##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2002

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transaction period from ___________________ to ___________________

Commission File Number: 0-7277

PIERRE FOODS, INC.
(Exact name of registrant as specified in its charter)

North Carolina
(State or other jurisdiction of incorporation or organization)

56-0945643
(I.R.S. Employer Identification No.)

9990 Princeton Road
Cincinnati, Ohio 45246
(Address of principal executive offices) (zip code)

Registrants telephone number, including area code: (513) 874-8741



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(Former name or former address, if changed since last report)


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

Yes [X]                     No [  ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                          |  |                                        
|------------------------- |  | ---------------------------------------
|ClassClass A Common Stock |  | Outstanding at October 15, 2002
100,000





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##### 



PIERRE FOODS, INC.

INDEX

|                                                                                              |                                                                                                                                                   |                   |         |          |         | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------- | -------- | ------- | 
|                                                                                              |                                                                                                                                                   |                   |         | Page No.
|Part I. Financial Information:                                                                |                                                                                                                                                   |                   |         |         
|                                                                                              |                                                                                                                                                   |                   |         |         
|Item 1. Financial Statements                                                                  |                                                                                                                                                   |                   |         |         
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              | Consolidated Balance Sheets -
August 31, 2002 and March 2, 2002                                                                                   |                   |         | 3 - 4    |        
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              | Consolidated Statements of
Operations and Retained Earnings -
Thirteen Weeks Ended August 31, 2002
and Thirteen Weeks Ended September 1, 2001     |                   |         | 5 - 6    |        
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              | Consolidated Statements of
Operations and Retained Earnings -
Twenty-six Weeks Ended August 31, 2002
and Twenty-six Weeks Ended September 1, 2001 |                   |         | 7 - 8    |        
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              | Consolidated Statements of Cash Flows -
Twenty-six Weeks Ended August 31, 2002 and
Twenty-six Weeks Ended September 1, 2001                       |                   |         | 9 - 10   |        
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              | Notes to Consolidated Financial Statements                                                                                                        |                   |         | 11 - 14  |        
|                                                                                              |                                                                                                                                                   |                   |         |         
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                                                   |                   | 15 - 18 |         
|                                                                                              |                                                                                                                                                   |                   |         |         
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                                                                   |                   | 19      |         
|                                                                                              |                                                                                                                                                   |                   |         |         
|Item 4. Controls and Procedures                                                               |                                                                                                                                                   |                   | 19      |         
|                                                                                              |                                                                                                                                                   |                   |         |         
|Part II. Other Information:                                                                   |                                                                                                                                                   |                   |         |         
|                                                                                              |                                                                                                                                                   |                   |         |         
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                                                   |                   | 20      |         
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              |                                                                                                                                                   | Signatures        |         |          | 21      | 
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              |                                                                                                                                                   | Certifications    |         |          | 22 - 23 | 
|                                                                                              |                                                                                                                                                   |                   |         |         
|                                                                                              |                                                                                                                                                   | Index to Exhibits |         |          | 24      | 

2



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##### 



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

|                                   |                                                                                                                                 |                      |            |            |                 |  |               |            |             |  | 
|---------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ---------- | ---------- | --------------- |  | ------------- | ---------- | ----------- |  | 
|                                   |                                                                                                                                 |                      |            |            | (Unaudited)     |  |               |            |            
|                                   |                                                                                                                                 |                      |            |            | August 31, 2002 |  | March 2, 2002
|                                   |                                                                                                                                 |                      |            |            |                 |  |              
|ASSETS                             |                                                                                                                                 |                      |            |            |                 |  |               |           
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           
|CURRENT ASSETS:                    |                                                                                                                                 |                      |            |            |                 |  |               |           
|                                   | Cash and cash equivalents                                                                                                       |                      | $          | 85,769     |                 |  | $             | 4,577,982  |            
|                                   | Certificates of deposit of special purpose entity                                                                               |                      |            | 1,240,000  |                 |  |               | 1,240,000  |            
|                                   | Accounts receivable, net (includes related party receivables of
$106,000 and employee receivables of $3,365,000 in fiscal
2003) |                      |            | 23,345,585 |                 |  |               | 21,469,035 |            
|                                   | Inventories                                                                                                                     |                      |            | 33,704,949 |                 |  |               | 23,852,855 |            
|                                   | Refundable income taxes                                                                                                         |                      |            | 198,908    |                 |  |               | 70,622     |            
|                                   | Deferred income taxes                                                                                                           |                      |            | 2,349,617  |                 |  |               | 2,349,617  |            
|                                   | Prepaid expenses and other current assets                                                                                       |                      |            | 3,434,587  |                 |  |               | 1,624,161  |            
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           
|                                   |                                                                                                                                 | Total current assets |            |            | 64,359,415      |  |               |            | 55,184,272  | 
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           
|PROPERTY, PLANT AND EQUIPMENT, NET |                                                                                                                                 |                      | 50,089,280 |            |                 |  | 43,281,303    |           
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           
|OTHER ASSETS:                      |                                                                                                                                 |                      |            |            |                 |  |               |           
|                                   | Trade name, net                                                                                                                 |                      |            | 38,808,636 |                 |  |               | 38,808,636 |            
|                                   | Goodwill, net                                                                                                                   |                      |            | 29,019,571 |                 |  |               | 29,019,571 |            
|                                   | Note receivable  related party                                                                                                 |                      |            | 993,247    |                 |  |               | 993,247    |            
|                                   | Deferred loan origination fees, net                                                                                             |                      |            | 3,336,951  |                 |  |               | 2,092,904  |            
|                                   | Other                                                                                                                           |                      |            | 405,214    |                 |  |               | 440,931    |            
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           
|                                   |                                                                                                                                 | Total other assets   |            |            | 72,563,619      |  |               |            | 71,355,289  | 
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           
|                                   |                                                                                                                                 | Total Assets         |            | $          | 187,012,314     |  |               | $          | 169,820,864 | 
|                                   |                                                                                                                                 |                      |            |            |                 |  |               |           

See accompanying notes to unaudited consolidated financial statements.

