##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED: June 24, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 FOR THE TRANSITION PERIOD FROM TO
 COMMISSION FILE NUMBER: 1-32439
 CUISINE SOLUTIONS, INC.
  Delaware
    
    52-0948383(STATE OR OTHER JURISDICTION OF 
INCORPORATION OR ORGANIZATION)
    
    (IRS EMPLOYER
IDENTIFICATION NO.)
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
  
 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 NAME OF EACH EXCHANGETITLE OF EACH CLASS
    
    ON WHICH REGISTEREDCommon Stock, par value $0.01 per share
    
    American Stock Exchange
 SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None  (TITLE CLASS)
 o þ
 o þ
 þ o
 o
 12b-2 of the Exchange Act).
 o o þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    page   3Item 1A.
    
    Risk Factors
    

page
  9Item 2.
    
    Properties
    
    page 12Item 3.
    
    Legal Proceedings
    
    page 12Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    page 12PART IIItem 5.
    
    Market for The Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    page 13Item 6.
    
    Selected Financial Data
    
    page 14Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    page 14Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    page 23Item 8.
    
    Financial Statements and Supplementary Data
    
    page 23Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    page 23Item 9A.
    
    Controls and Procedures
    
    page 23Item 9B.
    
    Other Information
    
    page 23PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    page 24Item 11.
    
    Executive Compensation
    
    page 24Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    page 24Item 13.
    
    Certain Relationships and Related Transactions
    
    page 24Item 14.
    
    Principal Accountant Fees and Services
    
    page 24PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    page 25SIGNATURESEX-14.1:
    
    Code of Ethics
    
    page 48EX-21.1:
    
    Subsidiaries of the Registrant
    
    page 50EX-23.1:
    
    Consent of Independent Registered Public Accounting Firm
    
    page 51EX-23.2:
    
    Consent of Independent Registered Public Accounting Firm
    
    page 52EX-31.1:
    
    Certification of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
    
    page 53EX-31.2:
    
    Certification of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002
    
    page 54EX-32.1:
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
    
    page 55
 2




---



##### 



PART I
 ITEM 1. BUSINESS
  GENERAL
          Cuisine Solutions U.S.:
  3




---



##### 



Cuisine Solutions France:
  Cuisine Solutions Chile:
   
    
    On Board Services: Airlines, railroad and cruise lines;
    
    Foodservice: Hotel banquets, convention centers, sport stadiums and other special events such as the Olympics;
    
    Retail: Supermarket in-store deli, premium frozen packaged foods;
    
    Military: Naval carriers, Army field feeding, and military dining halls and clubs; and
    
    National Restaurant Chains: Upscale multi-unit restaurants.
 On Board Services
  Foodservice
  4




---



##### 



Retail
   Military
  National Restaurant Chains
  5




---



##### 



BACKGROUND
           6




---



##### 



PRODUCTS
    DISTRIBUTION
   RAW MATERIAL STATUS
  TRADEMARKS
  7




---



##### 



CUSTOMER DEPENDENCY
   SEASONALITY
  COMPETITION
   RESEARCH & DEVELOPMENT
  REGULATIONS
   EMPLOYEES
  8




---



##### 



GEOGRAPHIC SALES
  EXECUTIVE OFFICERS
  Name
    
    Age
    
    Office held with Company
    
    SinceStanislas Vilgrain
    
    
    47
    
    
    Chief Executive Officer
    
    
    1993Thomas L. Gregg
    
    
    42
    
    
    President
    
    
    2005Felipe Hasselmann
    
    
    37
    
    
    Chief Operating Officer
    
    
    2005Yuyun Tristan Kuo
    
    
    52
    
    
    Chief Financial Officer, Treasurer and Corporate Secretary
    
    
    2005Gerard Bertholon
    
    
    46
    
    
    Corporate Chef and Vice President of Sales
    
    
    2002
      ITEM 1A. RISK FACTORS
  9




---



##### 



The Companys foreign operations subject it to a number of risks.
  Increases in interest rates may have an adverse impact on the Companys profitability.
  Fluctuation in the availability and price of raw materials may increase the Companys operating
costs, resulting in an adverse impact on the Companys margins.
  The Company does not enter into long term contracts with its customers, and the loss of one or more
significant customers could have a material adverse impact on the Companys business, results of
operations and financial condition.
  The Company is exposed to a number of risks associated with food production, any of which could
result in a material adverse effect on the Company.
  The markets in which the Company competes are highly competitive.
  10




---



##### 



The Company depends on common carriers to deliver its products, and the disruption of such delivery
channels could have an adverse impact on the Companys ability to deliver its products to market.
  As a food company, we are required to comply with many federal, state and local laws and
regulations, and the failure to comply with applicable laws could have a material adverse impact on
the Companys reputation and results of operations.
  Our future financial performance is subject to a number of additional uncertainties, any of which
could have a material adverse impact on the Companys business, results of operations and financial
condition.
  The market price of the Companys common stock may fluctuate significantly for reasons beyond the
Companys control and potentially unrelated to the Companys performance.
  
    
    price and volume fluctuations in the stock market from time to time, which are often
unrelated to the operating performance of particular companies;
    
    significant volatility in the market price and trading volume of shares of food
companies, which is not necessarily related to the operating performance of these
companies;
    
    changes in regulatory policies;
    
    changes in the Companys earnings or variations in the Companys operating results;
    
    any shortfall in the Companys revenue or net income or any increase in losses from
levels expected by securities analysts;
    
    departure of key personnel of the Company;
    
    operating performance of companies comparable to the Company;
    
    general economic trends and other external factors;
    
    loss of one or more of the Companys significant customers; and
    
    loss of a major funding source.
  The market for the Companys common stock has recently been characterized by relatively low trading
volume, and high trading volume could result in a significant decline in the Companys stock price.
  11




---



##### 



Members of the Vilgrain family and their affiliates control a majority of the Companys common
stock and are able to exert significant control over the Companys future direction.
  ITEM 2. PROPERTIES
  ITEM 3. LEGAL PROCEEDINGS
     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 12




---



##### 



PART II
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
   Year ended June 24, 2006
    
    High
    
    LowFirst Quarter
    
    $
    8.70
    
    
    $
    4.78Second Quarter
    
    
    9.80
    
    
    
    6.80Third Quarter
    
    
    11.60
    
    
    
    7.85Fourth Quarter
    
    
    9.47
    
    
    
    4.50
 Year ended June 25, 2005
    
    High
    
    LowThird Quarter (beginning February 24, 2005)
    
    $
    5.00
    
    
    $
    4.25Fourth Quarter
    
    
    8.05
    
    
    
    4.60
  Year ended June 25, 2005
    
    High
    
    LowFirst Quarter
    
    $
    1.88
    
    
    $
    1.60Second Quarter
    
    
    3.40
    
    
    
    1.70Third Quarter (prior to February 24, 2005)
    
    
    4.45
    
    
    
    3.00
 Year ended June 26, 2004
    
    High
    
    LowFirst Quarter
    
    $
    .78
    
    
    $
    .51Second Quarter
    
    
    1.40
    
    
    
    .60Third Quarter
    
    
    1.35
    
    
    
