Premium Brands Inc. Announces Fourth Quarter Results and Completion of Fresh Pork Division Divestiture

Apr 19, 2001, 01:00 ET from Premium Brands Inc.

    VANCOUVER, B.C., April 19 /PRNewswire/ -- Premium Brands Inc. (TSE: FFF)
 announced today its results for the fourth quarter and year-ended
 December 30, 2000. Sales for the quarter increased by 18% despite a labour
 dispute at the Company's Vancouver processing plant and the sale of its salad
 division on August 5, 2000. For the year, the Company's sales increased by
 $63.7 million to $501.7 million.
     High North American hog prices resulted in significant losses in the
 Company's Fresh Pork Division. These losses, combined with a $10.6 million
 charge relating to the Vancouver plant labour dispute and the realignment of
 several plants' production lines, resulted in a net loss for the quarter of
 $7.3 million or $0.92 per share. For the year, the combination of the Fresh
 Pork Division's poor results and the $10.6 million charge resulted in a net
 loss of $5.8 million or $0.74 per share.
     On April 17, 2001 the Company completed the sale of its Fresh Pork
 Division to Olymel S.E.C, a limited partnership, for proceeds of about
 $90 million. Premium will be recording an after tax gain on the transaction of
 approximately $23 million or $2.71 per share in the first quarter of 2001. In
 conjunction with the sale, Premium Brands and Olymel entered into a seven-year
 supply agreement which guarantees the Company's processed meat operations
 access to a supply of high quality fresh pork.
     On April 11, 2001 the Company announced the signing of a five-year labour
 agreement with United Food and Commercial Workers Local 1518, which represents
 the Vancouver plant's unionized employees. The new agreement, in conjunction
 with a realignment of production at several of the Company's plants, is
 expected to generate benefits of approximately $3.5 million per year and will
 play a significant part in making the Vancouver facility a low cost producer
 of processed meat products.
     "With the sale of the Fresh Pork Division and the settlement of the
 Vancouver plant labour dispute, our company is re-positioned for growth," said
 Fred Knoedler, President and CEO.
     "Looking forward, our focus will be on building our branded consumer
 products and distribution businesses, both of which have a history of strong
 growth and expanding margins," stated Mr. Knoedler.
     During the quarter, the Company's Distribution Division's sales increased
 by over 150% to $15.7 million while its gross profit increased to $5.3 million
 from $2.0 million in 1999. For the year, the Distribution Division's sales
 were up almost 100% to $47.0 million while its gross profit, as a percentage
 of sales, expanded to 37.1% from 32.5% in 1999.
     The Prepared Foods Division's sales and gross profit for the quarter
 decreased by 10.3% and 15.3%, respectively, due to the Vancouver plant labour
 dispute and the sale of the Division's salad business earlier in the year. For
 the year, these factors resulted in a 1.2% and 6.9% decrease in the Division's
 sales and gross profit, respectively. Excluding the salad business's results
 for 1999 and 2000, the Prepared Foods Division would have shown a sales
 increase of $8.3 million or 4% and a gross profit decrease of 2.5%.
     The Company's performance was also impacted by rising selling, general and
 administration costs that were almost entirely the result of increased
 overheads associated with the expansion of its proprietary distribution
 networks.
     "The combination of our leading brands and unique proprietary distribution
 channels will enable us to continue growing at double digit rates and, as our
 distribution channels achieve critical mass, generate strong sustainable
 operating margins," said Will Kalutycz, CFO. "Furthermore, we see significant
 opportunities to create value for shareholders through strategic
 transactions," added Mr. Kalutycz.
     After adjusting for losses associated with the Fresh Pork Division and the
 Company's new Goodlife Foods home delivery initiative, and normalizing for the
 effects of the Vancouver labour dispute, Premium Brands' earnings before
 interest, taxes, depreciation and amortization ("EBITDA") for fiscal 2000
 would have been approximately $15 million.
     "The benefits associated with the recently resolved Vancouver plant labour
 dispute combined with the strong growth opportunities of our various business
 units should enable us to significantly expand our EBITDA in 2001," stated
 Mr. Kalutycz.
     "The sale of the Fresh Pork Division was a significant step in the
 Corporation's continuing process of reviewing strategic alternatives to create
 and maximize shareholder value," said Richard Klassen, Chairman of Premium
 Brands. "Our remaining businesses are now ideally positioned to benefit from
 current trends in the North American food industry," added Mr. Klassen.
     Premium Brands has been engaged in the food processing business since 1917
 and has manufacturing facilities in British Columbia, Alberta, Saskatchewan,
 Manitoba, Ontario, Washington and Oregon.
 
