          |        |           
|                        | Pre Merger  |                          |        |            |       
|                        |             | Cuisine Solutions, Inc.  |        | $          | 27,176 |  
|                        |             | Cuisine Solutions France |        |            | 4,208  |  
|                        |             |                          | 31,384 |           
|                        | Post-Merger |                          |        |            |       
|                        |             | Cuisine Solutions France |        |            | 4,426  |  
|Total                   |             |                          | 35,810 |           
|                        |             |                          |        |           
|Net Income (Loss):      |             |                          |        |           
|                        | Pre Merger  |                          |        |            |       
|                        |             | Cuisine Solutions, Inc.  |        |            | (2,261 | )
|                        |             | Cuisine Solutions France |        |            | 132    |  
|                        |             |                          |        |           
|                        |             | Total                    |        |            | (2,129 | )
|                        | Post-Merger |                          |        |            |       
|                        |             | Cuisine Solutions France |        |            | 149    |  
|Total                   |             | $                        | (1,980 | )         
|                        |             |                          |        |           

NOTE 3  ACCOUNTS RECEIVABLES

Accounts Receivables consisted of:

|                                                  |  |          |           |          |  |   |           |  
|------------------------------------------------- |  | -------- | --------- | -------- |  | - | --------- | -
|                                                  |  | JUNE 29, |           | JUNE 30,
|                                                  |  | 2002     |           | 2001    
|                                                  |  |          |           |         
|TRADE ACCOUNTS RECEIVABLES                        |  | $        | 3,440,000 |          |  | $ | 5,222,000 |  
|ALLOWANCE FOR DOUBTFUL ACCOUNTS                   |  |          | (168,000  | )        |  |   | (108,000  | )
|ALLOWANCE FOR SALES REBATES EARNED, NOT YET TAKEN |  |          |          |          |  |   | (198,000  | )
|                                                  |  |          |           |          |  |   |           |  
|TRADE ACCOUNTS RECEIVABLES, NET                   |  | $        | 3,272,000 |          |  | $ | 4,916,000 |  
|                                                  |  |          |           |          |  |   |           |  

The allowance for rebates relates to customer programs on sales and related
rebates and payments subsequent to the fiscal year end. Last years allowance
was related to a particular program with one customer. Due to the modification
of this program during fiscal year 2002 and the immateriality of the related
liability, it is reported under Accounts payable and accrued expenses.

NOTE 4  INVESTMENTS

The Companys investments are classified as available-for-sale. These
securities are carried at estimated fair value and unrealized gains and losses
are reported as a separate component of stockholders equity. The Company did
not sell any of the investments during fiscal year 2002.





---



##### 



The following is a summary of the Companys investments at June 29, 2002:

|                             |                   |  |      |           |       |  |            |        |       |  |   |   |  |  |           |           | 
|---------------------------- | ----------------- |  | ---- | --------- | ----- |  | ---------- | ------ | ----- |  | - | - |  |  | --------- | --------- | 
|                             |                   |  |      |           |       |  |            |        |       |  |   |   |  |  | ESTIMATED
|                             |                   |  |      |           |       |  | UNREALIZED |        | FAIR 
|                             |                   |  | COST |           | GAINS |  | LOSSES     |        | VALUE
|                             |                   |  |      |           |       |  |            |        |      
|U.S. Government and agencies |                   |  |      |           |       |  |            |        |       |  |   |   |  |  |           |          
|                             | Current           |  | $    |          |       |  | $          |       |       |  | $ |  |  |  | $         |          | 
|                             | Non-current       |  |      | 1,324,000 |       |  |            | 10,000 |       |  |   |  |  |  |           | 1,334,000 | 
|Corporate debt               |                   |  |      |           |       |  |            |        |       |  |   |   |  |  |           |          
|                             | Current           |  |      |          |       |  |            |       |       |  |   |  |  |  |           |          | 
|                             | Non-current       |  |      | 1,274,000 |       |  |            |       |       |  |   |  |  |  |           | 1,274,000 | 
|                             |                   |  |      |           |       |  |            |        |       |  |   |   |  |  |           |           | 
|                             | Total investments |  | $    | 2,598,000 |       |  | $          | 10,000 |       |  | $ |  |  |  | $         | 2,608,000 | 
|                             |                   |  |      |           |       |  |            |        |       |  |   |   |  |  |           |           | 

The following is a summary of the Companys investments at June 30, 2001:

|                             |                   |  |      |           |       |  |            |   |       |  |   |         |  |  |           |           | 
|---------------------------- | ----------------- |  | ---- | --------- | ----- |  | ---------- | - | ----- |  | - | ------- |  |  | --------- | --------- | 
|                             |                   |  |      |           |       |  |            |   |       |  |   |         |  |  | ESTIMATED
|                             |                   |  |      |           |       |  | UNREALIZED |   | FAIR 
|                             |                   |  | COST |           | GAINS |  | LOSSES     |   | VALUE
|                             |                   |  |      |           |       |  |            |   |      
|U.S. Government and agencies |                   |  |      |           |       |  |            |   |       |  |   |         |  |  |           |          
|                             | Current           |  | $    |          |       |  | $          |  |       |  | $ |        |  |  | $         |          | 
|                             | Non-current       |  |      | 1,324,000 |       |  |            |  |       |  |   | 48,000  |  |  |           | 1,276,000 | 
|Corporate debt               |                   |  |      |           |       |  |            |   |       |  |   |         |  |  |           |          
|                             | Current           |  |      |          |       |  |            |  |       |  |   |        |  |  |           |          | 
|                             | Non-current       |  |      | 1,274,000 |       |  |            |  |       |  |   | 59,000  |  |  |           | 1,215,000 | 
|                             |                   |  |      |           |       |  |            |   |       |  |   |         |  |  |           |           | 
|                             | Total investments |  | $    | 2,598,000 |       |  | $          |  |       |  | $ | 107,000 |  |  | $         | 2,491,000 | 
|                             |                   |  |      |           |       |  |            |   |       |  |   |         |  |  |           |           | 

