Centennial Specialty Foods Reports Second Quarter Results DENVER,
Aug. 13 /PRNewswire-FirstCall/ -- Centennial Specialty Foods
Corporation (Nasdaq: CHLE; Boston Stock Exchange: CSJ) reported
that gross sales of its products for the three months ended June
30, 2004 increased 9.6 % over the same period last year. This
increase is made up of an increase of $402,067 (48.6%) in gross
sales of their premium Stokes line of green chile sauces and a
decrease of $248,930 (41.1%) in gross sales of the Ellis line of
products. This reflects the Company's concentration on its premium,
higher profit margin products, while eliminating or de-emphasizing
lower margin products in its product mix. The increase in gross
sales of the Stokes Green Chile Sauces was due to initial orders
for product by new retail customers in California and Arizona. Net
sales, which are adjusted for discounts, promotional allowances and
slotting fees, totaled $947,064 for the three months ended June 30,
2004 and were 22.3% lower than the same period in 2003. This
decrease resulted from $427,380 of slotting fees being charged
against gross sales. As a result, gross profit for the three months
ended June 30, 2004 decreased $348,030 (82.6%) from the same period
in 2003. Selling, general and administrative expenses increased
$307,782 for the three months ended June 30, 2004 compared to 2003.
This increase was primarily attributable to advertising and
consumer marketing spending associated with Centennial's expansion
into new markets. Additionally, the Company incurred higher legal
fees due to issues with its tenant and sole supplier. Centennial
reported a net loss of $344,090 for its three months ended June 30,
2004 compared to net income of $14,802 for the same period in the
prior year. Loss per common share, after giving effect to preferred
stock dividends in arrears, was $0.12 for the three months ended
June 30, 2004. Centennial has been successful in laying the
groundwork for expansion of its premium Stokes Green Chile Sauces
into new markets. Centennial currently sells to Albertsons, Kroger,
Safeway, Wal-Mart, Sam's Club and Costco, and is using this
customer base as a launching platform for new markets. It has added
nearly 1,700 new stores in California and Arizona since its
expansion efforts began with more store additions anticipated. Bob
Beckwith, Chief Marketing Officer for Centennial stated, "Getting
distribution into additional retail grocery customers has been, and
will continue to be, a critical part of our expansion plans."
Centennial is rolling out its marketing campaign to drive consumer
purchases of its premium Stokes Green Chile Sauces. "Consumer
purchases of our products is the next step in executing our
business plan. Continued sales growth will be driven by consumer
demand in our new markets," stated Mr. Beckwith. With three strong
promotions planned through year end, Centennial will gain
significant feedback on consumer demand for its Stokes Green Chile
Sauces in the new markets. Centennial is continuing to work with
major retailers and regional chains as it evaluates the next
markets for future expansion. "These markets provide opportunities
for Centennial to further increase its distribution during 2004 and
2005. We continue to be excited about the opportunities ahead for
Centennial. We believe that our premium quality Southwestern sauces
provide consumers with a unique alternative to typical Mexican
sauces," stated Jeffrey Nieder, CEO. As previously reported in the
Company's Form 10-QSB for the three months ended March 31, 2004,
the Company's tenant and sole supplier had raised certain claims.
The parties entered into a non-binding Memorandum of Understanding
("MOU") that provides for, among other things, the release of all
claims by both parties and includes the sale of the Company's
production plant and equipment to the supplier. The closing of the
transactions in the MOU are subject to certain conditions,
including satisfactory completion of due diligence and execution of
definitive documents. "We are pleased to be moving toward
resolution of all issues in a mutually beneficial manner," said
Jeff Nieder, CEO. Tad Ballantyne, CEO for the Company's supplier
stated, "We look forward to expanding our relationship as
Centennial rolls out its business plan." Centennial Specialty Foods
Corporation is a distributor of ethnic Southwestern food products.
Its products are sold under the Stokes and Ellis labels, two
well-known Southwestern brands that date back almost 100 years.