3



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PIERRE FOODS, INC. AND SUBSIDIARIES

|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |            |   |             | 
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------ | ---------- | --------------- | ----------- | ------------- | ---------- | - | ----------- | 
|                                          |                                                                                                                                                                                                               |  |                                            |            | (Unaudited)     |             |               |            |  
|                                          |                                                                                                                                                                                                               |  |                                            |            | August 31, 2002 |             | March 2, 2002
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |              
|LIABILITIES AND SHAREHOLDERS EQUITY      |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|CURRENT LIABILITIES:                      |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|                                          | Current installments of long-term debt                                                                                                                                                                        |  | $                                          | 333,907    |                 |             | $             | 325,071    |  
|                                          | Trade accounts payable                                                                                                                                                                                        |  |                                            | 7,505,459  |                 |             |               | 4,972,870  |  
|                                          | Accrued interest                                                                                                                                                                                              |  |                                            | 3,073,736  |                 |             |               | 3,090,624  |  
|                                          | Accrued payroll and payroll taxes                                                                                                                                                                             |  |                                            | 5,215,125  |                 |             |               | 6,077,062  |  
|                                          | Accrued promotions                                                                                                                                                                                            |  |                                            | 1,916,284  |                 |             |               | 1,473,954  |  
|                                          | Accrued taxes (other than income and payroll)                                                                                                                                                                 |  |                                            | 791,428    |                 |             |               | 566,677    |  
|                                          | Other accrued liabilities (includes related party liabilities of
$370,017 and employee payables of $1,125,000 at
August 31, 2002)                                                                             |  |                                            | 2,291,591  |                 |             |               | 1,617,083  |  
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|                                          |                                                                                                                                                                                                               |  | Total current liabilities                  |            |                 | 21,127,530  |               |            |   | 18,123,341  | 
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|LONG-TERM DEBT, less current installments |                                                                                                                                                                                                               |  | 131,270,512                                |            |                 |             | 115,047,605   |           
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|OBLIGATION OF SPECIAL PURPOSE ENTITY      |                                                                                                                                                                                                               |  | 5,782,862                                  |            |                 |             | 5,858,139     |           
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|OTHER LONG-TERM LIABILITIES               |                                                                                                                                                                                                               |  | 866,263                                    |            |                 |             | 1,032,696     |           
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|DEFERRED INCOME TAXES                     |                                                                                                                                                                                                               |  | 2,552,066                                  |            |                 |             | 2,552,066     |           
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|SHAREHOLDERS EQUITY:                     |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|                                          | Preferred stock  none at August 31, 2002 and par value $.10,
authorized 2,500,000 shares; no shares issued at March 2, 2002                                                                                  |  |                                            |           |                 |             |               |           |  
|                                          | Common stock  no par value, 100,000 shares authorized, issued
and outstanding at August 31, 2002 and no par value, authorized
100,000,000 shares; issued and outstanding at March 2, 2002 -
5,781,480 shares |  |                                            | 5,781,480  |                 |             |               | 5,781,480  |  
|                                          | Additional paid in capital                                                                                                                                                                                    |  |                                            | 23,656,692 |                 |             |               | 23,656,692 |  
|                                          | Retained earnings                                                                                                                                                                                             |  |                                            | 974,909    |                 |             |               | 2,768,845  |  
|                                          | Note receivable  related party                                                                                                                                                                               |  |                                            | (5,000,000 | )               |             |               | (5,000,000 | )
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|                                          |                                                                                                                                                                                                               |  | Total shareholders equity                 |            |                 | 25,413,081  |               |            |   | 27,207,017  | 
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           
|                                          |                                                                                                                                                                                                               |  | Total Liabilities and Shareholders Equity |            | $               | 187,012,314 |               |            | $ | 169,820,864 | 
|                                          |                                                                                                                                                                                                               |  |                                            |            |                 |             |               |           

See accompanying notes to unaudited consolidated financial statements.

4



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PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Retained Earnings

(Unaudited)

|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |            |            |            |  
|------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | ------------------ | ---------- | -------------------- | ---------- | ----------------- | ---------- | ---------- | ---------- | -
|                               |                                                                                                                                                                  |                          |                    |            | Thirteen Weeks Ended
|                               |                                                                                                                                                                  |                          |                    |            |                     
|                               |                                                                                                                                                                  |                          |                    |            | August 31, 2002      |            | September 1, 2001
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                  
|REVENUES                       |                                                                                                                                                                  | $                        | 61,533,655         |            |                      | $          | 57,839,217        |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|COSTS AND EXPENSES:            |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|                               | Cost of goods sold (includes related party transactions totaling
$1,013,356 in fiscal 2003)                                                                      |                          |                    | 40,979,098 |                      |            |                   | 38,454,858 |           
|                               | Selling, general and administrative expenses (includes related
party transactions totaling $6,449,381 and $686,978 in fiscal
2003 and fiscal 2002, respectively) |                          |                    | 17,000,115 |                      |            |                   | 15,043,653 |           
|                               | (Gain) loss on disposition of property, plant and equipment, net                                                                                                 |                          |                    | (13,000    | )                    |            |                   | 13,557     |           
|                               | Depreciation and amortization                                                                                                                                    |                          |                    | 978,693    |                      |            |                   | 1,553,815  |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|                               |                                                                                                                                                                  | Total costs and expenses |                    |            | 58,944,906           |            |                   |            | 55,065,883 |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|OPERATING INCOME               |                                                                                                                                                                  |                          | 2,588,749          |            |                      |            | 2,773,334         |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|OTHER INCOME (EXPENSE):        |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|                               | Interest expense                                                                                                                                                 |                          |                    | (3,615,736 | )                    |            |                   | (3,292,574 | )         
|                               | Other income, net  (including interest) (includes related
party income of $192,484 and $14,551 in fiscal 2003 and 2002, respectively)                           |                          |                    | 213,616    |                      |            |                   | 16,898     |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|                               |                                                                                                                                                                  |                          | Other expense, net |            |                      | (3,402,120 | )                 |            |            | (3,275,676 | )
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|LOSS BEFORE INCOME TAX BENEFIT |                                                                                                                                                                  |                          | (813,371           | )          |                      |            | (502,342          | )         
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|INCOME TAX BENEFIT             |                                                                                                                                                                  |                          | 142,233            |            |                      |            | 251,171           |           
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           
|NET LOSS                       |                                                                                                                                                                  | $                        | (671,138           | )          |                      | $          | (251,171          | )         
|                               |                                                                                                                                                                  |                          |                    |            |                      |            |                   |           

See accompanying notes to unaudited consolidated financial statements.

5



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##### 



|                                                        |                                                 |   |         |            |   |   |           |           |   |  | 
|------------------------------------------------------- | ----------------------------------------------- | - | ------- | ---------- | - | - | --------- | --------- | - |  | 
|RETAINED EARNINGS:                                      |                                                 |   |         |            |   |   |           |          
|                                                        | Balance at beginning of period                  |   | $       | 2,655,243  |   |   | $         | 2,007,630 |  
|                                                        | Net loss                                        |   |         | (671,138   | ) |   |           | (251,171  | )
|                                                        | Distributions by special purpose leasing entity |   |         | (1,009,196 | ) |   |           |          |  
|                                                        |                                                 |   |         |            |   |   |           |          
|                                                        | Balance at end of period                        |   | $       | 974,909    |   |   | $         | 1,756,459 |  
|                                                        |                                                 |   |         |            |   |   |           |          
|NET LOSS PER COMMON SHARE  BASIC AND
DILUTED           |                                                 | $ | (6.71   | )          |   | $ | (.04      | )        
|WEIGHTED AVERAGE SHARES OUTSTANDING  BASIC AND
DILUTED |                                                 |   | 100,000 |            |   |   | 5,781,480 |          

See accompanying notes to unaudited consolidated financial statements.