The following schedule reconciles unrealized gains (losses) to those reported
for other comprehensive income as disclosed in the statement of changes in
stockholders equity and comprehensive income:

|                                                                |  |          |         |          |  |   |         | 
|--------------------------------------------------------------- |  | -------- | ------- | -------- |  | - | ------- | 
|                                                                |  | June 29, |         | June 30,
|                                                                |  | 2002     |         | 2001    
|                                                                |  |          |         |         
|Unrealized holding gains (losses) arising during the period     |  | $        | 117,000 |          |  | $ | 148,252 | 
|Reclassification adjustment for net losses
included in net loss |  |          |        |          |  |   | 197,748 | 
|                                                                |  |          |         |          |  |   |         | 
|Net unrealized gain                                             |  | $        | 117,000 |          |  | $ | 346,000 | 
|                                                                |  |          |         |          |  |   |         | 

NOTE 5  INVESTMENTS AND ADVANCES TO CUISINE SOLUTIONS BRAZIL

During fiscal 1999, the Company became a partner in a limited liability company
with a Brazilian partner, Sanoli Indsutria E Commercio Alimentacao Ltda, which
has built a manufacturing facility and is marketing product in the Mercusor
market. Cuisine Solutions Inc. owns 39% of this Brazilian joint venture. The
Company contributed technology to the partnership in lieu of a cash
contribution. The Company performs management services to assist with the
design and construction of the manufacturing facility as well as ongoing
management service for operations, research and development, marketing and
administrative support. The Company has not earned any management income during
fiscal year 2002.

The Companys investment in Cuisine Solutions do Brasil Ltda consisting of
advances, Accounts Receivables for services performed and a loan in the amount
of $763,000 that has been granted to the Joint Venture Partner during the
second quarter of 2001. The loan bears interest at the London Interbank Offered
Rate (LIBOR) plus spread accepted by the Central Bank of Brazil at the time
of repayment. The loan must be repaid within one year with the option to
convert it into equity and controlling interest of the Brazilian Company. The
loan is in default as at June 29, 2002.

Due to the continued lack of cooperation from the Brazilian partner, the
inability to obtain any financial disclosures and the Joint Venture Partners
termination of Cuisine Solutions Inc. business activity in Brazil, Cuisine
Solutions, Inc has written off 100% of its





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##### 



investment in Brazil through the end of fiscal year ended June 29, 2002. The
total amount of write-offs and losses in equity from the investment in Brazil
amounts up to $997,000 during fiscal year 2002. The Company recorded already a
loss of $661,000 under Loss in equity from investments in Brazil and as a
reduction of Investment and Advances to Cuisine Solutions Brazil during
fiscal year 2001 as their share of Cuisine Solutions Brazil Ltda. accumulated
losses from the date of inception August 7, 1998 through June 30, 2001 which
approximated to $1,694,000.

Accumulated losses of Cuisine Solutions Brazil Ltda. from the date of inception
August 7, 1998 through December 15, 2001 approximated to $2,255,000. Fiscal
2002 third and fourth quarter results of Cuisine Solutions Brazil Ltda. were
not available to the Company. The Company has no future funding
responsibility to Cuisine Solutions Brazil Ltda.

At the end of fiscal year 2002, the Company has filed a civil lawsuit in the
Federal District Court of Brasilia against the controlling partner in the joint
venture, Cuisine Solutions do Brasil Ltda, as a result of the Brazilian
partners failure to disclose financial information and operating results of
Cuisine Solutions do Brasil Ltda to Cuisine Solutions Inc. according to both
the joint venture agreement and Brazilian law. The Company claims full recovery
of the amounts owed by Cuisine Solutions do Brasil Ltda, including the loan of
$763,000, and in addition the management and administrative fees of $895,000
according to the Joint Venture agreement with the Brazilian Partner. The
managing directors of Cuisine Solutions do Brasil Ltda, Jose Sanchez Aguayo and
Rodrigo Sanchez, were named as nominal defendants in the lawsuit. Due to the
early stage of the filed lawsuit, management cannot predict a judgement from
this lawsuit before the end of fiscal year 2003.

NOTE 6  INCOME TAXES

The composition of the provision for income tax benefit attributable to
operations was:

|          |         |   |          |        |          |   |          |       |  |   |        |        | 
|--------- | ------- | - | -------- | ------ | -------- | - | -------- | ----- |  | - | ------ | ------ | 
|          |         |   | June 29, |        | June 30, |   | June 24,
|          |         |   | 2002     |        | 2001     |   | 2000    
|          |         |   |          |        |          |   |         
|Current:  |         |   |          |        |          |   |          |       |  |   |        |       
|          | Federal |   | $        |       |          |   | $        |      |  |   | $      |       | 
|          | Foreign |   |          | 14,000 |          |   |          | 3,000 |  |   |        | 11,000 | 
|          | State   |   |          |       |          |   |          |      |  |   |        |       | 
|          |         |   |          |        |          |   |          |       |  |   |        |        | 
|          |         |   | 14,000   |        |          |   | 3,000    |       |  |   | 11,000 |       
|          |         |   |          |        |          |   |          |       |  |   |        |        | 
|Deferred: |         |   |          |        |          |   |          |       |  |   |        |       
|          | Federal |   |          |       |          |   |          |      |  |   |        |       | 
|          | Foreign |   |          |       |          |   |          |      |  |   |        |       | 
|          | State   |   |          |       |          |   |          |      |  |   |        |       | 
|          |         | $ |         |        |          | $ |         |       |  | $ |       |       
|          |         |   |          |        |          |   |          |       |  |   |        |        | 