    .95Fourth Quarter
    
    
    1.85
    
    
    
    1.05
  Dividends
  Recent Sales of Unregistered Securities
  Securities Authorized for Issuance Under Equity Compensation Plans
  13




---



##### 



ITEM 6. SELECTED FINANCIAL DATA
  FIVE YEAR SUMMARY
 2006
    
    2005
    
    2004
    
    2003
    
    2002Net Sales
    
    $
    64,114
    
    
    $
    46,246
    
    
    $
    35,335
    
    
    $
    26,626
    
    
    $
    27,361Income (Loss) from continuing operations before
discontinued operation (1)
    
    
    3,654
    
    
    
    1,886
    
    
    
    (343
    )
    
    
    (3,359
    )
    
    
    (6,008
    )Loss from discontinued operations
    
    
    
    
    
    
    (177
    )
    
    
    (661
    )
    
    
    (733
    )
    
    
    (19
    )Net income (loss) (2)
    
    
    3,654
    
    
    
    1,709
    
    
    
    (1,004
    )
    
    
    (4,092
    )
    
    
    (6,027
    )Income (Loss) from continuing operations per share  basic
    
    
    0.22
    
    
    
    0.12
    
    
    
    (0.02
    )
    
    
    (0.21
    )
    
    
    (0.38
    )Loss from discontinued operations per share  basic
    
    
    
    
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    (0.05
    )
    
    
    Net income (loss) per share  basic
    
    
    0.22
    
    
    
    0.11
    
    
    
    (0.06
    )
    
    
    (0.26
    )
    
    
    (0.38
    )Total assets
    
    
    26,766
    
    
    
    18,986
    
    
    
    17,710
    
    
    
    16,428
    
    
    
    18,197Long term debt, including current portion
    
    
    4,677
    
    
    
    3,277
    
    
    
    1,903
    
    
    
    798
    
    
    
    446Stockholders Equity
    
    
    13,255
    
    
    
    8,651
    
    
    
    6,572
    
    
    
    7,466
    
    
    
    11,156
 
 (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. ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   (a)
    
    a significant change of the Companys relationship with its customers in channels where
concentration of sales to certain number of customers exists;(b)
    
    the impact on the Companys profitability from the fluctuations in the availability and cost
of raw materials; and(c)
    
    the impact on the Companys reported earnings from fluctuations in foreign currency exchange
rates, particularly the Euro.
  CRITICAL ACCOUNTING ESTIMATES
  14




---



##### 



RECENT ACCOUNTING PRONOUCEMENTS
   15




---



##### 



RESULTS OF OPERATIONS
 NET SALES
  % Change2006
    
    2005Year Ended
    
    vs
    
    vsJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004
    
    2005
    
    2004U.S.
    
    $
    44,470,000
    
    
    $
    29,843,000
    
    
    $
    21,641,000
    
    
    
    49.0
    %
    
    
    37.9
    %France
    
    
    19,644,000
    
    
    
    16,403,000
    
    
    
    13,694,000
    
    
    
    19.8
    %
    
    
    19.8
    %Total Net Sales
    
    $
    64,114,000
    
    
    $
    46,246,000
    
    
    $
    35,335,000
    
    
    
    38.6
    %
    
    
    30.9
    %
    %Change2006
    
    2005Year Ended
    
    vs
    
    vsJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004
    
    2005
    
    2004On Board Services
    
    $
    17,483,000
    
    
    $
    16,459,000
    
    
    $
    12,734,000
    
    
    
    6.2
    %
    
    
    29.3
    %Foodservice
    
    
    13,236,000
    
    
    
    11,370,000
    
    
    
    9,932,000
    
    
    
    16.4
    %
    
    
    14.5
    %Retail
    
    
    15,934,000
    
    
    
    10,162,000
    
    
    
    9,991,000
    
    
    
    56.8
    %
    
    
    1.7
    %Military
    
    
    13,868,000
    
    
    
    6,222,000
    
    
    
    1,047,000
    
    
    
    122.9
    %
    
    
    494.3
    %National Restaurant
Chains / New
Business
    
    
    3,593,000
    
    
    
    2,033,000
    
    
    
    1,631,000
    
    
    
    76.7
    %
    
    
    24.6
    %Total
    
    $
    64,114,000
    
    
    $
    46,246,000
    
    
    $
    35,335,000
    
    
    
    38.6
    %
    
    
    30.9
    %
  16




---



##### 



%Change2006
    
    2005Year Ended
    
    
    
    
    
    vs
    
    vsJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004
    
    2005
    
    2004On Board Services
    
    $
    8,616,000
    
    
    $
    10,866,000
    
    
    $
    9,558,000
    
    
    
    (20.7
    %)
    
    
    13.7
    %Foodservice
    
    
    8,473,000
    
    
    
    6,198,000
    
    
    
    5,842,000
    
    
    
    36.7
    %
    
    
    6.1
    %Retail
    
    
    9,970,000
    
    
    
    4,580,000
    
    
    
    3,595,000
    
    
    
    117.7
    %
    
    
    27.4
    %Military
    
    
    13,868,000
    
    
    
    6,222,000
    
    
    
    1,047,000
    
    
    
    122.9
    %
    
    
    494.3
    %National Restaurant Chains
    
    
    3,543,000
    
    
    
    1,977,000
    
    
    
    1,599,000
    
    
    
    79.2
    %
    
    
    23.6
    %Total
    
    $
    44,470,000
    
    
    $
    29,843,000
    
    
    $
    21,641,000
    
    
    
    49.0
    %
    
    
    37.9
    %
   %Change2006
    
    2005Year Ended
    
    vs
    
    vsJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004
    
    2005
    
    2004On Board Services
    
    $
    8,867,000
    
    
    $
    5,593,000
    
    
    $
    3,176,000
    
    
    
    58.5
    %
    
    
    76.1
    %Foodservice
    
    
    4,763,000
    
    
    
    5,172,000
    
    
    
    4,090,000
    
    
    
    (7.9
    %)
    
    
    26.5
    %Retail
    
    
    5,964,000
    
    
    
    5,582,000
    
    
    
    6,396,000
    
    
    
    6.8
    %
    
    
    (12.7
    %)New Business
    
    
    50,000
    
    
    
    56,000
    
    
    
    32,000
    
    
    
    (10.7
    %)
    
    
    75.0
    %Total
    
    $
    19,644,000
    
    
    $
    16,403,000
    
    
    $
    13,694,000
    
    
    
    19.8
    %
    
    
    19.8
    %
  GROSS MARGIN
  Year EndedJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004Net sales
    
    $
    64,114,000
    
    
    $
    46,246,000
    
    
    $
    35,335,000Gross margin
    
    $
    16,112,000
    
    
    $
    11,374,000
    
    
    $
    7,728,000Gross margin percentage
    
    
    25.1
    %
    
    
    24.6
    %
    
    
    21.9
    %
 17




---



##### 



SELLING AND ADMINISTRATIVE EXPENSES
  %Change2006
    
    2005Year Ended
    
    vs
    
    vsJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004
    
    2005
    
    2004U.S.
    