                         CONSOLIDATED INCOME STATEMENT
        (in thousands of CDN dollars except earnings per share amounts)
 
 
                                13 week      12 week      53 week    52 week
                                period       period       period      period
                                 ended        ended        ended      ended
                                Dec 30,      Dec 25,      Dec 30,     Dec 25,
                                 2000         1999         2000        1999
                              (Unaudited)  (Unaudited)   (Audited)  (Audited)
 
     Sales by division:
       Prepared Foods Division  $51,471      $57,379     $229,407   $232,217
       Distribution Division     15,667        6,181       46,984     23,683
       Fresh Pork Division       58,617       43,232      225,299    182,100
                                125,755      106,792      501,690    438,000
 
     Gross profit (loss) by
      division:
       Prepared Foods Division  $13,545      $16,001      $52,864    $56,775
       Distribution Division      5,302        2,016       17,425      7,686
       Fresh Pork Division         (22)        2,306      (4,350)      8,586
                                 18,825       20,323       65,939     73,047
     Expenses:
       Selling, general and
         administrative          20,032       14,908       66,928     56,326
       Depreciation               2,372        1,748       10,177      8,321
       Amortization                 714          283        1,736        874
       Interest                   3,049          939        7,719      3,451
       Equity earnings            (591)           17      (2,076)      (975)
       Gain on sale of assets       225           --      (2,214)         --
       Dilution gain on
         subsidiary's share
         issuance                 (888)          198      (8,795)         --
       Labour dispute and plant
         re-alignment costs      10,617           --       10,617         --
       Plant restructuring           --        6,767           --      6,767
       Non-controlling interest   (883)        (127)        (749)       (35)
 
     Earnings before income
      taxes                    (15,822)      (4,409)     (17,404)    (1,682)
       Income taxes             (8,488)      (1,540)     (11,609)      (873)
 
     Net earnings (loss)        (7,334)      (2,869)      (5,795)      (809)
 
     Net earnings (loss) per
      share:
       Basic                     (0.92)       (0.37)       (0.74)     (0.11)
       Fully diluted             (0.92)       (0.37)       (0.74)     (0.11)
 
 
                       CONSOLIDATED BALANCE SHEET AMOUNTS
                         (in thousands of CDN dollars)
 
                                                        Dec 30,      Dec 25,
                                                         2000         1999
                                                       (Audited)    (Audited)
 
     Current assets:
       Cash                                                $237       $1,530
       Accounts receivable                               39,463       41,929
       Inventories                                       27,598       25,002
       Prepaid expenses                                   4,026        2,245
       Deferred income taxes                              8,700           --
 
                                                         80,024       70,706
 
     Notes receivable                                     9,481        2,066
     Deferred income taxes                                4,007           --
     Investment in significantly
       influenced companies                              35,944       16,601
     Capital assets                                     123,338       92,040
     Goodwill                                            19,301       16,557
     Other                                                2,012        1,820
 
                                                       $274,107     $199,790
 
     Current liabilities:
       Bank indebtedness                                $40,417      $29,798
       Accounts payable                                  33,372       24,739
       Current term-debt                                  9,780        3,143
 
                                                         83,569       57,680
 
     Long-term debt                                      88,032       55,353
     Deferred income taxes                                   --          717
                                                        171,601      113,750
 
     Non-controlling interest                             9,186          330
     Shareholders' equity                                93,320       85,710
 