6



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PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Retained Earnings

(Unaudited)

|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |            |             |            |  
|------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------ | ------------------ | ---------- | ---------------------- | ---------- | ----------------- | ---------- | ----------- | ---------- | -
|                               |                                                                                                                                                                     |                          |                    |            | Twenty-Six Weeks Ended
|                               |                                                                                                                                                                     |                          |                    |            |                       
|                               |                                                                                                                                                                     |                          |                    |            | August 31, 2002        |            | September 1, 2001
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                  
|REVENUES                       |                                                                                                                                                                     | $                        | 123,294,454        |            |                        | $          | 108,665,141       |           
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|COSTS AND EXPENSES:            |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|                               | Cost of goods sold (includes related party transactions totaling
$2,200,157 in fiscal 2003)                                                                         |                          |                    | 81,231,933 |                        |            |                   | 71,710,923 |            
|                               | Selling, general and administrative expenses (includes related
party transactions totaling $12,748,123 and $2,125,041 in
fiscal 2003 and fiscal 2002, respectively) |                          |                    | 34,458,986 |                        |            |                   | 29,354,614 |            
|                               | Loss on disposition of property, plant and equipment, net                                                                                                           |                          |                    | 10,408     |                        |            |                   | 13,557     |            
|                               | Depreciation and amortization                                                                                                                                       |                          |                    | 1,967,360  |                        |            |                   | 3,135,435  |            
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|                               |                                                                                                                                                                     | Total costs and expenses |                    |            | 117,668,687            |            |                   |            | 104,214,529 |           
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|OPERATING INCOME               |                                                                                                                                                                     |                          | 5,625,767          |            |                        |            | 4,450,612         |           
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|OTHER INCOME (EXPENSE):        |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|                               | Interest expense                                                                                                                                                    |                          |                    | (7,033,251 | )                      |            |                   | (6,567,931 | )          
|                               | Other income, net  (including interest) (includes related
party income of $387,484 and $29,102 in fiscal 2003 and fiscal
2002, respectively)                       |                          |                    | 426,558    |                        |            |                   | 93,707     |            
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|                               |                                                                                                                                                                     |                          | Other expense, net |            |                        | (6,606,693 | )                 |            |             | (6,474,224 | )
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|LOSS BEFORE INCOME TAX BENEFIT |                                                                                                                                                                     |                          | (980,926           | )          |                        |            | (2,023,612        | )         
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|INCOME TAX BENEFIT             |                                                                                                                                                                     |                          | 196,186            |            |                        |            | 1,011,806         |           
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           
|NET LOSS                       |                                                                                                                                                                     | $                        | (784,740           | )          |                        | $          | (1,011,806        | )         
|                               |                                                                                                                                                                     |                          |                    |            |                        |            |                   |           

See accompanying notes to unaudited consolidated financial statements.

7



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##### 



|                                                        |                                                 |   |         |            |   |   |           |            |   |  | 
|------------------------------------------------------- | ----------------------------------------------- | - | ------- | ---------- | - | - | --------- | ---------- | - |  | 
|RETAINED EARNINGS:                                      |                                                 |   |         |            |   |   |           |           
|                                                        | Balance at beginning of period                  |   | $       | 2,768,845  |   |   | $         | 2,768,265  |  
|                                                        | Net loss                                        |   |         | (784,740   | ) |   |           | (1,011,806 | )
|                                                        | Distributions
by special purpose leasing entity |   |         | (1,009,196 | ) |   |           |           |  
|                                                        |                                                 |   |         |            |   |   |           |           
|                                                        | Balance at end of period                        |   | $       | 974,909    |   |   | $         | 1,756,459  |  
|                                                        |                                                 |   |         |            |   |   |           |           
|NET LOSS PER COMMON SHARE  BASIC AND
DILUTED           |                                                 | $ | (7.85   | )          |   | $ | (.17      | )         
|WEIGHTED AVERAGE SHARES OUTSTANDING  BASIC AND
DILUTED |                                                 |   | 100,000 |            |   |   | 5,781,480 |           

See accompanying notes to unaudited consolidated financial statements.

8



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##### 



PIERRE FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                   |            |           |            |  
|------------------------------------ | ----------------------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------------------------------- | ------------------------------------------------------------------ | ---------- | ---------------------- | ---------- | ----------------- | ---------- | --------- | ---------- | -
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            | Twenty-Six Weeks Ended
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                       
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            | August 31, 2002        |            | September 1, 2001
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|CASH FLOWS FROM OPERATING ACTIVITIES |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|                                     | Net loss                                                                                  |                                                      | $                                                         | (784,740                                                           | )          |                        | $          | (1,011,806        | )         
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|                                     | Adjustments to reconcile net loss to net cash provided by
(used in) operating activities: |                                                      |                                                           |                                                                    |            |                        |            |                   |           
|                                     |                                                                                           |                                                      | Depreciation and amortization                             |                                                                    |            | 1,967,360              |            |                   |            | 3,135,435 |           
|                                     |                                                                                           |                                                      | Amortization of deferred loan origination fees            |                                                                    |            | 339,420                |            |                   |            | 263,810   |           
|                                     |                                                                                           |                                                      | Loss on disposition of property, plant and equipment, net |                                                                    |            | 10,408                 |            |                   |            | 13,557    |           
|                                     |                                                                                           |                                                      | (Increase) decrease in other assets                       |                                                                    |            | 35,717                 |            |                   |            | (482,142  | )         
|                                     |                                                                                           |                                                      | Decrease in other long-term liabilities                   |                                                                    |            | (166,433               | )          |                   |            | (154,289  | )         
|                                     |                                                                                           |                                                      | Changes in operating assets and liabilities:              |                                                                    |            |                        |            |                   |            |           |           
|                                     |                                                                                           |                                                      |                                                           | Receivables                                                        |            |                        | (1,876,550 | )                 |            |           | (2,034,218 | )
|                                     |                                                                                           |                                                      |                                                           | Inventories                                                        |            |                        | (9,852,094 | )                 |            |           | (3,916,016 | )
|                                     |                                                                                           |                                                      |                                                           | Refundable income taxes, prepaid expenses and other
current assets |            |                        | (1,938,712 | )                 |            |           | (1,153,443 | )
|                                     |                                                                                           |                                                      |                                                           | Trade accounts payable and other accrued liabilities               |            |                        | 2,995,353  |                   |            |           | 1,280,551  |  
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|                                     |                                                                                           |                                                      |                                                           | Total adjustments                                                  |            |                        | (8,485,531 | )                 |            |           | (3,046,755 | )
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|                                     |                                                                                           |                                                      |                                                           | Net cash used in operating activities                              |            |                        | (9,270,271 | )                 |            |           | (4,058,561 | )
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|CASH FLOWS FROM INVESTING ACTIVITIES |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|                                     |                                                                                           | Proceeds from sales of property, plant and equipment |                                                           |                                                                    | 43,000     |                        |            |                   | 1,000      |          
|                                     |                                                                                           | Capital expenditures                                 |                                                           |                                                                    | (8,828,745 | )                      |            |                   | (2,579,082 | )        
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  
|                                     |                                                                                           |                                                      |                                                           | Net cash used in investing activities                              |            |                        | (8,785,745 | )                 |            |           | (2,578,082 | )
|                                     |                                                                                           |                                                      |                                                           |                                                                    |            |                        |            |                  