    $
    9,203,000
    
    
    $
    6,670,000
    
    
    $
    6,013,000
    
    
    
    38.0
    %
    
    
    10.9
    %France
    
    
    3,090,000
    
    
    
    2,585,000
    
    
    
    1,804,000
    
    
    
    19.5
    %
    
    
    43.3
    %Total selling and administrative expenses
    
    $
    12,293,000
    
    
    $
    9,255,000
    
    
    $
    7,817,000
    
    
    
    32.8
    %
    
    
    18.4
    %
  DEPRECIATION AND AMORTIZATION
  NON-OPERATING INCOME AND EXPENSE
  INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS
  Year EndedJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004Income (Loss) from
continuing
operations before
discontinued
operations
    
    $
    3,654,000
    
    
    $
    1,886,000
    
    
    $
    (343,000
    )
 18




---



##### 



DISCONTINUED OPERATIONS
   NET INCOME (LOSS)
  Year EndedJune 24, 2006
    
    June 25, 2005
    
    June 26, 2004Net income (loss)
    
    $
    3,654,000
    
    
    $
    1,709,000
    
    
    $
    (1,004,000
    )
   Year EndedJune 24, 2006
    
    
    June 25, 2005
    
    
    June 26, 2004U.S.
    
    $
    3,277,000
    
    
    $
    1,677,000
    
    
    $
    (702,000
    )France
    
    
    377,000
    
    
    
    372,000
    
    
    
    359,000Norway (discontinued operations)
    
    
    
    
    
    
    (340,000
    )
    
    
    (661,000
    )Total net income (loss)
    
    $
    3,654,000
    
    
    $
    1,709,000
    
    
    $
    (1,004,000
    )
   19




---



##### 



IMPACT OF INFLATION AND THE ECONOMY
  LIQUIDITY AND CAPITAL RESOURCES
     
 
  
   
 20




---



##### 




 
  
 CONTRACTUAL OBLIGATIONS AND COMMERICAL COMMITMENTS
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    1 - 3 years
    
    
    4 - 5 years
    
    
    5 yearsDebt payable  current
    
    $
    1,347,000
    
    
    $
    1,347,000
    
    
    $
    
    
    
    $
    
    
    
    $
    Debt payable  long term
    
    
    3,312,000
    
    
    
    
    
    
    
    770,000
    
    
    
    796,000
    
    
    
    1,746,000Asset retirement obligation
    
    
    398,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    398,000Capital leases
    
    
    18,000
    
    
    
    9,000
    
    
    
    9,000
    
    
    
    
    
    
    
    Operating leases
    
    
    4,632,000
    
    
    
    654,000
    
    
    
    1,116,000
    
    
    
    1,102,000
    
    
    
    1,760,000Interest
    
    
    815,000
    
    
    
    155,000
    
    
    
    249,000
    
    
    
    162,000
    
    
    
    249,000Total
    
    $
    10,522,000
    
    
    $
    2,165,000
    
    
    $
    2,144,000
    
    
    $
    2,060,000
    
    
    $
    4,153,000
  FUTURE PROSPECTS
   21




---



##### 



On Board Services
  Foodservice
  Retail
  Military
 1 2
 National Restaurant Chains
  22




---



##### 



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Interest Rate Exposure:
  Foreign Currency Exchange Rate Exposure:
  ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  ITEM 9A. CONTROLS AND PROCEDURES
    ITEM 9B. OTHER INFORMATION
  23




---



##### 



PART III
  ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  ITEM 11. EXECUTIVE COMPENSATION
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  24




---



##### 



PART IV
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Page(1) Financial StatementsReport of Independent Registered Public Accounting Firm
BDO Seidman, LLP as of and for the year ended June 24,
2006 and June 25, 2005
    
    
    29Report of Independent Registered Public Accounting Firm
Grant Thornton LLP as of June 26, 2004
    
    
    30Consolidated Balance Sheets  June 24, 2006 and June 25,
2005
    
    
    31Consolidated Statements of Operations  Fiscal Years
Ended June 24, 2006, June 25, 2005 and June 26, 2004
    
    
    32Consolidated Statements of Changes in Stockholders
Equity  Fiscal Years Ended June 24, 2006, June 25, 2005
and June 26, 2004
    
    
    33Consolidated Statements of Cash Flows  Fiscal Years
Ended June 24, 2006, June 25, 2005 and June 26, 2004
    
    
    34Notes to Consolidated Financial Statements
    
    
    35(2) Financial Statement Schedule:Schedule II  Valuation and Qualifying Accounts and Reserves
    
    
    48
   ExhibitNumber
    
    Description3.1
    
    Restated Certificate of Incorporation, as amended. (1)3.2
    
    Certificate of Amendment of Restated Certificate of Incorporation. (2)3.3
    
    By-laws. (3)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. (4)10.53*
    
    The Companys 1992 Stock Option Plan. (5)10.54*
    
    The Companys 1999 Stock Option Plan. (5)10.55*
    
    Employment Agreement of Y. Tristan Kuo dated December 15, 2003. (6)10.56*
    
    Employment Agreement of Thomas L. Gregg dated January 1, 2004. (6)10.59
    
    Credit Agreement with Bank of Charles Town adopted June 25, 2004. (6)
 25




---



##### 



ExhibitNumber
    
    Description10.60
    
    Modification and Increase to Deed of Trust and Other Loan Documents dated November 30, 2005 with
Bank of Charles Town. (7)10.61
    
    Loan Contract dated April 19, 2006 with Credit Industriel de Normandie. (8)10.62
    
    Loan Contract dated May 23, 2006 with BNP Paribas. (9)10.63
    
    Lease and Lease Addendum No. 1 to Lease with Duke Shirley LLC, dated June 7, 2006. (10)14.1
    
    Code of Ethics.21.1
    
    Subsidiaries of the Company. (2)23.1
    
    Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm.23.2
    
    Consent of BDO Seidman LLP, Independent Registered Public Accounting Firm.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 
 *
    
    denotes management contract, compensatory plan or arrangement. (1)
    
    Incorporated by reference to exhibit 3-A of the Registrants Form 10-K/A for the year ended June 27, 1992, filed with the SEC on April 2, 1993.(2)
    
    Incorporated by reference to exhibit 3.2 of the Registrants Form 8-A filed with the SEC on February 22, 2005.(3)
    
    Incorporated by reference to exhibit 3-B of the Registrants Form 10-K/A for the year ended June 27, 1992, filed with the SEC on April 2, 1993.(4)
    
    Incorporated by reference to an identically numbered exhibit to the Registrants Annual Report on Form 10-K for the year ended June 29, 1991.(5)
    
    Incorporated by reference from the Registrants two Registration Statements on Form S-8, dated April 5, 1993.(6)
    
    Incorporated by reference to exhibit 10.55 of the Registrants Form 10-K for the year ended June 26, 2004, filed with the SEC on September 24, 2004.(7)
    
    Incorporated by reference to exhibit 10.60 of the Registrants Form 8-K filed with the SEC on December 30, 2005.(8)
    
    Incorporated by reference to exhibit 10.61 of the Registrants Form 8-K filed with the SEC on April 25, 2006.(9)
    
    Incorporated by reference to exhibit 10.62 of the Registrants Form 8-K filed with the SEC on May 30, 2006.(10)
    