The differences between amounts computed by applying the statutory federal
income tax rates to income from operations and the total income tax benefit
applicable to operations were as follows:

|                                               |  |            |            |          |  |          |          |   |  |   |          |  
|---------------------------------------------- |  | ---------- | ---------- | -------- |  | -------- | -------- | - |  | - | -------- | -
|                                               |  | Year Ended
|                                               |  |           
|                                               |  | June 29,   |            | June 30, |  | June 24,
|                                               |  | 2002       |            | 2001     |  | 2000    
|                                               |  |            |            |          |  |         
|Federal tax benefit at statutory rates         |  | $          | (2,072,000 | )        |  | $        | (480,000 | ) |  | $ | (431,000 | )
|Income (Loss) from foreign operations          |  |            | 22,000     |          |  |          | 188,000  |   |  |   | (238,000 | )
|France minimum taxes                           |  |            | 14,000     |          |  |          | 3,000    |   |  |   | 11,000   |  
|Period effect of change in valuation allowance |  |            | 2,267,000  |          |  |          | 162,000  |   |  |   | (2,000   | )
|State income taxes                             |  |            | (362,000   | )        |  |          | (52,000  | ) |  |   | (118,000 | )
|Period effect of Foreign valuation allowance   |  |            |           |          |  |          |         |   |  |   | 719,000  |  
|Permanent differences                          |  |            | 8,400      |          |  |          | 69,000   |   |  |   | 70,000   |  
|Affect of capital loss carry-forward           |  |            |           |          |  |          | 78,000   |   |  |   |         |  
|Other, net                                     |  |            | 136,600    |          |  |          | 35,000   |   |  |   |         |  
|                                               |  |            |            |          |  |          |          |   |  |   |          |  
|Total                                          |  | $          | 14,000     |          |  | $        | 3,000    |   |  | $ | 11,000   |  
|                                               |  |            |            |          |  |          |          |   |  |   |          |  





---



##### 



Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

The significant components of deferred tax assets are as follows:

|                         |                                         |  |            |           |          |  |            |           | 
|------------------------ | --------------------------------------- |  | ---------- | --------- | -------- |  | ---------- | --------- | 
|                         |                                         |  | June 29,   |           | June 30,
|                         |                                         |  | 2002       |           | 2001    
|                         |                                         |  |            |           |         
|Deferred Tax Assets      |                                         |  |            |           |          |  |            |          
|                         | Net operating loss carryforward: Norway |  | $          | 664,000   |          |  | $          | 816,000   | 
|                         | Net operating loss carryforward: France |  |            | 1,015,000 |          |  |            | 1,016,000 | 
|                         | Net operating loss carryforward: USA    |  |            | 4,064,000 |          |  |            | 2,183,000 | 
|                         | Inventory adjustment                    |  |            | 269,000   |          |  |            | 117,000   | 
|                         | Other                                   |  |            | 1,181,000 |          |  |            | 794,000   | 
|                         |                                         |  |            |           |          |  |            |           | 
|                         | Total deferred tax assets               |  |            | 7,193,000 |          |  |            | 4,926,000 | 
|Less valuation allowance |                                         |  | (7,193,000 | )         |          |  | (4,926,000 | )        
|                         | Net deferred tax assets                 |  |            |          |          |  |            |          | 
|                         |                                         |  |            |           |          |  |            |           | 
|Deferred Tax Liabilities |                                         |  |            |           |          |  |            |          
|                         | Property and equipment                  |  |            |          |          |  |            |          | 
|                         |                                         |  |            |           |          |  |            |           | 
|                         | Net deferred tax liabilities            |  |            |          |          |  |            |          | 
|                         |                                         |  |            |           |          |  |            |           | 
|                         | Net deferred income tax                 |  | $          |          |          |  | $          |          | 
|                         |                                         |  |            |           |          |  |            |           | 

The net changes in total valuation allowance for the years ended June 29, 2002
and June 30, 2001 were an increase of $2,267,000 and $162,000, respectively.

The net foreign operating loss carry-forward can only be used to offset taxable
income in the country where the carry-forward was generated. These operating
loss carry-forwards are available to offset future foreign income, if any,
through 2012.

At June 29, 2002, the Company has net operating loss carry-forwards for US
federal and state income tax purposes of $10,160,000 which are available to
offset future federal and state taxable income, if any, through 2022.

NOTE 7  DEBT

Debt, at June 29, 2002 and June 30, 2001 was as follows:

|                                                                                                       |  |                                                                                                                      |  |                                                                                                                           |  |                                                                                                  |  |             |                                                       | 
|------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | ----------- | ----------------------------------------------------- | 
|                                                                                                       |  |                                                                                                                      |  |                                                                                                                           |  | 2002                                                                                             |  | 2001       
|                                                                                                       |  |                                                                                                                      |  |                                                                                                                           |  | PRINCIPAL                                                                                        |  | PRINCIPAL  
|LENDER                                                                                                 |  | DESCRIPTION                                                                                                          |  | MATURITY                                                                                                                  |  | OUTSTANDING                                                                                      |  | OUTSTANDING
|                                                                                                       |  |                                                                                                                      |  |                                                                                                                           |  |                                                                                                  |  |            
|Den norske bank
        SND
        Hjelmeland Kommune
        CDN
        NORBAIL
        Nationsbank |  | Overdraft Facility
        Term Loan
        Capital Lease
        Term Loan
        Capital Lease
        Term Loan |  | Six months, renewable February 1,
        2006
 June 1, 2014
 September 25,
 2003 November 20,
 2005
        June 2, 2002 |  | $1,185,000
          140,000
          1,153,000
          138,000
          308,000
          - |  | $           | 900,000 141,000 972,000 207,000
        357,000 5,000 | 
|                                                                                                       |  |                                                                                                                      |  |                                                                                                                           |  |                                                                                                  |  |             |                                                       | 
|                                                                                                       |  |                                                                                                                      |  | Total
        Less current portion                                                                                        |  | 2,924,000
          1,585,000                                                                    |  |             | 2,582,000 1,082,000                                   | 
|                                                                                                       |  |                                                                                                                      |  |                                                                                                                           |  |                                                                                                  |  |             |                                                       | 
|                                                                                                       |  |                                                                                                                      |  | Non-current portion                                                                                                       |  | $1,339,000                                                                                       |  | $           | 1,500,000                                             | 
|                                                                                                       |  |                                                                                                                      |  |                                                                                                                           |  |                                                                                                  |  |             |                                                       | 

The Company believes that the carrying values of the amounts outstanding under
the above debt instruments approximate fair value.