See accompanying notes to unaudited consolidated financial statements.

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|                                               |  |                                                 |            |                                           |            |   |            |   |           |   |           | 
|---------------------------------------------- |  | ----------------------------------------------- | ---------- | ----------------------------------------- | ---------- | - | ---------- | - | --------- | - | --------- | 
|CASH FLOWS FROM FINANCING ACTIVITIES           |  |                                                 |            |                                           |            |   |            |  
|                                               |  | Net borrowings under revolving credit agreement |            |                                           | 16,249,527 |   |            |   | 4,867,915 |  
|                                               |  | Principal payments on long-term debt            |            |                                           | (93,061    | ) |            |   | (44,457   | )
|                                               |  | Loan origination fees                           |            |                                           | (1,583,467 | ) |            |   |          |  
|                                               |  | Distributions by special purpose leasing entity |            |                                           | (1,009,196 | ) |            |   |          |  
|                                               |  |                                                 |            |                                           |            |   |            |  
|                                               |  |                                                 |            | Net cash provided by financing activities |            |   | 13,563,803 |   |           |   | 4,823,458 | 
|                                               |  |                                                 |            |                                           |            |   |            |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS      |  |                                                 | (4,492,213 | )                                         |            |   | (1,813,185 | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |  |                                                 | 4,577,982  |                                           |            |   | 1,813,185  |  
|                                               |  |                                                 |            |                                           |            |   |            |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD       |  | $                                               | 85,769     |                                           |            | $ |           |  
|                                               |  |                                                 |            |                                           |            |   |            |  

See accompanying notes to unaudited consolidated financial statements.

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PIERRE FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(Unaudited)

1.     Basis of Presentation

In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position of the Company as of August 31, 2002 and March 2, 2002, the
results of operations for the thirteen weeks and twenty-six weeks ended August
31, 2002 and September 1, 2001, and the cash flows of the Company for the
twenty-six weeks ended August 31, 2002 and September 1, 2001. Financial
statements for the year-to-date period ended September 1, 2001 (fiscal 2002)
have been reclassified, where applicable, to conform to financial statement
presentation used for the year-to-date period ended August 31, 2002 (fiscal
2003). The thirteen week period ended August 31, 2002 is referred to as
second quarter 2003 and the thirteen week period ended September 1, 2001 is
referred to as second quarter 2002.

The Company reports the results of its operations using a 52-53 week
basis. In line with this, each quarter of the fiscal year will contain 13
weeks except for the infrequent fiscal years with 53 weeks.

The results of interim operations for fiscal 2003 are not necessarily
indicative of the results to be expected for the full fiscal year. These
interim unaudited consolidated financial statements should be read in
conjunction with the Companys March 2, 2002 audited consolidated financial
statements and notes thereto.

2.      Inventories

A summary of inventories, by major classifications, follows:

|                       |       |   |                 |            |               |   |            |            | 
|---------------------- | ----- | - | --------------- | ---------- | ------------- | - | ---------- | ---------- | 
|                       |       |   | August 31, 2002 |            | March 2, 2002
|                       |       |   |                 |            |              
|Manufacturing supplies |       | $ | 1,269,607       |            |               | $ | 1,199,647  |           
|Raw materials          |       |   | 4,957,506       |            |               |   | 4,975,188  |           
|Finished goods         |       |   | 27,477,836      |            |               |   | 17,678,020 |           
|                       |       |   |                 |            |               |   |            |           
|                       | Total |   | $               | 33,704,949 |               |   | $          | 23,852,855 | 
|                       |       |   |                 |            |               |   |            |           

3.      Intangible Assets

The Company adopted FASB Statement of Financial Accounting Standards No.
142 (SFAS 142), Goodwill and Other Intangible Assets, effective March 3,
2002. SFAS 142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential
future impairments of goodwill. As a result, during first quarter 2002, the
assembled work force with an amortized balance of $2,171,067 was reclassified
as goodwill. In addition, the intangible asset established for trade name is
deemed to have an indefinite life because the trade name is expected to
generate cashflows indefinitely. Accordingly, amortization of both goodwill
and tradename has been discontinued.

As required by FAS 142, during second quarter 2002, the Company completed
its first step transitional goodwill impairment test. The results of the first
step transitional impairment test indicate that the revised goodwill amount of
$29,019,571 may be impaired. Since the first step transitional test indicates
that goodwill may be impaired, a second step transitional test is required to be completed by March 1, 2003. Any
impairment loss resulting from the second step

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transitional impairment test
would be recorded as a cumulative effect of a change in accounting principle
effective March 3, 2002. Accordingly, the financial statements for interim
quarters of fiscal 2003 would be restated for any such impairment loss. The
reason for the potential impairment loss is the result of the change (effective
March 3, 2002) in the evaluation criteria for goodwill from an undiscounted
cash flow approach, which was previously utilized under the guidance in
Accounting Principles Board Opinion No. 17, to the fair value approach which is
stipulated in SFAS 142.