    Incorporated by reference to exhibit 10.63 of the Registrants Form 8-K filed with the SEC on June 13, 2006.
     26




---



##### 



SIGNATURES
  CUISINE SOLUTIONS, INC.(Registrant)By:
    
    /s/ Stanislas VilgrainStanislas VilgrainChief Executive Officer(Principal Executive Officer)
  Signature
    
    Title
    
    Date/s/ Jean-Louis Vilgrain
  Jean-Louis Vilgrain
    
    Chairman of the Board
    
    September 22, 2006/s/ Stanislas Vilgrain
  Stanislas Vilgrain
    
    Chief Executive Officer
(Principal Executive Officer)
    
    September 22, 2006/s/ Sebastien Vilgrain
  Sebastien Vilgrain
    
    Director
    
    September 22, 2006/s/ Charles McGettigan
  Charles McGettigan
    
    Director
    
    September 22, 2006/s/ Robert van Roijen
  Robert van Roijen
    
    Director
    
    September 22, 2006/s/ Hugues Prince
  Hugues Prince
    
    Director
    
    September 22, 2006/s/ John D. Firestone

  John D. Firestone
    
    Director
    
    September 22, 2006/s/ Robert Herman
  Robert Herman
    
    Director
    
    September 22, 2006/s/ Yuyun Tristan Kuo
  Yuyun Tristan Kuo
    
    Chief Financial Officer, Treasurer
and Corporate Secretary
(Principal Financial and
Accounting Officer)
    
    September 22, 2006
 27




---



##### 



Report of Independent Registered Public Accounting Firm
 
   ,
  /s/ BDO Seidman, LLPBDO Seidman, LLP
 
 28




---



##### 



Report of Independent Registered Public Accounting Firm
 The Board of Directors and Stockholders
CUISINE SOLUTIONS, INC.:
    /s/ Grant Thornton LLP
 
 29




---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
 June 24, 2006
    
    
    June 25, 2005ASSETSCurrent AssetsCash and cash equivalents
    
    $
    2,154,000
    
    
    $
    2,171,000Trade accounts receivable, net (Note 2)
    
    
    5,360,000
    
    
    
    3,758,000Inventory, net (Note 3)
    
    
    9,461,000
    
    
    
    6,929,000Prepaid expenses
    
    
    373,000
    
    
    
    344,000Accounts receivable, related party
    
    
    25,000
    
    
    
    94,000Other current assets
    
    
    616,000
    
    
    
    255,000Assets from discontinued operations (Note 6)
    
    
    6,000
    
    
    
    39,000TOTAL CURRENT ASSETS
    
    
    17,995,000
    
    
    
    13,590,000Investments, non-current (Note 5)
    
    
    375,000
    
    
    
    1,465,000Fixed assets, net (Note 4)
    
    
    8,321,000
    
    
    
    3,885,000Restricted cash (Note 12)
    
    
    5,000
    
    
    
    Other assets
    
    
    70,000
    
    
    
    46,000TOTAL ASSETS
    
    $
    26,766,000
    
    
    $
    18,986,000LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesLine-of-credit (Note 7)
    
    $
    1,000,000
    
    
    $
    1,774,000Current portion of long-term debt (Note 7)
    
    
    356,000
    
    
    
    422,000Accounts payable and accrued expenses
    
    
    5,831,000
    
    
    
    4,227,000Accrued payroll and related liabilities
    
    
    2,455,000
    
    
    
    1,631,000Liabilities from discontinued operations (Note 6)
    
    
    150,000
    
    
    
    1,200,000TOTAL CURRENT LIABILITIES
    
    
    9,792,000
    
    
    
    9,254,000Long-term debt, less current portion (Note 7)
    
    
    3,321,000
    
    
    
    1,081,000Asset retirement obligation (Note 12)
    
    
    398,000
    
    
    
    TOTAL LIABILITIES
    
    
    13,511,000
    
    
    
    10,335,000Commitments and Contingencies
    
    
    
    
    
    
    Stockholders equityCommon stock  $.01 par value, 20,000,000 shares authorized,
16,439,191 and 16,073,288 shares issued and outstanding
at June 24, 2006 and June 25, 2005, respectively
    
    
    165,000
    
    
    
    161,000Class B Stock  $.01 par value, 175,000 shares authorized,
none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    27,516,000
    
    
    
    26,754,000Accumulated deficit
    
    
    (15,127,000
    )
    
    
    (18,781,000
    )Accumulated Other Comprehensive IncomeUnrealized (loss) gain on debt and equity investments
    
    
    
    
    
    
    (7,000
    )Cumulative translation adjustment
    
    
    701,000
    
    
    
    524,000TOTAL STOCKHOLDERS EQUITY
    
    
    13,255,000
    
    
    
    8,651,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    26,766,000
    
    
    $
    18,986,000
  30




---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 Year EndedJune 24, 2006
    
    
    June 25, 2005
    
    
    June 26, 2004Net sales
    
    $
    64,114,000
    
    
    $
    46,246,000
    
    
    $
    35,335,000Cost of goods sold
    
    
    48,002,000
    
    
    
    34,872,000
    
    
    
    27,607,000Gross margin
    
    
    16,112,000
    
    
    
    11,374,000
    
    
    
    7,728,000Selling and administrative expense
    
    
    12,293,000
    
    
    
    9,255,000
    
    
    
    7,817,000Depreciation and amortization
    
    
    162,000
    
    
    
    175,000
    
    
    
    170,000Other operating income
    
    
    (67,000
    )
    
    
    (60,000
    )
    
    
    (4,000
    )Income (Loss) from continuing operations
    
    
    3,724,000
    
    
    
    2,004,000
    
    
    
    (255,000
    )Non operating income (expense)Investment income
    
    
    57,000
    
    
    
    64,000
    
    
    
    66,000Interest expense
    
    
    (122,000
    )
    
    
    (168,000
    )
    
    
    (73,000
    )(Loss) gain on sale of investment
    
    
    (49,000
    )
    
    
    
    
    
    
    3,000Other income (expense), net
    
    
    64,000
    
    
    
    5,000
    
    
    
    (66,000
    )Total non-operating income (expense)
    
    
    (50,000
    )
    
    
    (99,000
    )
    
    
    (70,000
    )Income (Loss) before income taxes
    
    
    3,674,000
    
    
    
    1,905,000
    
    
    
    (325,000
    )Provision for income tax expense (Note 9)
    
    
    (20,000
    )
    
    
    (19,000
    )
    
    
    (18,000
    )Income (Loss) from continuing operations before discontinued operations
    
    
    3,654,000
    
    
    
    1,886,000
    
    
    
    (343,000
    )Loss from discontinued operations (Note 6)Loss from operations of Cuisine Solutions Norway
    
    
    
    
    
    
    (67,000
    )
    
    
    (661,000
    )Loss from translation adjustment
    
    
    
    
    
    
    (110,000
    )
    
    
    Net loss from discontinued operations
    
    
    
    
    
    
    (177,000
    )
    
    
    (661,000
    )NET INCOME (LOSS)
    