Borrowings under the Den norske Bank (DnB) Overdraft Facility are limited to
a percentage of inventories and receivables of the Norwegian subsidiary, up to
a maximum of $1,422,000 with a floating interest rate equal to the prevailing
Norwegian overnight funds rate plus two percentage points. The Den norske Bank
Overdraft Facility interest rate at June 29, 2002 and
June 30, 2001 was 8.75% and 8.7%, respectively. Borrowings of $237,000 were available at June 29, 2002.





---



##### 



Statens Narings-OgDistriktutvikiingsfond (SND), a governmental development
agency in Norway, issued to CSI Norway, an eight-year term loan that requires
the Company to continue to operate its plant facility. The loan has a variable
interest rate which at June 29, 2002 and June 30, 2001 was 9.5% and 8.5%,
respectively, and is required to be repaid through sixteen semi-annual payments
of principal and interest beginning August 1, 1996 and ending February 1, 2006.

The Norwegian subsidiary entered into a twenty-year capital lease obligation
with an initial principal amount of $1,205,000 and with quarterly payments of
$36,000, including principal and interest. At the end of the lease term,
ownership of the facility will transfer to the Norwegian subsidiary. The
Company has issued no guarantees with respect to this lease.

In December 2000, Cuisine Solutions France entered into a five-year capital
lease obligation with an initial principal amount of $435,000 and with monthly
payments of $10,400 for the first year and $9,565 for the second year with 6%
p.a. interest on the outstanding balance of the loan. The lease is related to a
cooking machine which can be purchased at a bargain price at the end of the
lease term.

During fiscal year 1997 the Company entered into a five year term loan with
Nations Bank /Bank of America to finance the purchase of a new refrigerated
truck for its US operations. The term loan was repaid through monthly payments
of principal and interest to June 2, 2002.

Debt maturities during the next five fiscal years on an aggregate basis at June
29, 2002 were as follows:

|     |  |   |           | 
|---- |  | - | --------- | 
|2003 |  | $ | 1,585,000 | 
|2004 |  |   | 327,000   | 
|2005 |  |   | 269,000   | 
|2006 |  |   | 207,000   | 
|2007 |  |   | 143,000   | 

The total debt balance thereafter is $393,000.

NOTE 8  STOCKHOLDERS EQUITY

The Companys capital stock is comprised of two classes: Common Stock and Class
B Stock. The Class B Stock, which is reserved for issuance to employees under
stock option plans, is identical in all respects to the Common Stock except
that the holders thereof have no voting rights unless otherwise required by
law. There are no shares of Class B Stock outstanding.

NOTE 9  EMPLOYEE BENEFITS

The Company sponsors a qualified employee savings plan under which employees
who meet certain minimum age and service requirements are eligible to
participate. The Company matches one-third of the first 6% of eligible
employees voluntary contributions to the plan. The Company expensed $29,726,
$24,631 and $22,235 in fiscal years 2002, 2001 and 2000, respectively, for
contributions to the savings and profit sharing plan.

In fiscal year 1994, the Company implemented a non-qualified employee savings
plan under which senior management employees are eligible to participate. The
Company matches one-third of the first 6% of eligible employees voluntary
contributions to the plan. The Companys matching contribution is limited to 6%
of the combined contributions into both the qualified and the non-qualified
plan. The Company expensed $7,562, $26,559, and $21,995 for fiscal year 2002,
2001 and 2000 respectively.

The Company expensed $78,400, $53,000 and $75,800 for a separate health and
retirement plan for the president of the Company and three other non-Officer
but key employees in fiscal year 2002, 2001 and 2000 respectively.

During fiscal year 1993, the Company established, upon stockholder approval,
the 1992 Stock Option Plan which provides for up to 300,000 shares of the
Companys Common Stock to be made available to employees at various prices as
established by the Board of Directors at the date of grant. During fiscal year
1997 the Company amended its 1992 Stock Option Plan to increase the number of
shares in its plan from 300,000 to 1,300,000. During fiscal year 1997, the
Company granted to employees 951,460 options under the 1992 Stock Option Plan.
During fiscal year 1998 the Company amended its 1992 Stock Option Plan to
increase the number of shares in its plan from 1,300,000 to 1,753,000 upon
majority shareholder approval. During fiscal year 1998 the Company granted to
employees 110,000 options under the 1992 Stock Option Plan. During fiscal year
1999 the Company granted to employees 530,000 options under the 1992 Stock
Option Plan. The exercise price of options granted was equal to the market
price at the date of grant.

During fiscal year 2000, the Company adopted the 1999 stock option plan that
which provides for up to 2,600,000 shares of the Companys Common Stock to be
made available to employees and directors at various prices as established by
the Board of Directors of the Company. During 2000, the Company granted to employees and directors,
817,500 options under the 1992 and 1999 plans. Thereof, 147,500 options were
canceled during fiscal year 2001 and additional 102,500 options were granted
under the 1999 stock option plan. Additional 670,000 options were granted under
the 1992 and 1999 stock option plans during fiscal year 2002.





---



##### 



The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 2002, 2001 and 2000 as follows:

|                         |  |          |     |          |  |          |     |   |  |  |     |  
|------------------------ |  | -------- | --- | -------- |  | -------- | --- | - |  |  | --- | -
|                         |  | June 29, |     | June 30, |  | June 24,
|                         |  | 2002     |     | 2001     |  | 2000    
|                         |  |          |     |          |  |         
|Expected dividend yield  |  |          |    |          |  |          |    |   |  |  |    |  
|Risk-free interest rate  |  |          | 4.6 | %        |  |          | 5.7 | % |  |  | 6.1 | %
|Expected life (in years) |  |          | 6   |          |  |          | 6   |   |  |  | 6   |  
|Expected volatility      |  |          | 108 | %        |  |          | 72  | % |  |  | 66  | %

