Overhill Farms Announces First Quarter Results 255% Increase in Operating Income LOS ANGELES, Feb. 10 /PRNewswire-FirstCall/ -- Overhill Farms, Inc. today
announced its first quarter results for the period ended December 28, 2003.
Operating incomefor the current period increased $1,090,000 to $1,517,000, as
compared to $427,000 in the same period last year, an increase of 255%, despite
lower revenues.
Net revenue for the first quarter of fiscal 2004 decreased $7,916,00 to
$30,394,000 from $38,310,000 for the same period last fiscal year. This
decrease is largely attributable to the activity in four accounts. Sales to
Albertson's, which has been affected by the Southern California grocers strike,
decreased by over $3,000,000, comparing the first quarter of fiscal 2004 to the
first quarter of fiscal 2003. Secondly, Overhill's decision to limit its credit
exposure with United Airlines, after that carrier filed for bankruptcy
protection, contributed to an overall decrease of $1,600,000 million in airline
sales for the first quarter as compared to the same period in the prior year.
First quarter revenues from foodservice customers, which decreased by $3,072,000
from the prior year, were affected primarily by two customers, one of which the
Company decided not to re-bid aggressively based upon profitability objectives
and another which reduced the number of products offered to its customers.
Gross profit for the first quarter of fiscal 2004 increased $288,000 to
$4,596,000 from $4,308,000 for the first quarter of fiscal 2003. The increase
in gross profit, despite lower net revenues was the result of several positive
factors. Gross profit margin as a percentage of net revenues increased from
11.2% to 15.1% due to (1) the realization of planned efficiencies in the
Company's new production facility; (2) management's efforts to increase
profitability on new accounts and its decision to forgo business that did not
meet profitability objectives; and (3) decreasing intracompany product transfers
and reduced costs resulting from the full utilization of Overhill's new on-site
cold storage facility.
Selling, general and administrative expenses (SG&A) for the first quarter of
fiscal 2004 decreased $802,000 to $3,079,000 from $3,881,000 for the first
quarter of fiscal 2003. The decrease in SG&A reflects the fact that there were
no bad debt write-offs in the three months ended December 28, 2003, as compared
to a write-off of $173,000 for United Airlines in the quarter ended December 29,
2002 and a decrease in outbound freight costs of $575,000 due to reduced sales
volume and better management of freight costs.
Other expenses for the first quarter of fiscal 2004, which primarily consist of
various financing-related charges, increased $3,326,000 to $4,832,000 from
$1,506,000 for the first quarter of fiscal 2003. The increase includes a
$2,778,000 charge, substantially all noncash, for debt extinguishment expenses
related to the write-off of deferred financing costs and debt issue costs in
connection with the refinancing, at more favorable interest rates, of
substantially all indebtedness in October 2003.
The net result for the first quarter of fiscal 2004 was a loss of $2,059,000
($.14 per share) as compared to a loss of $646,000 ($.06 per share) for the
first quarter of fiscal 2003. As indicated above, the net loss for the first
quarter of fiscal 2004 includes significant amounts of nonrecurring, noncash
charges related to the refinancing in October 2003.
In discussing the first quarter results, James Rudis, Overhill Farms' Chairman
and Chief Executive Officer, said, "While we realize that there is a lot more
for us to accomplish, we are very pleased with our overall first quarter
results. We are finally getting the efficiencies and savings we anticipated
from our new facility and a new lower-cost, long-term financing package is in
place." Rudis added, "Our focus now is on growing the top line and increasing
our market share in the foodservice and retail channels. We are confident that
we shall begin seeing near-term benefits from our initiatives to increase
revenues." Overhill Farms is a value added supplier of high quality frozen foods to
foodservice, retail, airline and health care customers.
This news release contains disclosures that are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs,
including, but not limited to, statements concerning the Company's operations
and financial performance and condition. For this purpose, statements of
historical fact may be deemed to be forward-looking statements. All statements
regarding the Company's expected future financial position, results of
operations, cash flows, dividends, financing plans, business strategy, budgets,
projected costs or cost savings, capital expenditures, competitive positions,
continuation or expansion of governmental programs, growth opportunities for
existing products or products under development, benefits from new technology,
plans and objectives of management for future operations and markets for stock
are forward looking statements. In addition, forward-looking statements include
statements in which we use words such as "expect," "believe," "anticipate,"
"confident," "intend," "strategy," "plan," "will," "estimate," "project,"
"goal," "target" or similar expressions. Although we believe the expectations
reflected in such forward-looking statements are based on reasonable
assumptions, we cannot assure you that these expectations will prove to have
been correct, and actual results may differ materially from those reflected in
the forward-looking statements.
The Company cautions that these statements by their nature involve risks and
uncertainties, and actual results may differ materially depending on a variety
of important factors, including, among others, the impact of competitive
products and pricing; market conditions and weather patterns that may affect the
cost of raw material as well as the market for the Company's products; changes
in the Company's business environment, including actions of competitors and
changes in customer preferences; the occurrence of acts of terrorism, such as
the events of September 11, 2001, or acts of war; changes in governmental laws
and regulations, including income taxes; market demand for new and existing
products; and other factors as may be discussed in the Company's Report on Form
10-K for the year ended September 28, 2003, and other reports filed with the
Securities and Exchange Commission.
OVERHILL FARMS, INC. CONDENSED SUMMARY OF OPERATIONS
(UNAUDITED) For the Three Months Ended
December 28, December 29,
2003 2002 Net revenues $30,393,606$38,309,691 Cost of sales 25,797,635 34,001,913 Gross profit 4,595,971 4,307,778 Selling, general and
administrative expenses 3,078,595 3,880,859 Operating income 1,517,376 426,919 Other expenses (4,832,386) (1,506,476) Loss before income taxes (3,315,010) (1,079,557) Income tax benefit 1,256,000 433,313 Net loss $(2,059,010) $(646,244) Weighted average shares outstanding:
Basic 14,805,556 10,084,669
Diluted 14,805,556 10,084,669 Net loss per share - basic and diluted $ (.14) $ (.06)
OVERHILL FARMS, INC. CONDENSED BALANCE SHEET DATA December 28, September 28,
2003 2003
(Unaudited) Current assets $26,754,683 $23,412,238 Property and equipment, net 12,927,757 13,251,330 Other assets 19,372,640 19,518,559 Total assets $59,055,080 $56,182,127 Current liabilities $10,605,155 $11,571,148 Other liabilities 50,848,395 44,950,438 Shareholders' equity (deficit) (2,398,470) (339,459) Total liabilities and shareholders'
equity (deficit) $59,055,080 $56,182,127
DATASOURCE: Overhill Farms, Inc.
CONTACT: James Rudis of Overhill Farms, Inc., +1-323-582-9977
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