As of August 31, 2002, the Company had the following acquired intangible
assets recorded:

|                                         |       |            |            |                 |            |                 |            |                 |            |   |            |            |            | 
|---------------------------------------- | ----- | ---------- | ---------- | --------------- | ---------- | --------------- | ---------- | --------------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                         |       |            |            | August 31, 2002 |            | August 31, 2002 |            | August 31, 2002
|                                         |       |            |            | Gross Carrying  |            | Accumulated     |            | Net Carrying   
|                                         |       |            |            | Amount          |            | Amortization    |            | Amount         
|                                         |       |            |            |                 |            |                 |            |                
|Goodwill                                 |       | $          | 33,571,687 |                 |            | $               | (4,552,116 | )               |            | $ | 29,019,571 |           
|                                         |       |            |            |                 |            |                 |            |                 |            |   |            |           
|Intangible assets with
indefinite lives: |       |            |            |                 |            |                 |            |                 |            |   |            |           
|                                         |       | Trade name |            | $               | 44,340,000 |                 |            | $               | (5,531,364 | ) |            | $          | 38,808,636 | 
|                                         |       |            |            |                 |            |                 |            |                 |            |   |            |           
|                                         | Total |            | $          | 77,911,687      |            |                 | $          | (10,083,480     | )          |   | $          | 67,282,207 |           
|                                         |       |            |            |                 |            |                 |            |                 |            |   |            |           

As required by SFAS 142, the results for first and second quarters 2002
have not been restated. The table below presents the effect on net loss and
loss per share as if SFAS 142 had been in effect for first and second quarters
2002:

|                                                 |                   |   |                 |       |                   |   |            |      |  
|------------------------------------------------ | ----------------- | - | --------------- | ----- | ----------------- | - | ---------- | ---- | -
|                                                 |                   |   | Twenty-Six      |       | Twenty-Six       
|                                                 |                   |   | Weeks Ended     |       | Weeks Ended      
|                                                 |                   |   | August 31, 2002 |       | September 1, 2001
|                                                 |                   |   |                 |       |                  
|Reported net loss                                |                   | $ | (784,740        | )     |                   | $ | (1,011,806 | )   
|                                                 | Add
back:         |   |                 |       |                   |   |            |      |  
|Goodwill and tradename amortization (net of tax) |                   |   |                |       |                   |   | 673,376    |     
|                                                 |                   |   |                 |       |                   |   |            |     
|Adjusted net loss                                |                   | $ | (784,740        | )     |                   | $ | (338,430   | )   
|                                                 |                   |   |                 |       |                   |   |            |     
|Basic and diluted net loss per share:            |                   |   |                 |       |                   |   |            |     
|                                                 | Reported net loss |   | $               | (7.85 | )                 |   | $          | (.17 | )
|                                                 | Adjusted net loss |   | $               | (7.85 | )                 |   | $          | (.06 | )

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4.      Long-Term Debt

Effective May 29, 2002, the Company terminated its $25 million credit
facility, and obtained a new five-year variable rate secured credit facility in
an aggregate amount up to $50 million. The new facility includes a $16 million
term loan subline, a $10 million capital expenditures subline and a $7 million
letter of credit subfacility. The collateral for the facility includes
substantially all of the Companys assets. As of August 31, 2002, the Company
had borrowings under this new facility of $16.2 million and borrowing
availability of approximately $3.6 million. As of September 1, 2001, the
Company had borrowings under its former $25 million credit facility of $4.9
million and borrowing availability of approximately $18.1 million. In
addition, at August 31, 2002 and September 1, 2001, the Company was in
compliance with the financial covenants under each facility.

The Companys Chairman and Vice Chairman agreed to guarantee payment of
the new $50 million facility in exchange for guarantee fees to be paid annually
in advance, equal to 1.5% each of the amount committed for lending under the
facility. During the fiscal quarter ended August 31, 2002, $750,000 was paid
to each of the Companys Chairman and Vice Chairman, and as of August 31, 2002,
$187,500 each had been amortized.

5.      Common Stock

On July 26, 2002, PF Management, Inc. closed its management buyout of the
Company. This going-private transaction resulted in the exchange of each share
of common stock owned by a person other than PF Management for the right to
receive $2.50 in cash. There were 5,781,480 shares issued and outstanding
immediately before the closing. Of that amount, 2,151,268 shares were owned by
persons other than PF Management. After the closing, the Company amended and
restated its Articles of Incorporation to authorize the issuance of up to
100,000 shares of Class A common stock as the only authorized class of capital
stock of the Company. All 100,000 shares of authorized common stock have been
issued to PF Management.

6.Comprehensive Income

Total comprehensive loss is comprised solely of the net loss in fiscal
2003 and fiscal 2002. Comprehensive loss was $671,138 and $251,171 for the
second quarter 2003 and the second quarter 2002, respectively; and $784,740 and
$1,011,806 for fiscal 2003 and fiscal 2002, respectively.

7.      Supplemental cash flow disclosures  cash paid (received) during the period

|                    |                  |   |                 |          |                   |   |           |          |  
|------------------- | ---------------- | - | --------------- | -------- | ----------------- | - | --------- | -------- | -
|                    |                  |   | Twenty-Six      |          | Twenty-Six       
|                    |                  |   | Weeks Ended     |          | Weeks Ended      
|                    |                  |   | August 31, 2002 |          | September 1, 2001
|                    |                  |   |                 |          |                  
|Interest            |                  | $ | 6,710,719       |          |                   | $ | 6,333,191 |         
|                    |                  |   |                 |          |                   |   |           |         
|Income taxes net of |                  | $ |                 |          |                   | $ |           |         
|                    | refunds received |   |                 | (152,616 | )                 |   |           | (356,802 | )
|                    |                  |   |                 |          |                   |   |           |         

8.      Recently Issued Accounting Guidance.

In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 142 (SFAS 142), Goodwill and Other Intangible Assets. See Note 3 for
discussion of the Companys adoption of SFAS 142.

In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, which is
effective for the Company beginning March 3, 2002. SFAS 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the

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associated asset retirement cost. The adoption of SFAS 143 did not have a
material impact on the Companys financial position and results of operations.

In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of
Long-Lived Assets, which is effective for the Companys fiscal year beginning
March 3, 2002. SFAS 144 addresses the financial accounting and reporting for
the impairment or disposal of long-lived assets. The adoption of SFAS 144 did
not have a material impact on the Companys financial position and results of
operations.

9.      Related Party Transactions

Effective March 3, 2002, the Company entered into a one-year logistics
agreement with PF Distribution, LLC (PF Distribution), owned 50% each by the
Companys Chairman and Vice Chairman. Under the agreement, PF Distribution
will serve as an exclusive logistics agent for the Company, and will provide
all warehousing, fulfillment and transportation services to the Company. In
the second quarter 2003, distribution expense recorded in selling, general and
administrative expense was approximately $6.1 million. In fiscal 2003,
distribution expense recorded in selling, general and administrative expense
was approximately $12.0 million, of which approximately $11.7 million had been
paid to PF Distribution as of August 31, 2002.

All other related party transactions are consistent with those described
at March 2, 2002.