The Company applies APB Opinion 25 and related Interpretations in accounting
for its plans. Accordingly, no compensation cost has been recognized for its
fixed stock option plan in the financial statements. Had compensation cost for
the Companys stock-based compensation plan been determined based on the fair
value at the grant date for awards under those plans consistent with the method
of FASB Statement 123, the Companys Loss and Loss per share would have been
increased to the pro forma amounts indicated below:

|          |                     |             |  |          |            |          |  |          |            |   |  |   |            |  
|--------- | ------------------- | ----------- |  | -------- | ---------- | -------- |  | -------- | ---------- | - |  | - | ---------- | -
|          |                     |             |  | June 29, |            | June 30, |  | June 24,
|          |                     |             |  | 2002     |            | 2001     |  | 2000    
|          |                     |             |  |          |            |          |  |         
|Net loss: |                     |             |  |          |            |          |  |          |            |   |  |  
|          |                     | As reported |  | $        | (6,027,000 | )        |  | $        | (861,000   | ) |  | $ | (1,980,000 | )
|          |                     | Pro forma   |  | $        | (6,220,000 | )        |  | $        | (1,047,000 | ) |  | $ | (2,138,000 | )
|          | Net loss per share: |             |  |          |            |          |  |          |            |   |  |   |           
|          |                     | As reported |  | $        | (0.38      | )        |  | $        | (0.06      | ) |  | $ | (0.13      | )
|          |                     | Pro forma   |  | $        | (0.39      | )        |  | $        | (0.07      | ) |  | $ | (0.14      | )

|                                                               |  |        |           |                |  |                  |      |                |  |        |           |                  |  |  |      |  |  |                  |           |   |  |  |      | 
|-------------------------------------------------------------- |  | ------ | --------- | -------------- |  | ---------------- | ---- | -------------- |  | ------ | --------- | ---------------- |  |  | ---- |  |  | ---------------- | --------- | - |  |  | ---- | 
|                                                               |  | 2002   |           | 2001           |  | 2000            
|                                                               |  |        |           |                |  |                 
|                                                               |  |        |           |                |  | WEIGHTED-AVERAGE |      |                |  |        |           | WEIGHTED-AVERAGE |  |  |      |  |  | WEIGHTED-AVERAGE
|FIXED OPTIONS                                                  |  | SHARES |           | EXERCISE PRICE |  | SHARES           |      | EXERCISE PRICE |  | SHARES |           | EXERCISE PRICE  
|                                                               |  |        |           |                |  |                  |      |                |  |        |           |                 
|OUTSTANDING AT BEGINNING OF YEAR                               |  |        | 1,836,000 |                |  |                  | 1.26 |                |  |        | 2,397,500 |                  |  |  | 1.27 |  |  |                  | 1,585,000 |   |  |  | 1.33 | 
|GRANTED                                                        |  |        | 670,000   |                |  |                  | 0.85 |                |  |        | 102,500   |                  |  |  | 1.13 |  |  |                  | 817,500   |   |  |  | 1.13 | 
|CANCELED                                                       |  |        |          |                |  |                  |     |                |  |        | (147,500  | )                |  |  | 1.13 |  |  |                  |          |   |  |  |     | 
|EXERCISED                                                      |  |        |          |                |  |                  |     |                |  |        | (68,750   | )                |  |  | 0.84 |  |  |                  |          |   |  |  |     | 
|FORFEITED                                                      |  |        | (157,500  | )              |  |                  | 1.14 |                |  |        | (447,750  | )                |  |  | 1.37 |  |  |                  | (5,000    | ) |  |  | 0.66 | 
|                                                               |  |        |           |                |  |                  |      |                |  |        |           |                  |  |  |      |  |  |                  |           |   |  |  |      | 
|OUTSTANDING AT END OF YEAR                                     |  |        | 2,348,500 |                |  |                  | 1.17 |                |  |        | 1,836,000 |                  |  |  | 1.26 |  |  |                  | 2,397,500 |   |  |  | 1.27 | 
|                                                               |  |        |           |                |  |                  |      |                |  |        |           |                  |  |  |      |  |  |                  |           |   |  |  |      | 
|OPTIONS EXERCISABLE AT YEAR-END                                |  |        | 1,680,375 |                |  |                  |      |                |  |        | 1,374,125 |                  |  |  |      |  |  |                  | 1,520,000 |   |  |  |      | 
|WEIGHTED-AVERAGE FAIR VALUE OF
OPTIONS GRANTED DURING THE YEAR |  | $      | 0.71      |                |  |                  |      |                |  | $      | 0.88      |                  |  |  |      |  |  | $                | 0.91      |   |  |  |      | 
|TOTAL OPTION LIFE                                              |  |        | 10        |                |  |                  |      |                |  |        | 10        |                  |  |  |      |  |  |                  | 10        |   |  |  |      | 
|% EXERCISABLE                                                  |  |        | 72        | %              |  |                  |      |                |  |        | 75        | %                |  |  |      |  |  |                  | 63        | % |  |  |      | 
|AVERAGE YEARS EXERCISABLE                                      |  |        | 3         |                |  |                  |      |                |  |        | 3         |                  |  |  |      |  |  |                  | 3         |   |  |  |      | 
|AVERAGE REMAINING CONTRACTUAL LIFE                             |  |        | 7         |                |  |                  |      |                |  |        | 7         |                  |  |  |      |  |  |                  | 7         |   |  |  |      | 

THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT FIXED STOCK OPTIONS
OUTSTANDING AT JUNE 29, 2002:

|                         |  |                           |         |                           |  |                |      |             |  |                |      |  |  |  |         |  |  |   |      | 
|------------------------ |  | ------------------------- | ------- | ------------------------- |  | -------------- | ---- | ----------- |  | -------------- | ---- |  |  |  | ------- |  |  | - | ---- | 
|                         |  | Stock Options Outstanding |         | Stock Options Exercisable
|                         |  |                           |         |                          
|                         |  | Number                    |         | Weighted-Average          |  |                |      |             |  | Number         |      |  |  | 
|                         |  | Outstanding               |         | Remaining                 |  | Weighted-Avg   |      | Exercisable |  | Weighted-Avg  
|RANGE OF EXERCISE PRICES |  | at 6/29/02                |         | Contractual Life          |  | Exercise Price |      | at 6/29/02  |  | Exercise Price
|                         |  |                           |         |                           |  |                |      |             |  |               
|$0.6562 TO $1.030        |  |                           | 932,500 |                           |  |                | 8.19 |             |  | $              | 0.77 |  |  |  | 505,000 |  |  | $ | 0.71 | 
|$1.031 TO $1.37          |  |                           | 817,500 |                           |  |                | 7.29 |             |  | $              | 1.13 |  |  |  | 601,875 |  |  | $ | 1.12 | 
|$1.38 TO $1.50           |  |                           | 449,000 |                           |  |                | 5.13 |             |  | $              | 1.38 |  |  |  | 424,500 |  |  | $ | 1.38 | 
|$1.51 TO $2.00           |  |                           |        |                           |  |                |     |             |  | $              |     |  |  |  |        |  |  | $ |     | 
|$2.01 TO $2.50           |  |                           | 41,500  |                           |  |                | 0.96 |             |  | $              | 2.38 |  |  |  | 41,500  |  |  | $ | 2.38 | 
|$3.01 TO $3.50           |  |                           | 66,000  |                           |  |                | 2.83 |             |  | $              | 3.38 |  |  |  | 66,000  |  |  | $ | 3.38 | 
|$3.51 TO $4.00           |  |                           | 42,000  |                           |  |                | 1.51 |             |  | $              | 3.94 |  |  |  | 42,000  |  |  | $ | 3.94 | 





---



##### 



THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT FIXED STOCK OPTIONS
OUTSTANDING AT JUNE 30, 2001:

|                         |  |                           |         |                           |  |                |      |             |  |                |      |  |  |  |         |  |  |   |      | 
|------------------------ |  | ------------------------- | ------- | ------------------------- |  | -------------- | ---- | ----------- |  | -------------- | ---- |  |  |  | ------- |  |  | - | ---- | 
|                         |  | Stock Options Outstanding |         | Stock Options Exercisable
|                         |  |                           |         |                          
|                         |  | Number                    |         | Weighted-Average          |  |                |      |             |  | Number         |      |  |  | 
|                         |  | Outstanding               |         | Remaining                 |  | Weighted-Avg   |      | Exercisable |  | Weighted-Avg  
|RANGE OF EXERCISE PRICES |  | at 6/30/01                |         | Contractual Life          |  | Exercise Price |      | at 6/30/01  |  | Exercise Price
|                         |  |                           |         |                           |  |                |      |             |  |               
|$0.6562 TO $1.030        |  |                           | 412,500 |                           |  |                | 7.33 |             |  | $              | 0.66 |  |  |  | 309,375 |  |  | $ | 0.66 | 
|$1.031 TO $1.37          |  |                           | 822,500 |                           |  |                | 8.22 |             |  | $              | 1.12 |  |  |  | 463,750 |  |  | $ | 1.11 | 
|$1.38 TO $1.50           |  |                           | 404,500 |                           |  |                | 5.95 |             |  | $              | 1.38 |  |  |  | 404,500 |  |  | $ | 1.38 | 
|$1.51 TO $2.00           |  |                           | 47,000  |                           |  |                | 0.19 |             |  | $              | 1.63 |  |  |  | 47,000  |  |  | $ | 1.63 | 
|$2.01 TO $2.50           |  |                           | 41,500  |                           |  |                | 1.96 |             |  | $              | 2.38 |  |  |  | 41,500  |  |  | $ | 2.38 | 
|$3.01 TO $3.50           |  |                           | 66,000  |                           |  |                | 3.83 |             |  | $              | 3.38 |  |  |  | 66,000  |  |  | $ | 3.38 | 
|$3.51 TO $4.00           |  |                           | 42,000  |                           |  |                | 2.51 |             |  | $              | 3.94 |  |  |  | 42,000  |  |  | $ | 3.94 | 

THE FOLLOWING TABLE SUMMARIZES INFORMATION ABOUT FIXED STOCK OPTIONS
OUTSTANDING AT JUNE 24, 2000:

|                         |  |                           |         |                           |  |                |      |             |  |                |      |  |  |  |         |  |  |   |      | 
|------------------------ |  | ------------------------- | ------- | ------------------------- |  | -------------- | ---- | ----------- |  | -------------- | ---- |  |  |  | ------- |  |  | - | ---- | 
|                         |  | Stock Options Outstanding |         | Stock Options Exercisable
|                         |  |                           |         |                          
|                         |  | Number                    |         | Weighted-Average          |  |                |      |             |  | Number         |      |  |  | 
|                         |  | Outstanding               |         | Remaining                 |  | Weighted-Avg   |      | Exercisable |  | Weighted-Avg  
|RANGE OF EXERCISE PRICES |  | at 6/24/00                |         | Contractual Life          |  | Exercise Price |      | at 6/24/00  |  | Exercise Price
|                         |  |                           |         |                           |  |                |      |             |  |               
|$0.6562 TO $1.030        |  |                           | 475,000 |                           |  |                | 8.33 |             |  | $              | 0.66 |  |  |  | 237,500 |  |  | $ | 0.66 | 
|$1.031 TO $1.37          |  |                           | 925,000 |                           |  |                | 9.17 |             |  | $              | 1.11 |  |  |  | 285,000 |  |  | $ | 1.11 | 
|$1.38 TO $1.50           |  |                           | 770,000 |                           |  |                | 6.91 |             |  | $              | 1.38 |  |  |  | 770,000 |  |  | $ | 1.38 | 
|$1.51 TO $2.00           |  |                           | 77,000  |                           |  |                | 0.93 |             |  | $              | 1.75 |  |  |  | 77,000  |  |  | $ | 1.75 | 
|$2.01 TO $2.50           |  |                           | 41,500  |                           |  |                | 2.69 |             |  | $              | 2.38 |  |  |  | 41,500  |  |  | $ | 2.38 | 
|$3.01 TO $3.50           |  |                           | 67,000  |                           |  |                | 4.86 |             |  | $              | 3.38 |  |  |  | 67,000  |  |  | $ | 3.38 | 
|$3.51 TO $4.00           |  |                           | 42,000  |                           |  |                | 3.51 |             |  | $              | 3.94 |  |  |  | 42,000  |  |  | $ | 3.94 | 

NOTE 10  COMMITMENTS

The Company leases office and plant space under operating leases, which expire
on various dates through 2005. Certain leases provide for escalations in rent
based upon increases in the lessors annual operating costs or the consumer
price index. Future minimum lease payments under these agreements at June 29,
2002 were as follows:

|            |  |   |         | 
|----------- |  | - | ------- | 
|Fiscal Year |  |   |         | 
|2003        |  | $ | 409,000 | 
|2004        |  |   | 197,000 | 
|2005        |  |   | 104,000 | 
|            |  |   |         | 
|            |  | $ | 711,000 | 
|            |  |   |         | 

Rent expense for operations approximated $457,000, $380,000 and $342,000 for
fiscal years 2002, 2001 and 2000, respectively.