    $
    3,654,000
    
    
    $
    1,709,000
    
    
    $
    (1,004,000
    )Basic and diluted income (loss) per common share:Income (Loss) from continuing operations before discontinued operations
(after income taxes) per common share-basic
    
    $
    0.22
    
    
    $
    0.12
    
    
    $
    (0.02
    )Income (Loss) from continuing operations before discontinued operations
(after income taxes) per common share-diluted
    
    $
    0.20
    
    
    $
    0.11
    
    
    $
    (0.02
    )Loss from discontinued operations per common share-basic and diluted
    
    $
    
    
    
    $
    (0.01
    )
    
    $
    (0.04
    )Net income (loss) per common share-basic
    
    $
    0.22
    
    
    $
    0.11
    
    
    $
    (0.06
    )Net income (loss) per common share-diluted
    
    $
    0.20
    
    
    $
    0.10
    
    
    $
    (0.06
    )Weighted average shares outstanding-basic
    
    
    16,249,566
    
    
    
    15,927,524
    
    
    
    15,827,755Common stock equivalents
    
    
    1,922,799
    
    
    
    1,610,746
    
    
    
    Weighted average shares outstanding-diluted
    
    
    18,172,365
    
    
    
    17,538,270
    
    
    
    15,827,755
  31




---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 UnrealizedRetained
    
    
    GainsAdditional
    
    
    Earnings
    
    
    (Losses) on Debt
    
    
    Cumulative
    
    
    TotalCommon
    
    
    Paid-In
    
    
    (Accumulated
    
    
    and Equity
    
    
    Translation
    
    
    StockholdersStock
    
    
    Capital
    
    
    Deficit)
    
    
    Investments
    
    
    Adjustment
    
    
    EquityBalance, June 28, 2003
    
    $
    159,000
    
    
    $
    26,284,000
    
    
    $
    (19,486,000
    )
    
    $
    59,000
    
    
    $
    450,000
    
    
    $
    7,466,000Exercise of common stock options
    
    
    
    
    
    
    7,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,000Stock-based compensation
    
    
    
    
    
    
    89,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,0002004 Net loss
    
    
    
    
    
    
    
    
    
    
    (1,004,000
    )
    
    
    
    
    
    
    
    
    
    
    (1,004,000
    )Other Comprehensive IncomeUnrealized losses on debt
and equity investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,000
    )
    
    
    
    
    
    
    (42,000
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,000
    
    
    
    56,000Other Comprehensive Income/(Loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,000Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (990,000
    )Balance, June 26, 2004
    
    $
    159,000
    
    
    $
    26,380,000
    
    
    $
    (20,490,000
    )
    
    $
    17,000
    
    
    $
    506,000
    
    
    $
    6,572,000Exercise of common stock options
    
    
    2,000
    
    
    
    208,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,000Stock-based compensation
    
    
    
    
    
    
    166,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,0002005 Net income
    
    
    
    
    
    
    
    
    
    
    1,709,000
    
    
    
    
    
    
    
    
    
    
    
    1,709,000Other Comprehensive IncomeUnrealized losses on debt
and equity investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,000
    )
    
    
    
    
    
    
    (24,000
    )Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,000
    
    
    
    18,000Other Comprehensive Income/(Loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,000
    )Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,703,000Balance, June 25, 2005
    
    $
    161,000
    
    
    $
    26,754,000
    
    
    $
    (18,781,000
    )
    
    $
    (7,000
    )
    
    $
    524,000
    
    
    $
    8,651,000Exercise of common stock options
    
    
    4,000
    
    
    
    411,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    415,000Stock-based compensation
    
    
    
    
    
    
    351,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351,0002006 Net income
    
    
    
    
    
    
    
    
    
    
    3,654,000
    
    
    
    
    
    
    
    
    
    
    
    3,654,000Other Comprehensive IncomeUnrealized gains on debt
and equity investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,000
    
    
    
    
    
    
    
    7,000Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177,000
    
    
    
    177,000Other Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184,000Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,838,000Balance, June 24, 2006
    
    $
    165,000
    
    
    $
    27,516,000
    
    
    $
    (15,127,000
    )
    
    $
    
    
    
    $
    701,000
    
    
    $
    13,255,000
  32




---



##### 



CUISINE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year EndedJune 24, 2006
    
    
    June 25, 2005
    
    
    June 26, 2004CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    3,654,000
    
    
    $
    1,709,000
    
    
    $
    (1,004,000
    )Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activitiesDepreciation and amortization
    
    
    979,000
    
    
    
    901,000
    
    
    
    838,000Allowance for doubtful accounts
    
    
    173,000
    
    
    
    441,000
    
    
    
    301,000Inventory obsolescence reserve
    
    
    (50,000
    )
    
    
    317,000
    
    
    
    106,000Loss (gain) on sale of investments
    
    
    49,000
    
    
    
    
    
    
    
    (3,000
    )Stock-based compensation
    
    
    351,000
    
    
    
    166,000
    
    
    
    89,000Gain on disposal of assets of discontinued operations
    
    
    
    
    
    
    (577,000
    )
    
    
    Changes in assets and liabilities, net of effects of non-cash transactions:Increase in trade accounts receivable
    
    
    (1,775,000
    )
    
    
    (445,000
    )
    
    
    (875,000
    )Increase in inventory
    
    
    (2,482,000
    )
    
    
    (1,826,000
    )
    
    
    (1,887,000
    )(Increase) decrease in prepaid expenses
    
    
    (29,000
    )
    
    
    (204,000
    )
    
    
    310,000Decrease (increase) in account receivables, related parties
    
    
    69,000
    
    
    
    (36,000
    )
    
    
    (26,000
    )(Decrease) increase in other assets
    
    
    (385,000
    )
    
    
    11,000
    
    
    
    (70,000
    )Increase (decrease) in accounts payable and accrued expenses
    
    
    1,604,000
    
    
    
    (33,000
    )
    
    
    845,000Increase in accrued payroll and related liabilities
    
    
    824,000
    
    
    
    291,000
    
    
    
    167,000Changes in assets and liabilities of discontinued operations
    
    
    14,000
    
    
    
    (300,000
    )
    
    
    937,000Net cash provided by (used in) operating activities
    
    
    2,996,000
    
    
    
    415,000
    
    
    
    (272,000
    )CASH FLOWS FROM INVESTING ACTIVITIESIncrease in restricted cash
    
    
    (5,000
    )
    
    
    
    
    
    
    Proceeds from investments
    
    
    1,048,000
    
    
    
    
    
    
    
    178,000Capital expenditures
    
    
    (5,017,000
    )
    
    
    (1,241,000
    )
    
    
    (546,000
    )Net cash used in investing activities
    
    
    (3,974,000
    )
    
    
    (1,241,000
    )
    
    
    (368,000
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of common stock
    
    
    415,000
    
    
    
    210,000
    
    
    
    7,000Net (repayment) borrowings on line-of-credit
    
    
    (774,000
    )
    
    
    1,774,000
    
    
    
    Proceeds from debts
    
    
    3,154,000
    
    
    
    295,000
    
    
    
    1,294,000Repayment of debts
    
    
    (980,000
    )
    
    
    (695,000
    )
    