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Second Quarter 2003 Compared to Second Quarter 2002

Revenues, net.Net revenues increased by $3.7 million, or 6.4%. The
increase in net revenues was primarily due to a significant new customer, to
the introduction of new products and to an increase in demand in all core
customer channels. Sales to the new customer significantly increased the
Companys microwavable sandwich sales. The significant new product line
introduced was the Chop House burger line, marketed primarily to restaurants.
This new line added significant volume to the lower margin customer channel.

Cost of goods sold.Cost of goods sold increased by $2.5 million, or
6.6%. As a percentage of revenues, cost of goods sold increased from 66.5% to
66.6%. This increase primarily was due to a change in product mix to lower
margin products, offset by a decrease in beef and pork raw material prices and
improved production efficiencies. Production efficiencies, including favorable
material usage, were realized through process improvements combined with an
increase in production volume spread over a stable fixed overhead base.

Selling, general and administrative. Selling, general and administrative
expenses increased by $2.0 million, or 13.0%, primarily due to an increase in
overhead costs to support the increase in sales volume. As a percentage of
revenues, selling, general and administrative expenses increased from 26.0% to
27.6%.

Depreciation and amortization.Depreciation and amortization expense
decreased by $.6 million, or 37.0%, due primarily to the adoption of SFAS 142
in fiscal 2003 which discontinued amortization of goodwill and intangibles with
indefinite lives.

Other expense, net. The primary component of net other expense for
second quarter 2003 and second quarter 2002 is interest expense. Interest
expense consists primarily of interest on fixed rate long-term debt (see 
Liquidity and Capital Resources below). Net other expense increased by $.1
million or 3.9% in fiscal year 2003.

Income tax benefit. The effective tax rate for second quarter 2003 was
17.5% compared to 50% for second quarter 2002. The decrease in the effective
tax rate is due primarily to the effects of permanent timing differences and
compensation deduction limitations in fiscal 2002.

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Fiscal 2003 Compared to Fiscal 2002

Revenues, net.Net revenues increased by $14.6 million, or 13.5%. The
increase in net revenues was primarily due to a significant new customer, to
the introduction of new products and to an increase in demand in all core
customer channels. Sales to the new customer significantly increased the
Companys microwavable sandwich sales. The significant new product line
introduced was the Chop House burger line, marketed primarily to restaurants.
This new line added significant volume to the lower margin customer channel.

Cost of goods sold.Cost of goods sold increased by $9.5 million, or
13.3%. As a percentage of revenues, cost of goods sold decreased from 66.0% to
65.9%. This decrease primarily was due to a decrease in beef raw material
prices and improved production efficiencies, offset by an increase in pork and
chicken raw material prices and a by change in product mix to lower margin
products. Production efficiencies, including favorable material usage, were
realized through process improvements combined with an increase in production
volume spread over a stable fixed overhead base.

Selling, general and administrative. Selling, general and administrative
expenses increased by $5.1 million, or 17.4%, primarily due to an increase in
overhead costs to support the increase in sales volume. As a percentage of
revenues, selling, general and administrative expenses increased from 27.0% to
27.9%.

Depreciation and amortization.Depreciation and amortization expense
decreased by $1.2 million, or 37.3%, due primarily to the adoption of SFAS 142
in fiscal 2003 which discontinued amortization of goodwill and intangibles with
indefinite lives.

Other expense, net. The primary component of net other expense for
fiscal 2003 and fiscal 2002 is interest expense. Interest expense consists
primarily of interest on fixed rate long-term debt (see - Liquidity and
Capital Resources below). Net other expense increased by $.1 million or 2%.

Income tax benefit. The effective tax rate for fiscal 2003 was 20.0%
compared to 50% for fiscal 2002. The decrease in the effective tax rate is due
primarily to the effects of permanent timing differences and compensation
deduction limitations in fiscal 2002.

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Liquidity and Capital Resources

Net cash used in operating activities was $9.3 million for fiscal 2003, as
compared to $4.1 million for fiscal 2002. The primary components of the change
in net cash used in operating activities were 1) an increase in inventory of
$9.9 million due to the seasonal building of inventories which normally occurs
during the late spring and early summer to service market channels that require
heavy shipments in late summer and early fall; 2) an increase in accounts
payable and other accrued liabilities of $3.0 million; offset by 3) a decrease
in amortization expense of $1.3 million due to the discontinuance of
amortization of goodwill under FAS 142.

Net cash used in investing activities was $8.8 million for fiscal 2003,
compared to $2.6 million for fiscal 2002, due to an increase in capital
expenditures for plant improvements and a plant expansion.

Net cash provided by financing activities was $13.6 million for fiscal
2003, compared to net cash provided by financing activities of $4.8 million for
fiscal 2002. The increase in cash provided by financing activities was due
primarily to an increase in borrowings under the revolving credit facility of
$11.4 million for fiscal 2003 compared to fiscal 2002, offset by loan
origination fees of $1.6 million incurred in fiscal 2003 that did not occur in
fiscal 2002 and special purpose entity member distributions of $1.0 million
incurred in fiscal 2003 that did not occur in fiscal 2002.

Effective May 29, 2002, the Company terminated its $25 million credit
facility. Also, effective May 29, 2002, the Company obtained a five-year
variable-rate $50 million revolving credit facility from a new lender, which
includes a $16 million term loan subline, a $10 million capital expenditures
subline and a $7 million letter of credit subfacility. Funds available under
this facility are available for working capital requirements, permitted
investments and general corporate purposes. Borrowings under the facility bear
interest at floating rates based upon the interest rate option selected from
time to time by the Company and are secured by a first-priority security
interest in substantially all of the Companys assets. In addition, the
Company is required to satisfy certain financial covenants regarding cash flow
and capital expenditures.

As of August 31, 2002, the Company had borrowings under this new facility
of $16.2 million and borrowing availability of approximately $3.6 million. As
of September 1, 2001, the Company had borrowings under its former $25 million
credit facility of approximately $4.9 million and borrowing availability of
approximately $18.1 million. In addition, at August 31, 2002 and September 1,
2001, the Company was in compliance with the financial covenants under each of
the facilities.

The Company has budgeted approximately $4.3 million for capital
expenditures for the remainder of fiscal 2003. These expenditures are primarily
devoted to a plant expansion in order to maintain the current revenue growth
trend. Additional expenditures are designated for routine food processing
capital improvement projects and other miscellaneous expenditures. The Company
believes that funds from operations and funds from the $50 million credit
facility, as well as the Companys ability to enter into capital or operating
leases, will be adequate to finance these capital expenditures.