NOTE 11  TRANSACTIONS WITH RELATED PARTIES

During fiscal year 1998 the Company issued an officer loan in the amount of
$375,000. The loan of $375,000 was combined with the loan this officer had
outstanding in the amount of $45,000 at the end of fiscal year 1997. The
revised loan amount of $420,000 bears interest of at 6.5% per annum and is
payable on October 1, 2002 and is collateralized by the officers home.
Payments on the loan will be derived from the equity proceeds from the sale of
the officers first residence, a portion of future annual bonuses to be paid to
the officer by the Company as negotiated. All outstanding balances of the note,
including principal and interest accrued thereon, shall become payable in full
on October 1, 2002. At the end of fiscal year 2000 the officer sold his first
residence and applied the net proceeds of $26,000 from the sale of the
residence as payment towards the loan. $394,000 of the loan was outstanding at
June 30, 2001. The remaining balance was received and applied toward principal
and interest during fiscal year 2002.

During fiscal 1999 a loan of $85,000 was issued to a key employee and is
collateralized by the employees home. The note bears interest at 6.6% per
annum and payment of the note is due and payable in full five years from the
date of the loan, or six months after





---



##### 



the employees termination whichever comes first. During each of the fiscal
years 2000 and 2001, $20,000 was received for principle and interest. During
fiscal year 2002, an additional $36,000 of the employees earned
bonuses was applied toward principal and interest.

The Company receives consulting services under an agreement with Food Investors
Corporation (FIC), which is majority owned by the Secria Europe, S.A. Food
Research Corporation (FRC), the majority owner of Cuisine Solutions common
shares, is also owned by Secria Europe, S.A. Pursuant to the consulting
agreement, FIC provides services related to management, planning, strategy
development and pursing worldwide interests of the Company. This agreement is
renewable annually. The amount paid by the Company to FIC in fiscal years 2002,
2001 and 2000 was $144,000 per year.

The Company has receivables of $7,000 due as at June 29, 2002 from Classic
European Bakers, LLC (CEB). CEB is a related entity to FRC. The receivables
are primarily associated to unpaid rent related to a rental agreement for
office space used by CEB at the Companys premises in Alexandria.

Cuisine Solutions eliminated four positions in Sales departments effective June
2002 as a result to restructure these departments. The restructuring was
required to deliver cost reductions by streamlining management decision-making
and to accelerate future growth from currently under-performing business
channels. The Company recorded $268,000 of accrued severances for these
eliminations at the end of fiscal year 2002. The positions of Vice President,
On Board Services and Retail were eliminated. The Vice President On Board
Services was employed for over ten years with the Company in senior positions
and was given a one year guaranteed severance package in the amount of
$160,000. The Vice President Retail was employed for about two years with the
Company and was given half a year severance package in the amount of $62,000.
Two other sales positions in the Foodservices channel have been eliminated and
were given each three months of severance payments in the amount of total
$46,000 for both packages.

On June 12, 2001, the Company signed a letter of intent, whereby they will
exchange their interest in the Norwegian subsidiary for a joint venture
interest in Chile. The agreement has not been closed as the details of the
transaction have not been finalized at the end of fiscal year 2002.

NOTE 12  SALES TO MAJOR CUSTOMERS

Due to the decentralized purchase decision process of customers within the
Foodservice channel, management does not believe any single customer creates a
dependency relationship.

The On Board Services channel has sales to two airline catering companies that
represent 17.9% of total Company sales in fiscal 2002 and the same two caterers
accounted for approximately 20% of total Company sales during fiscal 2001. One
of the two caterers account for 11.4% of total Company sales in fiscal 2002 and
approximately 15% in fiscal 2001.

Foreign sales accounted for approximately 36.8%, 29.6%, and 32.4% of total
sales in fiscal years 2002, 2001 and 2000, respectively.

NOTE 13  LITIGATION

At the end of fiscal year 2002, the Company has filed a civil lawsuit in the
Federal District Court of Brasilia against the controlling partner in the joint
venture, Cuisine Solutions do Brasil Ltda, as a result of the Brazilian
partners failure to disclose financial information and operating results of
Cuisine Solutions do Brasil Ltda to Cuisine Solutions Inc. according to both
the joint venture agreement and Brazilian law. We refer to note 5 of the notes
to the consolidated financial statements.

There are no other material pending legal proceedings, other than ordinary,
routine litigation incidental to the Companys business, to which the Company
is a party or to which any of its property is subject. Management does not
believe that any amounts it may be required to pay by reason thereof will have
a material effect on the Companys financial position or results of operations.

NOTE 14  QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

In managements opinion, the interim financial data below reflects all
adjustments necessary to fairly state the results of the interim period
presented. All adjustments are of a normal recurring nature necessary for a
fair presentation of the information for the periods presented. Results of any
one or more quarters are not necessarily indicative of annual results or
continuing trends.

|                                       |  |                                          |       |              |  |          |        |          |  |   |        |   |  |   |        |  
|-------------------------------------- |  | ---------------------------------------- | ----- | ------------ |  | -------- | ------ | -------- |  | - | ------ | - |  | - | ------ | -
|                                       |  | (in thousands, except per share amounts)
|                                       |  | FISCAL YEAR 2002 QUARTERS ENDED         
|                                       |  |                                         
|                                       |  | September 22,                            |       | December 15, |  | April 6, |        | June 29,
|                                       |  | 2001                                     |       | 2001         |  | 2002     |        | 2002    
|                                       |  |                                          |       |              |  |          |        |         
|Total revenue                          |  | $                                        | 7,335 |              |  | $        | 6,235  |          |  | $ | 7,654  |   |  | $ | 7,392  |  
|Gross margin                           |  |                                          | 1,537 |              |  |          | 632    |          |  |   | 949    |   |  |   | 1,570  |  
|Net loss                               |  |                                          | (881  | )            |  |          | (1,477 | )        |  |   | (1,779 | ) |  |   | (1,890 | )
|Net loss per share (basic and diluted) |  | $                                        | (0.06 | )            |  | $        | (0.09  | )        |  | $ | (0.11  | ) |  | $ | (0.12  | )