                                                       $274,107     $199,790
 
 

SOURCE Premium Brands Inc.
    VANCOUVER, B.C., April 19 /PRNewswire/ -- Premium Brands Inc. (TSE: FFF)
 announced today its results for the fourth quarter and year-ended
 December 30, 2000. Sales for the quarter increased by 18% despite a labour
 dispute at the Company's Vancouver processing plant and the sale of its salad
 division on August 5, 2000. For the year, the Company's sales increased by
 $63.7 million to $501.7 million.
     High North American hog prices resulted in significant losses in the
 Company's Fresh Pork Division. These losses, combined with a $10.6 million
 charge relating to the Vancouver plant labour dispute and the realignment of
 several plants' production lines, resulted in a net loss for the quarter of
 $7.3 million or $0.92 per share. For the year, the combination of the Fresh
 Pork Division's poor results and the $10.6 million charge resulted in a net
 loss of $5.8 million or $0.74 per share.
     On April 17, 2001 the Company completed the sale of its Fresh Pork
 Division to Olymel S.E.C, a limited partnership, for proceeds of about
 $90 million. Premium will be recording an after tax gain on the transaction of
 approximately $23 million or $2.71 per share in the first quarter of 2001. In
 conjunction with the sale, Premium Brands and Olymel entered into a seven-year
 supply agreement which guarantees the Company's processed meat operations
 access to a supply of high quality fresh pork.
     On April 11, 2001 the Company announced the signing of a five-year labour
 agreement with United Food and Commercial Workers Local 1518, which represents
 the Vancouver plant's unionized employees. The new agreement, in conjunction
 with a realignment of production at several of the Company's plants, is
 expected to generate benefits of approximately $3.5 million per year and will
 play a significant part in making the Vancouver facility a low cost producer
 of processed meat products.
     "With the sale of the Fresh Pork Division and the settlement of the
 Vancouver plant labour dispute, our company is re-positioned for growth," said
 Fred Knoedler, President and CEO.
     "Looking forward, our focus will be on building our branded consumer
 products and distribution businesses, both of which have a history of strong
 growth and expanding margins," stated Mr. Knoedler.
     During the quarter, the Company's Distribution Division's sales increased
 by over 150% to $15.7 million while its gross profit increased to $5.3 million
 from $2.0 million in 1999. For the year, the Distribution Division's sales
 were up almost 100% to $47.0 million while its gross profit, as a percentage
 of sales, expanded to 37.1% from 32.5% in 1999.
     The Prepared Foods Division's sales and gross profit for the quarter
 decreased by 10.3% and 15.3%, respectively, due to the Vancouver plant labour
 dispute and the sale of the Division's salad business earlier in the year. For
 the year, these factors resulted in a 1.2% and 6.9% decrease in the Division's
 sales and gross profit, respectively. Excluding the salad business's results
 for 1999 and 2000, the Prepared Foods Division would have shown a sales
 increase of $8.3 million or 4% and a gross profit decrease of 2.5%.
     The Company's performance was also impacted by rising selling, general and
 administration costs that were almost entirely the result of increased
 overheads associated with the expansion of its proprietary distribution
 networks.
     "The combination of our leading brands and unique proprietary distribution
 channels will enable us to continue growing at double digit rates and, as our
 distribution channels achieve critical mass, generate strong sustainable
 operating margins," said Will Kalutycz, CFO. "Furthermore, we see significant
 opportunities to create value for shareholders through strategic
 transactions," added Mr. Kalutycz.
     After adjusting for losses associated with the Fresh Pork Division and the
 Company's new Goodlife Foods home delivery initiative, and normalizing for the
 effects of the Vancouver labour dispute, Premium Brands' earnings before
 interest, taxes, depreciation and amortization ("EBITDA") for fiscal 2000
 would have been approximately $15 million.
     "The benefits associated with the recently resolved Vancouver plant labour
 dispute combined with the strong growth opportunities of our various business
 units should enable us to significantly expand our EBITDA in 2001," stated
 Mr. Kalutycz.
     "The sale of the Fresh Pork Division was a significant step in the
 Corporation's continuing process of reviewing strategic alternatives to create
 and maximize shareholder value," said Richard Klassen, Chairman of Premium
 Brands. "Our remaining businesses are now ideally positioned to benefit from
 current trends in the North American food industry," added Mr. Klassen.
     Premium Brands has been engaged in the food processing business since 1917
 and has manufacturing facilities in British Columbia, Alberta, Saskatchewan,
 Manitoba, Ontario, Washington and Oregon.
 