If the Company continues its historical revenue growth trend as expected,
then the Company will be required to raise and invest additional capital for
additional plant expansion projects to provide operating capacity to satisfy
increased demand. Management believes that future cash requirements for these
plant expansion projects would need to be met through other long-term financing
sources, such as an increase in borrowing availability under the $50 million
credit facility, the issuance of industrial revenue bonds or equity investment.
The incurrence of additional long-term debt is governed and restricted by the
Companys existing debt instruments. Furthermore, there can be no assurance
that additional long-term financing will be available on advantageous terms (or
any terms) when needed by the Company.

The Company anticipates continued sales growth in key market areas. As
noted above, however, this growth will require future capital expansion
projects to increase existing plant capacity to satisfy increased demand.
Sales growth, improved operating performance and expanded plant capacity  none of which
is assured  will be necessary for the Company to continue to service existing
debt.

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Logistics Agreement

Effective March 3, 2002, the Company entered into a one-year logistics
agreement with PF Distribution, LLC (PF Distribution), owned 50% each by the
Companys Chairman and Vice Chairman. Under the agreement, PF Distribution
will serve as an exclusive logistics agent for the Company, and will provide
all warehousing, fulfillment and transportation services to the Company. The
cost of PF Distributions services is based on flat rates per pound, which are
calculated based on weight and volume characteristics of products, inventory
pounds maintained and inventory pounds shipped. Rates were determined based on
historical costs and industry standards. In the second quarter 2003,
distribution expense recorded in selling, general and administrative expense
was approximately $6.1 million. In fiscal 2003, distribution expense recorded
in selling, general and administrative expense was approximately $12.0 million,
of which approximately $11.7 million had been paid to PF Distribution as of
August 31, 2002.

Seasonality

Except for sales to school districts, which represent approximately 26% of
total sales and which decline during the early spring and summer and early
January, there is no significant seasonal variation in sales.

Management Buyout

On July 26, 2002, the Companys shareholders approved the Amended and
Restated Agreement and Plan of Share Exchange dated as of December 20, 2001,
and amended as of June 20, 2002 and the management buyout of the Company was
completed on July 26, 2002. The Company is now a wholly-owned subsidiary of PF
Management, Inc.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As discussed in its annual report for the fiscal year ended March 2, 2002,
the Company is exposed to market risks stemming from changes in interest rates,
foreign exchange rates and commodity prices. Changes in these factors could
cause fluctuations in the Companys financial condition, results of operations
and cash flows. The Company owned no derivative financial instruments or
nonderivative financial instruments held for trading purposes at August 31,
2002 or March 2, 2002. Certain of the Companys outstanding nonderivative
financial instruments at August 31, 2002 are subject to interest rate risk, but
not subject to foreign currency or commodity price risk.

The Companys major market risk exposure is potential loss arising from
changing interest rates and its impact on long-term debt. The Companys policy
is to manage interest rate risk by maintaining a combination of fixed and
variable rate financial instruments in amounts and with maturities that
management considers appropriate. The risks associated with long-term debt at
August 31, 2002 have not changed materially since March 2, 2002. All long-term
debt outstanding at August 31, 2002, comprised of $115.0 million of Senior
Notes, $16.2 million of outstanding borrowings under the revolving credit
facility and $5.8 million of obligation of special purpose entity, was accruing
interest at fixed rates. In the future, should the Company borrow funds under
its existing credit facility or other long-term financing sources, a rise in
prevailing interest rates could have adverse effects on the Companys financial
condition and results of operations.

Cautionary Statement As To Forward Looking Information

Certain statements made in this document are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve risks and uncertainties that may cause
actual results to differ materially from expected results. These risks and
uncertainties include: substantial leverage and insufficient cash flow from
operations; restrictions imposed by the Companys debt instruments; management
control; restriction of payment of dividends; competitive considerations;
government regulation; general risks of the food industry; adverse changes in
food costs and availability of supplies; dependence on key personnel and
potential labor disruptions. Shareholder approval of the management buyout is
not assured. The Companys failure to close that transaction for any reason
could have material adverse effects on the Company and the markets for its
securities. This list of risks and uncertainties is not exhaustive. Also, new
risk factors emerge over time. Investors should not place undue reliance on the
predictive value of forward-looking statements.

ITEM 4. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys President and Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Companys disclosure controls and procedures, as defined in
Exchange Act Rule 15d-14(c). Based upon that evaluation, the Companys
President and Chief Executive Officer and Chief Financial Officer concluded
that the Companys disclosure controls and procedures are effective in enabling
the Company to record, process, summarize and report information required to be
included in the Companys periodic SEC filings within the required time period.
There have been no significant changes in the Companys internal controls or
in other factors that could significantly affect internal controls subsequent
to the date the Company carried out its evaluation.

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PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits                                                                                                                                                 
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | See the Index to Exhibits provided elsewhere in this report.                                                                                             
|
| | (b) |  | Reports on Form 8-K                                                                                                                                      
|
| |     |  | The Company announced on July 26, 2002 the completion of a share
exchange with PF Management, Inc. resulting in a management buyout
of Pierre Foods, Inc.
|
| | (c) |  | Other Filings                                                                                                                                            
|
| |     |  | None.                                                                                                                                                    

20



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##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       |  |                    |  |                                                                                                               
|---------------------- |  | ------------------ |  | --------------------------------------------------------------------------------------------------------------
|                       |  | PIERRE FOODS, INC.
|                      
|                       |  |                    |  |                                                                                                               
|                      
|Date: October 15, 2002 |  | By:                |  | /s/ Norbert E.
WoodhamsNorbert E. Woodhams
President and Chief Executive Officer
(Principal Executive Officer)
|                      
|                       |  |                    |  |                                                                                                               
|                      
|Date: October 15, 2002 |  | By:                |  | /s/ Pamela M.
WittersPamela M. Witters
Chief Financial Officer
(Principal Financial Officer)                  

21



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##### 



CERTIFICATIONS

I, Norbert E. Woodhams, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Pierre Foods,
Inc.;

2.     Based on my knowledge, this quarterly 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
quarterly report;

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

4.     The Companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and we have:



| | a. |  | designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the Companys disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                     

5.     The Companys other certifying officer and I have disclosed, based on
our most recent evaluation, to the Companys auditors and the Companys board
of directors:



| | a. |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the Companys ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the Companys internal
controls; and                                                                                                                                        

6.     The Companys other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                       |  |                                                                                                               
|---------------------- |  | --------------------------------------------------------------------------------------------------------------
|Date: October 15, 2002 |  |                                                                                                               
|                      
|                       |  |                                                                                                               
|                      
|                       |  | /s/ Norbert E. WoodhamsNorbert E. Woodhams
President and Chief Executive Officer
(Principal Executive Officer)

22



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##### 



I, Pamela M. Witters, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Pierre Foods,
Inc.;