    
    (189,000
    )Repayment of note payable from discontinued operations
    
    
    (1,031,000
    )
    
    
    
    
    
    
    Net cash provided by financing activities
    
    
    784,000
    
    
    
    1,584,000
    
    
    
    1,112,000Net (decrease) increase in cash and cash equivalents
    
    
    (194,000
    )
    
    
    758,000
    
    
    
    472,000Effect of foreign exchange rate changes on cash and cash equivalents
    
    
    177,000
    
    
    
    18,000
    
    
    
    56,000Cash and cash equivalents, beginning of year
    
    
    2,171,000
    
    
    
    1,395,000
    
    
    
    867,000CASH and CASH EQUIVALENTS, END OF YEAR
    
    $
    2,154,000
    
    
    $
    2,171,000
    
    
    $
    1,395,000SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATIONCash paid during the year for interest
    
    $
    189,000
    
    
    $
    188,000
    
    
    $
    51,000Cash paid during the year for income taxes
    
    $
    20,000
    
    
    $
    19,000
    
    
    $
    18,000Addition to fixed assets due to recognition of asset retirement obligation
    
    $
    398,000
    
    
    $
    
    
    
    $
    
  33




---



##### 



CUISINE SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 NATURE OF OPERATIONS
  PRINCIPLES OF CONSOLIDATION
   FISCAL PERIODS
  USE OF ESTIMATES
  REVENUE RECOGNITION
  SEGMENT REPORTING
  CASH AND CASH EQUIVALENTS
  INVESTMENTS
  34




---



##### 



INVENTORY
   FIXED ASSETS
    WEB SITE DEVELOPMENT COSTS
 The Company capitalizes web site development costs in accordance with EITF 00-02 Accounting for
Web Site Development Costs and AICPA SOP No. 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use, as the Company plans to use the web site internally. 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. In fiscal 2004, the company modified its website. Approximately
$23,000 was capitalized as a result of such modification and is being amortized over 3 years.  SHIPPING AND HANDLING COSTS
  RESEARCH AND DEVELOPMENT COSTS
  INCOME AND OTHER TAXES
  IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
  35




---



##### 



ACCOUNTING FOR STOCK-BASED COMPENSATION
      June 25, 2005
    
    June 26, 2004Net income (loss) applicable to common shareholders
    
    $
    1,709,000
    
    
    $
    (1,004,000
    )Add: Stock-based employee compensation cost
included in reported net income (loss)
    
    $
    166,000
    
    
    $
    89,000Less: Total stock-based compensation expense determined under
the fair value method
    
    $
    (716,000
    )
    
    $
    (72,000
    )Pro forma net income (loss)
    
    $
    1,159,000
    
    
    $
    (987,000
    )Net Income (loss) per common share:Basic  as reported
    
    $
    0.11
    
    
    $
    (0.06
    )Diluted  as reported
    
    $
    0.10
    
    
    $
    (0.06
    )Basic  pro forma
    
    $
    0.07
    
    
    $
    (0.06
    )Diluted  pro forma
    
    $
    0.07
    
    
    $
    (0.06
    )Weighted average common shares outstandingbasic
    
    
    15,927,524
    
    
    
    15,827,755Common stock equivalents
    
    
    1,610,746
    
    
    
    Weighted average common shares outstandingdiluted
    
    
    17,538,270
    
    
    
    15,827,755
 36




---



##### 



EARNINGS PER SHARE
  FOREIGN CURRENCY TRANSLATION
  COMPREHENSIVE INCOME
  FAIR VALUE OF FINANCIAL INSTRUMENTS
  RECLASSIFICATIONS
  RECENT ACCOUNTING PRONOUNCEMENTS
    37




---



##### 



NOTE 2
 ACCOUNTS RECEIVABLE
  June 24, 2006
    
    
    June 25, 2005Trade Accounts Receivable
    
    $
    6,022,000
    
    
    $
    4,251,000Allowance for Doubtful Accounts
    
    
    (662,000
    )
    
    
    (493,000
    )Trade Accounts Receivable, net
    
    $
    5,360,000
    
    
    $
    3,758,000
  NOTE 3  INVENTORY
  June 24, 2006
    
    
    June 25, 2005Raw Material
    
    $
    3,371,000
    
    
    $
    1,935,000Frozen Product & Other Finished Goods
    
    
    5,297,000
    
    
    
    4,337,000Packaging
    
    
    1,074,000
    
    
    
    988,0009,742,000
    
    
    
    7,260,000Less Obsolescence Reserve
    
    
    (281,000
    )
    
    
    (331,000
    )$
    9,461,000
    
    
    $
    6,929,000
 NOTE 4
 FIXED ASSETS
  June 24, 2006
    
    
    June 25, 2005Land
    
    $
    450,000
    
    
    $
    71,000Buildings
    
    
    4,541,000
    
    
    
    2,571,000Machinery & equipment
    
    
    13,564,000
    
    
    
    10,892,000Machinery & equipment under capital lease
    
    
    34,000
    
    
    
    589,000Leasehold improvements
    
    
    3,095,000
    
    
    
    2,384,000Furniture & fixtures
    
    
    274,000
    
    
    
    241,000Computer software
    
    
    1,127,000
    
    
    
    1,090,000Construction in progress
    
    
    482,000
    
    
    
    391,00023,567,000
    
    
    
    18,229,000Less: Accumulated depreciation and amortization
    
    
    (15,232,000
    )
    
    
    (14,074,000
    )Less: Accumulated amortization on capital leases
    
    
    (14,000
    )
    
    
    (270,000
    )$
    8,321,000
    
    
    $
    3,885,000
 38




---



##### 



NOTE 5  INVESTMENTS
  NOTE 6
 DISCONTINUED OPERATIONS
   June 24, 2006
    
    
    June 25, 2005Assets from discontinued operations:Cash and cash equivalents
    
    $
    
    
    
    $
    36,000Other assets
    
    
    6,000
    
    
    
    3,000Total assets from discontinued operations
    
    $
    6,000
    
    
    $
    39,000Liabilities from discontinued operations:Accounts payable and accrued expenses
    
    $
    150,000
    
    
    $
    169,000Note payable
    
    
    
    
    
    
    1,031,000Total liabilities from discontinued operations
    
    $
    150,000
    
    
    $
    1,200,000
    Year endedJune 24, 2006
    
    
    June 25, 2005
    
    
    June 26, 2004Net Sales
    
    $
    
    
    
    $
    32,000
    
    
    $
    1,386,000Expenses:Cost of goods sold
    
    
    
    
    
    
    127,000
    
    
    
    1,990,000Selling and administrative expenses
    
    
    
    
    
    
    1,000
    
    
    
    22,000Other operating expense
    
    
    
    
    
    
    463,000
    
    
    
    Interest expense
    
    
    
    
    
    
    86,000
    
    
    
    135,000Other income
    
    
    
    
    
    
    (1,000
    )
    
    
    (100,000
    )Loss from discontinued operations
    
    
    
    
    
    
    (644,000
    )
    
    
    (661,000
    )Gain from disposal of assets
    
    
    
    
    
    
    577,000
    
    
    
    Loss from translation adjustments
    
    
    
    
    
