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Eskimo Pie: Reports 1999 Financial Results
NEWS FROM:
ESKIMO PIE CORPORATION
901 Moorefield Park Drive Contact: Thomas M. Mishoe, Jr.
Richmond, Virginia 23236 Telephone: (804)-560-8490
FOR IMMEDIATE RELEASE: March 3, 2000
ESKIMO PIE CORPORATION REPORTS 1999 FINANCIAL RESULTS
NET INCOME UP 148% EXCLUSIVE OF 1999 SPECIAL CHARGES!
Richmond, Virginia (NASDAQ NNM: EPIE) - Eskimo Pie Corporation today reported
consolidated net income for the year ending December 31, 1999 of $836,000 or
$.24 per share, as compared to 1998 net income of $795,000 or $0.23 per share.
The 1999 results include special charges of $1,223,000 associated with the
Company's previously announced analysis of strategic alternatives,
restructuring charges of $191,000 and proxy contest expenses of $394,000 which,
after related tax effects, reduced net income by $1,139,000 or $0.33 per share.
Exclusive of special charges incurred in 1999, net income was $1,975,000 or
$0.57 per share, up 148% over the prior year. The 1998 results include the
recovery of $600,000 of past due rent income associated with equipment leased
to one of the Company's licensees and $80,000 of expenses associated with the
Company's consideration of strategic alternatives. These two items aggregate
to a gain of $520,000 ($325,000 after related income tax expense). Exclusive of
special items incurred in both 1999 and 1998, net income for 1999 increased by
$1,505,000 or $0.43 per share, up 320% over the prior year. Revenues for 1999
increased by $2,960,000 or 5% as compared to 1998, with all operating divisions
showing revenue growth.
For the fourth quarter, consolidated revenues were $12.5 million in 1999, which
resulted in a net loss of $900,000, as compared with revenues of $12.2 million
and a net loss of $520,000 in 1998. The fourth quarter 1999 results include
special charges of $673,000, related to resolution of the proxy contest and the
Board's subsequent pursuit of a sale of the Company. $433,000 of these charges
relates to partial payments of retention incentives intended to maintain the
employment of key personnel during uncertain times. As discussed above, fourth
quarter 1998 results include an aggregate gain of $520,000. Exclusive of
special items incurred in the fourth quarter of 1999 and 1998, the net loss was
$476,000 and $845,000, respectively, resulting in an improvement of net income
for the fourth quarter in 1999 of $369,000 or 44%. The fourth quarter is
generally the Company's least profitable quarter in its seasonal business
cycle.
The expenses associated with the review of strategic alternatives and
restructuring activities relate to the Company's continuing examination,
together with its financial advisor, of strategic alternatives available to
enhance shareholder value, and the execution of plans developed to reduce
overhead expenses in both manufacturing and administrative support. Proxy
contest expenses include legal and other professional services and
administrative expenses associated with the Company's delayed annual meeting of
shareholders held on September 8, 1999.
David B. Kewer, the Company's President and Chief Executive Officer
stated that "The 1999 financial performance for the Company reflects the
continuing execution of Management's turnaround strategies. Revenue increased
5% in 1999 with each of the four operating Divisions showing revenue growth.
Gross margins continued to improve for the third consecutive year, from 41.1%
in 1998 to 41.8% in 1999. Tight control was maintained over selling, general
and administrative expenses, reducing overhead costs to 12.2% of revenues in
1999 from 13.0% in 1998. Net income, exclusive of special charges, was
$1,975,000 or $.57 per share, a 148% improvement over 1998's earnings of
$795,000 or $.23 per share, which represents our best year since 1995."
Kewer went on to say "Eskimo Pie's balance sheet is the strongest it has been
in several years, with key financial ratios showing marked improvement.
Exclusive of special charges, EBITDA has grown from $1.1 million in 1996 to
$5.9 million in 1999. The Company's overall net debt (total debt less cash)
has been reduced from $8,488,000 to $2,150,000 during the last twelve months.
Although the Board and Management continue to pursue the sale of the Company,
either as a whole or in parts, the Management of the Company has continued to
focus sharply on the operation of the business and the execution of portions of
the previously announced Growth and Restructuring Plan."
Kewer emphasized that "The Company's 1999 performance was achieved despite the
considerable distractions that took place throughout the year, including the
ongoing efforts to affect a sale of the Company and the successful defense of
the proxy contest. The Management and employees of the Company have
demonstrated an ability to remain fully focused on the Company's business
during these uncertain times."