2.     Based on my knowledge, this quarterly 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
quarterly report;

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

4.     The Companys other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and we have:



| | a. |  | designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the Companys disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                     

5.     The Companys other certifying officer and I have disclosed, based on
our most recent evaluation, to the Companys auditors and the Companys board
of directors:



| | a. |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the Companys ability
to record, process, summarize and report financial data and have
identified for the Companys auditors any material weaknesses in
internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the Companys internal
controls; and                                                                                                                                     

6.     The Companys other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                       |  |                                                                                             
|---------------------- |  | --------------------------------------------------------------------------------------------
|Date: October 15, 2002 |  |                                                                                             
|                      
|                       |  | /s/ Pamela M. WittersPamela M. Witters
Chief Financial Officer
(Principal Financial Officer)

23



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##### 



INDEX TO EXHIBITS

|            |  |                                                                                                                                                                                                                                                                                                           
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                           
|3.1         |  | Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Companys Registration Statement on Form S-4 (No.
333-58711))                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                           
|3.2         |  | Bylaws of the Company (incorporated by reference to Exhibit 3.4 to the Companys Annual Report on Form 10-K for its fiscal year ended
February 27, 1998)                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                           
|3.3         |  | Articles of Restatement of Pierre Foods, Inc., dated July 30, 2002                                                                                                                                                                                                                                        
|            |  |                                                                                                                                                                                                                                                                                                           
|4.1         |  | Note Purchase Agreement, dated June 4, 1998, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.1
to the Companys Current Report on Form 8-K filed with the SEC on June 24, 1998)                                                                      
|            |  |                                                                                                                                                                                                                                                                                                           
|4.2         |  | Indenture, dated as of June 9, 1998, among the Company, certain Guarantors and State Street Bank and Trust Company, Trustee (incorporated by
reference to Exhibit 4.2 to the Companys Current Report on Form 8-K filed with the SEC on June 24, 1998)                                                    
|            |  |                                                                                                                                                                                                                                                                                                           
|4.3         |  | Registration Rights Agreement, dated June 9, 1998, among the Company, certain Guarantors and certain Initial Purchasers (incorporated by reference
to Exhibit 4.3 to the Companys Current Report on Form 8-K filed with the SEC on June 24, 1998)                                                        
|            |  |                                                                                                                                                                                                                                                                                                           
|4.4         |  | Form of Initial Global Note (included as Exhibit A to Exhibit 4.2 to the Companys Current Report on Form 8-K filed with the SEC on June 24, 1998
and incorporated herein by reference)                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                           
|4.5         |  | Form of Initial Certificated Note (included as Exhibit B to Exhibit 4.2 to the Companys Current Report on Form 8-K filed with the SEC on June 24,
1998 and incorporated herein by reference)                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                           
|4.6         |  | Form of Exchange Global Note (included as Exhibit C to Exhibit 4.2 to the Companys Current Report on Form 8-K filed with the SEC on June 24, 1998
and incorporated herein by reference)                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                           
|4.7         |  | Form of Exchange Certificated Note (included as Exhibit D to Exhibit 4.2 to the Companys Current Report on Form 8-K filed with the SEC on June 24,
1998 and incorporated herein by reference)                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                           
|4.8         |  | First Supplemental Indenture, dated as of September 5, 1998, among the Company, State Street Bank and Trust Company, Trustee, and Pierre Leasing,
LLC (incorporated by reference to Exhibit 4.8 to Pre-Effective amendment No. 1 to the Companys Registration Statement on Form S-4 (No. 333-58711))     
|            |  |                                                                                                                                                                                                                                                                                                           
|4.9         |  | Second Supplemental Indenture dated as of February 26, 1999 among the Company, State Street Bank and Trust Company, Trustee, and Fresh Foods
Restaurant Group, LLC (incorporated by reference to Exhibit 4.9 to the Companys Quarterly Report on Form 10-Q for its fiscal quarter ended December
4, 1999)
|            |  |                                                                                                                                                                                                                                                                                                           
|4.10        |  | Third Supplemental Indenture dated as of October 8, 1999 between the Company and State Street Bank and Trust Company, Trustee (incorporated by
reference to Exhibit 4.10 to the Companys Quarterly Report on Form 10-Q for its fiscal quarter ended December 4, 1999)                                    
|            |  |                                                                                                                                                                                                                                                                                                           
|10.1        |  | Guarantee Fee Agreement between the Company and James C. Richardson, dated as of May 23, 2002 (incorporated by reference to Exhibit 10.1 to the
Companys Quarterly Report on Form 10-Q for its fiscal quarter ended June 1, 2002)                                                                        
|            |  |                                                                                                                                                                                                                                                                                                           

24



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##### 



|     |  |                                                                                                                                                                                                                                                                                                                                   
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2 |  | Guarantee Fee Agreement between the Company and David R. Clark, dated as of May 23, 2002 (incorporated by reference to Exhibit 10.2 to the Companys
Quarterly Report on Form 10-Q for its fiscal quarter ended June 1, 2002)                                                                                                     
|     |  |                                                                                                                                                                                                                                                                                                                                   
|10.3 |  | Loan and Security Agreement by and among the Company and Foothill Capital Corporation, as Lender, dated as of May 29, 2002 (schedules omitted)
(incorporated by reference to Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q for its fiscal quarter ended June 1, 2002)                                               
|     |  |                                                                                                                                                                                                                                                                                                                                   
|10.4 |  | Amendment No. 1 to Amended and Restated Agreement and Plan of Share Exchange between the Company, PF Management, Inc., James C. Richardson, Jr. and
David R. Clark, dated as of June 20, 2002 (incorporated by reference to Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q for its fiscal
quarter ended June 1, 2002)
|     |  |                                                                                                                                                                                                                                                                                                                                   
|10.5 |  | Articles of Share Exchange Between PF Management, Inc. and Pierre Foods, Inc. dated July 26, 2002                                                                                                                                                                                                                                 
|     |  |                                                                                                                                                                                                                                                                                                                                   
|10.6 |  | Amended and Restated Bylaws of Pierre Foods, Inc., dated September 18, 2002                                                                                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                                                   
|99.1 |  | Risk Factors                                                                                                                                                                                                                                                                                                                      
|     |  |                                                                                                                                                                                                                                                                                                                                   
|99.2 |  | Written Statement of Chief Executive Officer                                                                                                                                                                                                                                                                                      
|     |  |                                                                                                                                                                                                                                                                                                                                   
|99.3 |  | Written Statement of Chief Financial Officer                                                                                                                                                                                                                                                                                      

The Company hereby agrees to provide to the Commission, upon request,
copies of long-term debt instruments omitted from this report pursuant to Item
601(b)(4)(iii)(A) of Regulation S-K under the Securities Act.

25