Principal channels of distribution for Centennial's products are
grocery retailers, superstores and club stores in Colorado,
Arizona, California and, to a lesser extent, several major
metropolitan markets in adjoining states. More information about
Centennial can be found on its website at
http://www.centennialspecialtyfoods.com/. Note Regarding Forward
Looking Statements: Certain matters discussed in this press release
could contain forward- looking information that involves risks and
uncertainties that could cause actual results to differ materially
from current trends or expected results. We identify forward
looking statements through our use of words such as "expect,"
"believe," "project," "anticipate," and similar expressions. These
risks that may affect our ability to achieve forward-looking
statements are discussed in our final prospectus in the section
entitled "Risk Factors" and other documents that are on file with
the Securities and Exchange Commission. CENTENNIAL SPECIALTY FOODS
CORPORATION AND SUBSIDIARY Consolidated Unaudited Statements of
Operations For the Three Months Ended For the Six Months Ended June
30, June 30, 2004 2003 2004 2003 Net sales $947,064 $1,218,154
$2,074,547 $2,414,216 Cost of goods sold 873,715 796,775 1,619,890
1,542,844 Gross profit 73,349 421,379 454,657 871,372 Selling,
general and administrative expenses 735,010 427,228 1,312,698
813,458 Income (loss) from operations (661,661) (5,849) (858,041)
57,914 Other income (expense) Interest expense (31,223) (129,302)
(143,228) (256,315) Rent income 146,710 158,581 305,291 317,162
Total other income 115,487 29,279 162,063 60,847 Income (loss)
before income taxes (546,174) 23,430 (695,978) 118,761 Income tax
benefit - deferred 202,084 -- 257,512 -- Income tax expense - pro
forma -- (8,628) -- (43,900) Total income tax benefit (expense)
202,084 (8,628) 257,512 (43,900) Net income (loss) $(344,090)
$14,802 $(438,466) $74,861 Net income (loss) before preferred stock
dividends $(344,090) $14,802 $(438,466) $74,861 Preferred stock
dividends - paid -- -- (250,000) -- Preferred stock dividends -
arrears (250,000) -- (250,000) -- Total preferred stock dividends
(250,000) -- (500,000) -- Net income (loss) available to common
shareholders $(594,090) $14,802 $(938,466) $74,861 Basic and
diluted net income (loss) per common share $(0.12) $0.00 $(0.19)
$0.02 Basic and diluted weighted average common shares outstanding
5,050,000 3,500,000 5,050,000 3,500,000 Consolidated Balance Sheets
June 30, December 31, 2004 2003 Assets (unaudited) Current assets
Cash and cash equivalents $286,123 $6,076,479 Accounts receivable,
net of allowance for doubtful accounts of $25,483 and $25,483,
respectively 376,036 303,848 Other receivable 57,497 -- Inventory,
net 1,759,651 1,043,540 Prepaid expenses 106,490 186,086 Total
current assets 2,585,797 7,609,953 Non-current assets Property,
plant and equipment, net 6,020,536 6,112,215 Goodwill, net
1,634,079 1,634,079 Other assets 70,610 70,000 Other long-term
receivable -- 170,000 Total non-current assets 7,725,225 7,986,294
Total assets $10,311,022 $15,596,247 Liabilities and Stockholders'
Equity Current liabilities Accounts payable - trade $273,904
$1,022,268 Accrued liabilities 602,102 578,134 Accrued dividends
payable -- 172,603 Related party payable -- 365,394 Current portion
of long-term debt -- 750,250 Note payable - stockholder -- 908,900
Total current liabilities 877,006 3,797,549 Long-term debt
2,084,750 3,503,454 Deferred tax liability 273,150 530,662 Total
long-term liabilities 2,357,900 4,034,116 Total liabilities
3,234,906 7,831,665 Commitments and contingencies Stockholders'
equity Preferred stock (liquidation preference $10,250,000),
3,000,000 shares authorized, 2,000,000 shares issued and
outstanding, $5 stated value, 10% dividend 2,334,785 2,334,785
Common stock, $0.0001 par value, 47,000,000 shares authorized,
5,050,000 shares issued and outstanding 505 505 Additional paid-in
capital 5,794,036 5,794,036 Accumulated deficit (1,053,210)
(364,744) Total stockholders' equity 7,076,116 7,764,582 Total
liabilities and stockholders' equity $10,311,022 $15,596,247 Stokes
and Ellis are registered trademarks of Centennial Specialty Foods
Corporation. DATASOURCE: Centennial Specialty Foods Corporation
CONTACT: Doug Evans of Centennial Specialty Foods Corporation,
+1-303-292-4018 Web site: http://www.centennialspecialtyfoods.com/
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