HONG KONG: CBR Brewing Company, Inc. reports third quarter 2000 operating results
During the nine months ended September 30, 2000, the Company reported net sales of $92,662,484 and net income of $168,354, as compared to net sales of $97,424,788 and net income of $2,335,798 for the nine months ended September 30, 1999. Net income per common share (basic and diluted) was $0.02 in 2000 as compared to $0.29 in 1999. Weighted average common shares outstanding (basic and diluted) were 8,010,013 in 2000 and 1999.
During the three months ended September 30, 2000 and 1999, the Company sold 41,430 metric tons and 50,721 metric tons of beer, respectively, a decrease of 18.3%. During the nine months ended September 30, 2000 and 1999, the Company sold 156,449 metric tons and 159,114 metric tons of beer, respectively, a decrease of 1.7%. Beer sales decreased in 2000 as compared to 1999 as a result of a decrease in the volume of beer sold due to a weakening in customer demand in China for foreign premium brands such as Pabst Blue Ribbon beer, as well as increasing competition from both foreign premium brands and local brands, which accelerated during the three months ended September 30, 2000. As a result of softening sales and substantial continuing marketing, advertising and promotional expenditures, the Company expects a continuing deterioration in sales and operating results during the three months ending December 31, 2000, with an operating loss likely for this period. The Company expects that current economic conditions will continue in 2001, and is therefore considering the implementation of certain cost control measures.
CBR Brewing Company, Inc., through its subsidiaries and affiliates, is engaged in the production, distribution and marketing of Pabst Blue Ribbon beer in the People's Republic of China. As of September 30, 2000, the Company owned effective interests of 60%, 24%, 33% and 9% in four brewing facilities currently producing Pabst Blue Ribbon beer in the People's Republic of China, all of which are managed by the Company. The Company produces Pabst Blue Ribbon beer under a sublicense agreement with Guangdong Blue Ribbon Group Co. Ltd. ("Guangdong Blue Ribbon"), a related company, which expires on November 6, 2003.
Noble China Inc., a public company listed on the Toronto Stock Exchange, issued a press release on May 27, 1999 to announce that it had acquired from Pabst Brewing Company the exclusive rights to brew and distribute Pabst Blue Ribbon beer throughout China for a period of 30 years from 2003 to 2033. Management has consulted with legal counsel regarding the legitimacy of the purported license and the Company's potential responses. In addition, management has consulted with Guangdong Blue Ribbon, the owner of the Pabst Blue Ribbon trademark in China, regarding potential responses, and has met with representatives of Noble China Inc. in an attempt to explore a potential settlement. In August 2000, the Company and Noble China Inc. agreed to establish a management committee to evaluate the potential to enhance the operations of their respective breweries in China through cooperative efforts, including the possibility of combining brewing and marketing operations into one entity.
Management of the Company has requested that Guangdong Blue Ribbon take appropriate action to protect its rights and its sub-licensees' rights to utilize the Pabst Blue Ribbon trademark in China. The Company has been advised that Guangdong Blue Ribbon is still evaluating the situation and has not yet determined how it will respond to this matter. Once Guangdong Blue Ribbon has responded, the Company expects to be in a position to evaluate and revise its future business plan and strategy accordingly. The Company is currently unable to predict the effect that this development may have on future operations. However, the inability of the Company to obtain a sub-license from Noble China Inc. or enter into some other form of strategic relationship under acceptable terms and conditions that would allow the Company to continue to produce and distribute Pabst Blue Ribbon beer in China would have a material adverse effect on the Company's future results of operations, financial position and cash flows.
For further information, contact investor relations at (818) 789-0488.
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