Leading Brands Inc., North America's only fully integrated premium beverage company, has announced its operating results, including record cash inflow from operations, for the first quarter of its 2004 fiscal year ended 31 May, 2004.

During Q1 the company generated cash inflow from operations of US$1.061 m versus US$295,000 in the same quarter last year. Net income before taxes was US$768,000 compared to US$7,000 in 2003.

The company has recorded income tax expense of US$371,000 in this quarter (US$0 last year).
The income tax expense on operating income is a non-cash item in this period as the company has tax loss carry-forwards sufficient to offset that expense. For the first time, the company recorded stock-based compensation for employees. Total non-cash stock-based compensation expenses were US$68,000. Resultant net income was US$396,000 or US$0.03 per share versus US$7,000 or $0.00 per share during Q1 2003.

Revenues for the quarter were US$9.34 m compared to US$12.286 m in Q1 2003. The reduction in revenue principally resulted from the discontinuance of the Little Debbie's snack cake distribution business, change in mix of co-pack customers that supply raw materials, and lower sales volumes in the US.

Leading Brands chairman and CEO Ralph McRae said: "We are very pleased with the turnaround in our operations. More than tripling operational cash inflow is no small task. The reduction in revenues is directly attributable to the three items mentioned above. The re-focusing of our US business on our "IDS" model was completed during Q1 and we are now seeing the impact on both the top and bottom lines. Our results directly benefited from a rather dramatic 31% increase in gross profit percentage and a US$706,000 reduction in SG&A expenses."

The company also announced the re-appointment of Iain Harris as a director. Harris' term expires at the company's 2005 annual general meeting.

In reference to Harris' appointment, McRae said: "We are all fortunate to have Iain back on our board. He has been a strong contributor to our company for many years and brings a wealth of experience to our business."