    
    (110,000
    )
    
    
    Net loss from discontinued operations
    
    $
    
    
    
    $
    (177,000
    )
    
    $
    (661,000
    )
 39




---



##### 



NOTE 7  DEBT
  2006 Principal
    
    
    2005 PrincipalLender
    
    Description
    
    Maturity
    
    Outstanding
    
    
    OutstandingNORBAIL
    
    Capital Lease
    
    November, 20, 2005
    
    $
    
    
    
    $
    33,000CDN
    
    Term Loan
    
    October 22, 2012
    
    
    167,000
    
    
    
    181,000BNP Paribas
    
    Term Loan
    
    March 6, 2008
    
    
    148,000
    
    
    
    210,000Emprunt CIN
    
    Term Loan
    
    June 15, 2008
    
    
    37,000
    
    
    
    53,000Emprunt CIN
    
    Term Loan
    
    June 20, 2010
    
    
    65,000
    
    
    
    77,000SG
    
    Term Loan
    
    November  28, 2012
    
    
    330,000
    
    
    
    BNP Paribas
    
    Term Loan
    
    June 12, 2019
    
    
    2,019,000
    
    
    
    Emprunt CIN
    
    Term Loan
    
    October 23, 2013
    
    
    125,000
    
    
    
    FIC
    
    Term Loan
    
    October 22, 2005
    
    
    
    
    
    
    231,000FIC
    
    Term Loan
    
    December 10, 2004
    
    
    
    
    
    
    FRC
    
    Term Loan
    
    November 10, 2006
    
    
    
    
    
    
    500,000BCT
    
    Line of credit
    
    November 1, 2006
    
    
    1,000,000
    
    
    
    1,774,000BCT
    
    Term Loan
    
    March 15, 2010
    
    
    156,000
    
    
    
    192,000BB&T
    
    Term Loan
    
    October 5, 2010
    
    
    612,000
    
    
    
    Volvo
    
    Capital Lease
    
    January 28, 2008
    
    
    8,000
    
    
    
    13,000Volkswagen
    
    Capital Lease
    
    September 18, 2008
    
    
    10,000
    
    
    
    13,000Total
    
    $
    4,677,000
    
    
    $
    3,277,000Less: current portion
    
    
    1,356,000
    
    
    
    2,196,000Non-current portion
    
    $
    3,321,000
    
    
    $
    1,081,000
        40




---



##### 



2007
    
    $
    1,356,0002008
    
    
    378,0002009
    
    
    401,0002010
    
    
    462,0002011
    
    
    334,000Thereafter
    
    
    1,746,000Total
    
    $
    4,677,000
 NOTE 8  STOCKHOLDERS EQUITY
  NOTE 9  INCOME TAXES
  Year EndedJune 24, 2006
    
    
    June 25, 2005
    
    
    June 26, 2004Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    20,000
    
    
    
    19,000
    
    
    
    18,000State
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    19,000
    
    
    
    18,000Deferred:Federal
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    
    
    
    
    
    
    
    
    State
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    $
    20,000
    
    
    $
    19,000
    
    
    $
    18,000
 41




---



##### 



Year EndedJune 24, 2006
    
    
    June 25, 2005
    
    
    June 26, 2004Federal tax expense (benefit) at statutory rates
    
    $
    1,114,000
    
    
    $
    581,000
    
    
    $
    (238,000
    )Income (loss) from foreign operations and investment
    
    
    151,000
    
    
    
    (584,000
    )
    
    
    (103,000
    )State income taxes, net
    
    
    14,000
    
    
    
    57,000
    
    
    
    (60,000
    )France minimum taxes
    
    
    20,000
    
    
    
    19,000
    
    
    
    18,000Credits
    
    
    
    
    
    
    (27,000
    )
    
    
    Period effect of change in valuation allowance
    
    
    (240,000
    )
    
    
    222,000
    
    
    
    387,000Permanent differences
    
    
    (1,036,000
    )
    
    
    (249,000
    )
    
    
    13,000Other, net
    
    
    (3,000
    )
    
    
    
    
    
    
    1,000Total
    
    $
    20,000
    
    
    $
    19,000
    
    
    $
    18,000
   Year EndedJune 24, 2006
    
    
    June 25, 2005Deferred tax assets:NOL  US
    
    $
    5,992,000
    
    
    $
    5,408,000NOL  Norway
    
    
    1,356,000
    
    
    
    1,356,000NOL  France
    
    
    415,000
    
    
    
    566,000Capital losses
    
    
    63,000
    
    
    
    63,000Foreign other
    
    
    74,000
    
    
    
    74,000Inventory adjustment
    
    
    121,000
    
    
    
    203,000Basis difference in investments
    
    
    793,000
    
    
    
    1,381,000Property and equipment
    
    
    249,000
    
    
    
    240,000Allowance for bad debts
    
    
    210,000
    
    
    
    146,000Stock options
    
    
    241,000
    
    
    
    AMT credit
    
    
    
    
    
    
    27,000Other
    
    
    191,000
    
    
    
    102,000Total deferred tax assets
    
    
    9,705,000
    
    
    
    9,566,000Less: Deferred tax liabilitiesWorthless
stock  Norway
    
    
    408,000
    
    
    
    Net deferred tax assets
    
    
    9,297,000
    
    
    
    9,566,000Less: Valuation allowance
    
    
    9,297,000
    
    
    
    9,566,000Net deferred tax
    
    $
    
    
    
    $
    
    42




---



##### 



NOTE 10  EMPLOYEE BENEFITS
      June 24, 2006
    
    June 25, 2005
    
    June 26, 2004Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    Risk-free interest rate
    
    
    3.9
    %
    
    
    4.2
    %
    
    
    4.5
    %Expected life (in
years)
    
    
    5
    
    
    
    6
    
    
    
    10Expected volatility
    
    
    179
    %
    
    
    251
    %
    
    
    96
    %
   Fiscal Year 2006
    
    
    Fiscal Year 2005
    
    
    Fiscal Year 2004Weighted- Average
    
    
    
    
    
    
    Weighted- Average
    
    
    
    
    
    
    Weighted- AverageOptions
    
    Shares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at beginning of the year
    
    
    2,795,968
    
    
    $
    1.02
    
    
    
    2,893,616
    
    
    $
    1.02
    
    
    
    1,914,500
    
    
    $
    1.11Granted
    
    
    18,034
    
    
    $
    0.01
    
    
    
    188,852
    
    
    $
    1.34
    
    
    
    1,089,616
    
    
    $
    0.89Exercised
    
    
    (365,903
    )
    
    $
    1.13
    
    
    
    (238,500
    )
    
    $
    0.88
    
    
    
    (10,000
    )
    
    $
    0.70Forfeited or expired
    
    
    
    
    
    
    
    
    
    
    (48,000
    )
    
    $
    2.98
    
    
    
    (100,500
    )
    
    $
    1.65Outstanding at end of the year
    
    
    2,448,099
    
    
    $
    0.99
    
    
    
    2,795,968
    
    
    $
    1.02
    
    
    
    2,893,616
    
    
    $
    1.01Exercisable at end of the year
    
    
    2,194,349
    
    
    $
    0.99
    
    
    
