USA: Northland Cranberries, Inc. Reports Third Quarter Financial Results
Year-to-date revenues for the nine-month period ending May 31, 2000 were $205 million, with a net loss of $25.1 million, or $1.19 per share. Last year's comparable period showed revenues of $160.2 million, with net income of $2.0 million, or $0.10 per share.
John Swendrowski, Northland Chairman and CEO, stated, "Our third quarter results were negatively impacted by weak sales in March and April, primarily due to the continued heavy price discounting by our major competitor and our reduced trade promotional activity. In May, we began to see the benefits of our revised pricing strategy, which followed the recent write-down of cranberry inventory, resulting in sales volume increasing more than 60% over April.
"Going forward, we anticipate our adjusted pricing strategy will enable us to remain competitive in the grocery aisle. We are continuing to aggressively expand our brands through new distribution channels, such as convenience stores and mass merchandisers, and through the introduction of new products, such as Northland Cranberry Orange and Seneca Cranberry Grapefruit.
"In addition, we have recently implemented measures to improve the utilization of our bottling plants over the inefficient levels in March and April. By streamlining our workforce and accepting additional contract packing to replace the lost volume of private label business sold to Cliffstar, we expect to reduce our overall per-case manufacturing costs and improve margins on our branded products.
"The cranberry juice category continues to be highly competitive, presenting a major challenge to Northland. However, the steps we have taken in an effort to lower both ingredient and manufacturing costs, along with the implementation of other cost-cutting measures, should help us to compete more effectively and reverse the losses of the past two quarters.
"We are continuing our process of exploring strategic alternatives through two investment banking firms and hope to report results of that process by our August 31st fiscal year-end," Swendrowski said.
Reporting on company actions taken to comply with the recently-announced USDA marketing order that restricts this year's industry-wide cranberry production to 85% of an historic average, Swendrowski stated measures have already been implemented to reduce the crop at Northland's Massachusetts properties. "Since the cost per barrel of cranberries produced at our Massachusetts bogs is higher than at our Wisconsin properties, we expect most of the mandated reduction to come from those properties. Because of our current inventory levels, the crop reduction should not impact our marketing strategy or the anticipated sales volume of our branded products," Swendrowski said.
Northland is a vertically integrated grower, handler, processor and marketer of cranberries and value-added cranberry products. The company processes and sells Northland brand 100% juice cranberry blends, Seneca brand juice products, Northland brand fresh cranberries and other cranberry products through retail supermarkets and other distribution channels. Northland also sells cranberry and other fruit concentrates to industrial customers who manufacture juice products. With 25 growing properties in Wisconsin and Massachusetts, Northland is the world's largest cranberry grower. It is the only publicly-owned, regularly-traded cranberry company in the United States, with shares traded on the Nasdaq Stock Market under the listing symbol CBRYA.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this press release are "forward-looking statements," including statements about the Company's future plans, goals and other events, which have not yet occurred. These statements are intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. They can generally be identified because the context of such statements will include words such as "believes," "anticipates," "expects," or words of similar import. Whether or not these forward-looking statements will be accurate in the future will depend on certain risks and factors including risks associates with (i) development, market share growth, and continued consumer acceptance of the Company's branded juice products; (ii) strategic actions of the Company's competitors in pricing, marketing, and advertising; (iii) aggressive spending to support the Company's branded products; (iv) the results of the sale of the Company's private label business; (v) the adoption and implementation of the marketing order of the Cranberry Marketing Committee of the United States Department of Agriculture; and (vi) agricultural factors affecting the Company's crop and the crop of other North American growers. Readers should consider these risks and factors and the impact they have when evaluating these forward-looking statements. These statements are based only on management's knowledge and expectations on the date of this press release. The Company will not necessarily update these statements or other information in this press release based on future events or circumstances.
Condensed consolidated statements of operations follow.
NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
For the three For the nine
months ended months ended
May 31, May 31, May 31, May 31,
2000 1999 2000 1999
Revenues $61,417 $70,895 $205,005 $160,232
Cost of sales 39,322 47,314 163,918 102,548
Gross profit (loss) 22,095 23,581 41,087 57,684
Selling, general and
administrative 25,425 17,968 71,973 48,438
Gain on disposal of
business (2,144) -- (2,144) --
Income (loss) from
operations (1,186) 5,613 (28,742) 9,246
Interest expense (3,908) (2,614) (10,311) (5,904)
Interest income 684 -- 684 --
Income (loss) before
income taxes (4,410) 2,999 (38,369) 3,342
Income taxes (benefit) -- 1,184 (13,244) 1,339
Net income (loss) $(4,410) $1,815 $(25,125) $2,003
Net income (loss)
Basic $(0.22) $0.09 $(1.19) $0.10
Diluted $(0.22) $0.09 $(1.19) $0.10
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