                         CONSOLIDATED INCOME STATEMENT
        (in thousands of CDN dollars except earnings per share amounts)
 
 
                                13 week      12 week      53 week    52 week
                                period       period       period      period
                                 ended        ended        ended      ended
                                Dec 30,      Dec 25,      Dec 30,     Dec 25,
                                 2000         1999         2000        1999
                              (Unaudited)  (Unaudited)   (Audited)  (Audited)
 
     Sales by division:
       Prepared Foods Division  $51,471      $57,379     $229,407   $232,217
       Distribution Division     15,667        6,181       46,984     23,683
       Fresh Pork Division       58,617       43,232      225,299    182,100
                                125,755      106,792      501,690    438,000
 
     Gross profit (loss) by
      division:
       Prepared Foods Division  $13,545      $16,001      $52,864    $56,775
       Distribution Division      5,302        2,016       17,425      7,686
       Fresh Pork Division         (22)        2,306      (4,350)      8,586
                                 18,825       20,323       65,939     73,047
     Expenses:
       Selling, general and
         administrative          20,032       14,908       66,928     56,326
       Depreciation               2,372        1,748       10,177      8,321
       Amortization                 714          283        1,736        874
       Interest                   3,049          939        7,719      3,451
       Equity earnings            (591)           17      (2,076)      (975)
       Gain on sale of assets       225           --      (2,214)         --
       Dilution gain on
         subsidiary's share
         issuance                 (888)          198      (8,795)         --
       Labour dispute and plant
         re-alignment costs      10,617           --       10,617         --
       Plant restructuring           --        6,767           --      6,767
       Non-controlling interest   (883)        (127)        (749)       (35)
 
     Earnings before income
      taxes                    (15,822)      (4,409)     (17,404)    (1,682)
       Income taxes             (8,488)      (1,540)     (11,609)      (873)
 
     Net earnings (loss)        (7,334)      (2,869)      (5,795)      (809)
 
     Net earnings (loss) per
      share:
       Basic                     (0.92)       (0.37)       (0.74)     (0.11)
       Fully diluted             (0.92)       (0.37)       (0.74)     (0.11)
 
 
                       CONSOLIDATED BALANCE SHEET AMOUNTS
                         (in thousands of CDN dollars)
 
                                                        Dec 30,      Dec 25,
                                                         2000         1999
                                                       (Audited)    (Audited)
 
     Current assets:
       Cash                                                $237       $1,530
       Accounts receivable                               39,463       41,929
       Inventories                                       27,598       25,002
       Prepaid expenses                                   4,026        2,245
       Deferred income taxes                              8,700           --
 
                                                         80,024       70,706
 
     Notes receivable                                     9,481        2,066
     Deferred income taxes                                4,007           --
     Investment in significantly
       influenced companies                              35,944       16,601
     Capital assets                                     123,338       92,040
     Goodwill                                            19,301       16,557
     Other                                                2,012        1,820
 
                                                       $274,107     $199,790
 
     Current liabilities:
       Bank indebtedness                                $40,417      $29,798
       Accounts payable                                  33,372       24,739
       Current term-debt                                  9,780        3,143
 
                                                         83,569       57,680
 
     Long-term debt                                      88,032       55,353
     Deferred income taxes                                   --          717
                                                        171,601      113,750
 
     Non-controlling interest                             9,186          330
     Shareholders' equity                                93,320       85,710
 
                                                       $274,107     $199,790
 
 SOURCE  Premium Brands Inc.