In connection with the audit of the Company's 1999 financial statements, the
Company will file amended Form 10-Qs with the SEC for the quarters ended March
31, June 30, and September 30, 1999. These amended Form 10-Qs will reflect a
reclassification to reduce various portions of the Company's long-term debt
(ranging from approximately $900,000 in the first quarter to $3.8 million in
the third quarter) with an offsetting reduction in cash and/or an increase in
short-term borrowings. These adjustments will have no impact on the Company's
previously reported income statements.
Eskimo Pie Corporation, headquartered in Richmond, Virginia, created the frozen
novelty industry in 1921 with the invention of the Eskimo Pie ice cream bar.
Today, the Company markets a broad range of frozen novelties, ice cream and
sorbet products under the Eskimo Pie, Real Fruit, Welch's, Weight Watchers
Smart Ones, SnackWell's and OREO brand names. These nationally branded
products are generally manufactured by a select group of licensed dairies who
purchase the necessary flavors ingredients and packaging directly from the
Company. Eskimo Pie Foodservice is a leading supplier of premium soft serve
ice cream, frozen yogurt, custard and smoothies to the foodservice industry.
The Company also sells a full line of quality flavors and ingredients for use
in private label dairy products in addition to the brands it licenses.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
Information in this release relating to the Company's future plans and
performance are "forward looking statements" and, as such, involve certain
risks and uncertainties that could cause actual results to vary materially.
Potential risks and uncertainties include, but are not limited to: (1) the
highly competitive nature of the frozen dessert market and the level of
consumer interest in the Company's products, (2) product costing, (3) the
weather, (4) the performance of management including management's ability to
implement its plans as contemplated, (5) the Company's relationships with its
licensees and licensors, (6) the impact of Year 2000 matters and (7) government
regulation.
ESKIMO PIE CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
1999 1998 1999 1998
(In thousands, except share data)
Net sales $ 12,491 $ 12,168 $ 66,452 $ 63,492
Cost of products sold 8,835 7,832 38,657 37,410
Gross profit 3,656 4,336 27,795 26,082
Advertising and sales
promotion expenses 2,418 3,091 16,195 16,074
Selling, general and
administrative expenses 1,997 1,960 8,109 8,253
Expense from restructuring
activities - - 191 -
Expense from analysis of
strategic alternatives 623 - 1,223 -
Expense from proxy contest 50 - 394 -
Operating income (1,432) (715) 1,683 1,755
Interest (income)/expense
and other - net (4) 110 356 493
Income before income taxes (1428) (825) 1,327 1,262
Income tax expense (528) (305) 491 467
Net income $ (900) $ (520) $ 836 $ 795
Per Share Data
Basic:
Weighted average number
of common shares
outstanding 3,464,050 3,458,597 3,463,211 3,458,394
Net income $ (0.26) $ (0.15) $ 0.24 $ 0.23
Assuming dilution:
Weighted average number
of common shares
outstanding 3,464,050 3,458,597 3,463,211 3,462,677
Net income $ (0.26) $ (0.15) $ 0.24 $ 0.23
Cash dividends $ 0.00 $ 0.05 $ 0.10 $ 0.20
Note: Certain prior period amounts have been reclassified to conform to current
presentation.
ESKIMO PIE CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
As of December 31, December 31,
(In thousands, except share data) 1999 1998
Assets
Current assets:
Cash and cash equivalents $ 1,751 $ 530
Receivables 6,057 6,817
Inventories 4,032 4,897
Prepaid expenses 557 889
Total current assets 12,397 13,133
Property, plant and equipment - net 6,578 7,665
Goodwill and other intangibles 16,598 17,645
Other assets 913 1,645
Total assets $ 36,486 $ 40,088
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 3,208 $ 2,875
Accrued advertising and promotion 2,217 1,728
Accrued compensation and related amounts 1,033 211
Other accrued expenses 1,038 657
Current portion of long term debt 972 1,317
Total current liabilities 8,468 6,788
Long term debt 2,929 3,901
Convertible subordinated notes - 3,800
Postretirement benefits and other liabilities 2,293 3,373
Shareholders' equity:
Preferred stock, $1.00 par value;
1,000,000 shares authorized,
none issued and outstanding - -
Common stock, $1.00 par value;
10,000,000 shares authorized,
3,464,050 issued and outstanding
at December 31, 1999, and
3,458,597 at December 31, 1998 3,464 3,459
Additional capital 4,468 4,393
Retained earnings 14,864 14,374
Total shareholders' equity 22,796 22,226
Total liabilities and
shareholders' equity $ 36,486 $ 40,088
End.