---



##### 



|                                   |  |                                 |       |             |  |           |       |          |  |   |       |   |  |   |       |  
|---------------------------------- |  | ------------------------------- | ----- | ----------- |  | --------- | ----- | -------- |  | - | ----- | - |  | - | ----- | -
|                                   |  | FISCAL YEAR 2001 QUARTERS ENDED
|                                   |  |                                
|                                   |  | September 16,                   |       | December 9, |  | March 31, |       | June 30,
|                                   |  | 2000                            |       | 2000        |  | 2001      |       | 2001    
|                                   |  |                                 |       |             |  |           |       |         
|Total revenue                      |  | $                               | 8,343 |             |  | $         | 9,463 |          |  | $ | 9,305 |   |  | $ | 9,027 |  
|Gross margin                       |  |                                 | 1,980 |             |  |           | 2,595 |          |  |   | 1,679 |   |  |   | 2,672 |  
|Net income (loss)                  |  |                                 | (171  | )           |  |           | 411   |          |  |   | (795  | ) |  |   | (306  | )
|Net income (loss) per share (basic |  | $                               | (0.01 | )           |  | $         | 0.03  |          |  | $ | (0.05 | ) |  | $ | (0.03 | )
|and diluted)                       |  |                                 |       |             |  |           |       |          |  |   |       |   |  |   |       |  

|                                      |  |                                 |       |              |  |          |       |          |  |   |        |   |  |   |       |  
|------------------------------------- |  | ------------------------------- | ----- | ------------ |  | -------- | ----- | -------- |  | - | ------ | - |  | - | ----- | -
|                                      |  | FISCAL YEAR 2000 QUARTERS ENDED
|                                      |  |                                
|                                      |  | September 18,                   |       | December 11, |  | April 1, |       | June 24,
|                                      |  | 1999                            |       | 1999         |  | 2000     |       | 2000    
|                                      |  |                                 |       |              |  |          |       |         
|Total revenue                         |  | $                               | 7,730 |              |  | $        | 8,701 |          |  | $ | 9,601  |   |  | $ | 9,778 |  
|Gross margin                          |  |                                 | 2,009 |              |  |          | 2,318 |          |  |   | 1,155  |   |  |   | 1,701 |  
|Net income (loss)                     |  |                                 | 1     |              |  |          | 59    |          |  |   | (1,274 | ) |  |   | (766  | )
|Net income (loss) per share (basic)   |  | $                               | 0.00  |              |  | $        | 0.00  |          |  | $ | (0.09  | ) |  | $ | (0.05 | )
|Net income (loss) per share
(diluted) |  | $                               | 0.00  |              |  | $        | 0.00  |          |  | $ | (0.08  | ) |  | $ | (0.05 | )

SCHEDULE II
CUISINE SOLUTIONS, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |         | 
|------------------------ | ------------------------------------------------- |  | ---------- | ------- | ---------- |  | - | ------- |  |  | ------------ | -- | ---------- |  | - | ------ |  |  | ------ | ------- | ------ |  | ---------- | -- | - |  | - | ------- | 
|                         |                                                   |  | Balance at |         | Additions  |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  | Balance at
|                         |                                                   |  | Beginning  |         | charged to |  |   |         |  |  | Reduction of |    |            |  |   |        |  |  |        |         | End of
|                         |                                                   |  | of Period  |         | operations |  |   |         |  |  | allowance    |    | write-offs |  |   |        |  |  | Period
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |       
|Year ended June 24, 2000 |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for doubtful accounts                   |  | $          | 61,000  |            |  | $ | 59,000  |  |  |              |    |            |  | $ |       |  |  | $      | 31,000  |        |  |            |    |   |  | $ | 89,000  | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for obsolete inventory                  |  | $          | 69,000  |            |  | $ | 119,000 |  |  |              |    |            |  | $ |       |  |  | $      |        |        |  |            | (1 | ) |  | $ | 188,000 | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|Year ended June 30, 2001 |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for doubtful accounts                   |  | $          | 89,000  |            |  | $ | 55,000  |  |  |              |    |            |  | $ |       |  |  | $      | 36,000  |        |  |            |    |   |  | $ | 108,000 | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for sales rebates earned,
not yet taken |  | $          |        |            |  | $ | 198,000 |  |  |              |    |            |  | $ |       |  |  | $      |        |        |  |            |    |   |  | $ | 198,000 | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for obsolete inventory                  |  | $          | 188,000 |            |  | $ |        |  |  |              |    |            |  | $ | 41,000 |  |  | $      | 44,000  |        |  |            |    |   |  | $ | 103,000 | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|Year ended June 29, 2002 |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for doubtful accounts                   |  | $          | 108,000 |            |  | $ | 112,000 |  |  |              | (2 | )          |  | $ |       |  |  | $      | 52,000  |        |  |            |    |   |  | $ | 168,000 | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for sales rebates earned,
not yet taken |  | $          | 198,000 |            |  | $ | 61,000  |  |  |              |    |            |  | $ | 10,000 |  |  | $      | 249,000 |        |  |            |    |   |  | $ |        | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        
|                         | Allowance for obsolete inventory                  |  | $          | 103,000 |            |  | $ | 475,000 |  |  |              | (1 | )          |  | $ |       |  |  | $      | 74,000  |        |  |            |    |   |  | $ | 504,000 | 
|                         |                                                   |  |            |         |            |  |   |         |  |  |              |    |            |  |   |        |  |  |        |         |        |  |            |    |   |  |   |        

(1) Additional reserves for obsolete inventory
(2) Additional allowance for doubtful accounts