    2,252,218
    
    
    $
    1.04
    
    
    
    1,979,241
    
    
    $
    1.04
 43




---



##### 



Stock Options OutstandingNumber
    
    
    Weighted-Average
    
    
    
    
    
    
    AggregateOutstanding
    
    
    Remaining
    
    
    Weighted-Avg
    
    
    IntrinsicRange of Exercise Prices
    
    6/24/2006
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Value$0.01 to $0.24
    
    
    161,502
    
    
    
    8.00
    
    
    $
    0.01
    
    
    $
    381,383$0.25 to $0.6561
    
    
    85,250
    
    
    
    6.33
    
    
    $
    0.25
    
    
    $
    $0.6562 to $1.030
    
    
    1,224,000
    
    
    
    6.60
    
    
    $
    0.88
    
    
    $
    19,050$1.031 to $1.37
    
    
    518,997
    
    
    
    4.14
    
    
    $
    1.14
    
    
    $
    87,600$1.38 to $1.50
    
    
    338,350
    
    
    
    1.13
    
    
    $
    1.38
    
    
    $
    $1.51 to $2.00
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    $2.01 to $2.50
    
    
    120,000
    
    
    
    8.34
    
    
    $
    2.10
    
    
    $
    2,448,099
    
    
    
    5.45
    
    
    $
    0.99
    
    
    $
    488,033
 Stock Options ExercisableNumber
    
    
    Weighted-Average
    
    
    
    
    
    
    AggregateExercisable
    
    
    Remaining
    
    
    Weighted-Avg
    
    
    IntrinsicRange of Exercise Prices
    
    at 6/24/2006
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Value$0.01 to $0.24
    
    
    161,502
    
    
    
    8.00
    
    
    $
    0.01
    
    
    $
    381,383$0.25 to $0.6561
    
    
    85,250
    
    
    
    6.33
    
    
    $
    0.25
    
    
    $
    $0.6562 to $1.030
    
    
    992,750
    
    
    
    6.39
    
    
    $
    0.88
    
    
    $
    14,288$1.031 to $1.37
    
    
    506,497
    
    
    
    4.04
    
    
    $
    1.14
    
    
    $
    $1.38 to $1.50
    
    
    338,350
    
    
    
    1.13
    
    
    $
    1.38
    
    
    $
    87,600$1.51 to $2.00
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    $2.01 to $2.50
    
    
    110,000
    
    
    
    8.34
    
    
    $
    2.10
    
    
    $
    2,194,349
    
    
    
    5.20
    
    
    $
    0.99
    
    
    $
    483,271
   NOTE 11  COMMITMENTS
  2007
    
    $
    654,0002008
    
    
    585,0002009
    
    
    531,0002010
    
    
    541,0002011
    
    
    561,000Thereafter
    
    
    2,157,000Total
    
    $
    5,029,000
  44




---



##### 



NOTE 12  ASSET RETIREMENT OBLIGATION
  NOTE 13  TRANSACTIONS WITH RELATED PARTIES
    NOTE 14  SALES TO MAJOR CUSTOMERS
   45




---



##### 



NOTE 15  LITIGATION
   NOTE 16  QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
  (in thousands, except per share amounts)FISCAL YEAR 2006 QUARTERS ENDEDSeptember 17, 2005
    
    December 10, 2005
    
    April 1, 2006
    
    June 24, 2006Net sales
    
    $
    14,752
    
    
    $
    16,595
    
    
    $
    17,967
    
    
    $
    14,800Gross margin
    
    
    4,086
    
    
    
    4,181
    
    
    
    4,469
    
    
    
    3,376Income from continuing operations before discontinued operations
    
    
    1,522
    
    
    
    787
    
    
    
    659
    
    
    
    686Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    1,522
    
    
    
    787
    
    
    
    659
    
    
    
    686Net income per share  basic
    
    $
    0.09
    
    
    $
    0.05
    
    
    $
    0.04
    
    
    $
    0.04Net income per share  diluted
    
    $
    0.08
    
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.04
 FISCAL YEAR 2005 QUARTERS ENDEDSeptember 18, 2004
    
    December 11, 2004
    
    April 2, 2005
    
    June 25, 2005Net sales
    
    $
    8,703
    
    
    $
    11,062
    
    
    $
    14,355
    
    
    $
    12,126Gross margin
    
    
    2,007
    
    
    
    2,942
    
    
    
    3,726
    
    
    
    2,699Income from continuing operations before discontinued operations
    
    
    280
    
    
    
    532
    
    
    
    511
    
    
    
    563(Loss) Income from discontinued operations
    
    
    (118
    )
    
    
    61
    
    
    
    
    
    
    
    (120
    )Net income
    
    
    162
    
    
    
    593
    
    
    
    511
    
    
    
    443Net income per share-basic
    
    $
    0.01
    
    
    $
    0.04
    
    
    $
    0.03
    
    
    $
    0.03Net income per share-diluted
    
    $
    0.01
    
    
    $
    0.03
    
    
    $
    0.03
    
    
    $
    0.03
 FISCAL YEAR 2004 QUARTERS ENDEDSeptember 20, 2003
    
    December 13, 2003
    
    April 3, 2004
    
    June 26, 2004Net sales
    
    $
    6,735
    
    
    $
    8,764
    
    
    $
    10,912
    
    
    $
    8,924Gross margin
    
    
    1,276
    
    
    
    2,139
    
    
    
    2,365
    
    
    
    1,948(Loss) Income from continuing operations before discontinued
operations
    
    
    (42
    )
    
    
    135
    
    
    
    (245
    )
    
    
    (191
    )(Loss) Income from discontinued operations
    
    
    (139
    )
    
    
    (72
    )
    
    
    (316
    )
    
    
    (134
    )Net (loss) income
    
    
    (181
    )
    
    
    63
    
    
    
    (561
    )
    
    
    (325
    )Net loss per share basic and diluted
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.03
    )
    
    $
    (0.02
    )
 46




---



##### 



SCHEDULE II
CUISINE SOLUTIONS, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 Balance at
    
    Additions
    
    Reduction/
    
    Balance atBeginning
    
    charged to
    
    write-off to
    
    End ofof Period
    
    operations
    
    allowance
    
    PeriodYear ended June 26, 2004Allowance for doubtful accounts
    
    $
    62,000
    
    
    $
    301,000
    
    
    $
    295,000
    
    
    $
    68,000Allowance for obsolete inventory
    
    $
    425,000
    
    
    $
    106,000
    
    
    $
    369,000
    
    
    $
    162,000Year ended June 25, 2005Allowance for doubtful accounts
    
    $
    68,000
    
    
    $
    441,000
    
    
    $
    16,000
    
    
    $
    493,000Allowance for obsolete inventory
    
    $
    162,000
    
    
    $
    317,000
    
    
    $
    148,000
    
    
    $
    331,000Year ended June 24, 2006Allowance for doubtful accounts
    
    $
    493,000
    
    
    $
    173,000
    
    
    $
    4,000
    
    
    $
    662,000Allowance for obsolete inventory
    
    $
    331,000
    
    
    $
    
    
    
    $
    50,000
    
    
    $
    281,000
 47