-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SpRJiLuCyZsX4axlvJ/uMYO5cHjgQcuEiHUEZoJOh2LR9LsJ5+ArAEXISwd3SYbb DLlHBfSczEXEubWKp0+/2Q== 0001050502-05-000163.txt : 20050308 0001050502-05-000163.hdr.sgml : 20050308 20050308135342 ACCESSION NUMBER: 0001050502-05-000163 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050307 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050308 DATE AS OF CHANGE: 20050308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECTRUM ORGANIC PRODUCTS INC CENTRAL INDEX KEY: 0001034992 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FRUITS, VEG & PRESERVES, JAMS & JELLIES [2033] IRS NUMBER: 943076294 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22231 FILM NUMBER: 05666261 BUSINESS ADDRESS: STREET 1: 5341OLD REDWOOD HIGHWAY STREET 2: 4TH FLOOR CITY: PETALUMA STATE: CA ZIP: 94954 BUSINESS PHONE: 7077788900 MAIL ADDRESS: STREET 1: 5341 OLD REDWOOD HIGHWAY STREET 2: 4TH FLOOR CITY: PETALUMA STATE: CA ZIP: 94954 FORMER COMPANY: FORMER CONFORMED NAME: ORGANIC FOOD PRODUCTS INC DATE OF NAME CHANGE: 19970304 8-K 1 spectrum8k.txt 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 7, 2005 Spectrum Organic Products, Inc. ------------------------------- (Exact name of Registrant as specified in its charter) California 333-22997 94-3076294 - ------------ --------- ---------- (State of (Commission File Number) (IRS Employer ID No.) Incorporation) 5341 Old Redwood Highway, Suite 400 Petaluma, CA 94954 ------------------ (Address of Principal Executive Offices) 707-778-8900 ------------ (Registrant's telephone number) Section 2 - Financial Information: Item 2.02 Results of Operations and Financial Condition Spectrum Organic Products, Inc. (the "Company" or the "Registrant") issued a press release on March 7, 2005 announcing its fourth quarter and twelve months ended December 31, 2004 results of operations and financial condition. Included with that press release were the following financial statements: 1. Balance Sheets as of December 31, 2004 and December 31, 2003 2. Statements of Operations for the years ended December 31, 2004, 2003 and 2002 3. Statement of Stockholders' Equity for the years ended December 31, 2004, 2003 and 2002 4. Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 Section 9 - Financial Information and Exhibits: Item 9.01 Financial Statements and Exhibits (c) Exhibits: Exhibit 99.12 Press release of the Company dated March 7, 2005 titled "Spectrum Organic Products Reports Record Sales for 2004" SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. Dated: March 8, 2005 Spectrum Organic Products, Inc. /s/ Robert B. Fowles ------------------------------- Duly Authorized Officer & Chief Financial Officer EX-99.12 2 spectrum99-12.txt PRESS RELEASE EXHIBIT 99.12 Spectrum Organic Products Inc. News Release Contact: Andrea Proulx For Immediate Release 707-778-8900 ext. 3101 andreap@spectrumorganics.com Spectrum Organic Products Reports Record Sales for 2004 - ------------------------------------------------------- PETALUMA, CA (March 7, 2005) Spectrum Organic Products, Inc. (OTCBB-SPOP.OB) today reported its fourth quarter and full year results for 2004. Net sales for the year ended December 31, 2004 were an all-time record of $49,915,400 versus $45,676,500 for the prior year(1), an increase of 9%. Sales growth continued to be excellent on the culinary side of the business, with the Spectrum Naturals(R) brand of culinary products up 17% and the Spectrum Ingredients Division industrial culinary sales increasing by 11%. The strong performance on the culinary side of the business was partially offset by an 8% decline in the Company's Spectrum Essentials(R) brand of nutritional supplements, which were temporarily impacted by the launch of the Company's new Fresh & Cold program, which asks that distributors treat Spectrum Essentials(R) like a perishable product line. That change required a one-time reduction of trade inventories to an approximate thirty-day supply, but will improve the freshness of product at the retail shelf. For the fourth quarter net sales increased by 3%, driven by an 18% increase in Spectrum Naturals(R) net sales, which was partially offset by declines in the sales of Spectrum Ingredients industrial culinary oils and Spectrum Essentials(R) nutritional supplements of 10% and 5%, respectively. Spectrum reported a net loss for 2004 of $832,700 or $0.02 per share versus net income of $2,663,600 ($0.06 per share) for the prior year. The net loss for 2004 was primarily attributable to expenses associated with the manufacturing facility relocation and reconfiguration of $1,565,300. During the fourth quarter of 2004 the Company completed the final phase of a three-year project to close its leased manufacturing facility located in Petaluma where flax oil production formerly occurred. The Company held a grand opening event for its new production facility in Cherokee Iowa in October. In connection with the shutdown of the Petaluma facility, the Company incurred non-cash write-offs of $919,500 for infrastructure and leasehold improvements at the Petaluma facility which could not be relocated to Iowa, plus $237,100 in write-downs to fair market value for equipment that was relocated to Iowa. There was also $408,700 in cash expenses incurred for relocation costs and project management fees associated with the move to Iowa. Also contributing to the net loss incurred in 2004 were higher sales and marketing expenses which increased by $1,089,000 versus 2003, primarily due to increased print advertising associated with the "I am Spectrum" campaign. For the fourth quarter the Company reported a net loss of $934,400 or $0.02 per share versus net income of $1,386,700 ($0.03 per share) for the prior year. Again, the majority of the decline in profitability versus 2003 was attributable to the expenses associated with the manufacturing facility relocation and the increased sales and marketing expenses during 2004. During the fourth quarter of 2003, the Company eliminated the 100% valuation reserve that had previously been maintained against its deferred tax assets, which contributed $1,647,800 of income to the prior year fourth quarter. Management believes that earnings before interest, taxes, depreciation and amortization, the plant relocation and expenses associated with the 2002 industrial accident (EBITDA as adjusted)(2) is an important measure of its financial performance. For the year ended December 31, 2004 Spectrum reported EBITDA as adjusted of $1,192,000 versus $2,436,100 for the prior year. The decline was primarily attributable to the increased sales and marketing spending and lower gross profit. Margins in the Company's culinary segments were squeezed due to higher costs for certain key organic raw materials such as canola and olive oils due to the weak dollar, an unfavorable commodity cycle during 2004, and increased importation and transportation costs. For the fourth quarter ended December 31, 2004 the Company reported EBITDA as adjusted of $140,600 compared to $410,600 for the corresponding period of the prior year, a decrease of 66%. Once again, the decrease was primarily attributable to increased sales and marketing expenses and gross margin pressure. "Spectrum completed its long-term goal of closing the Petaluma plant with the grand opening celebration at our new production facility in Cherokee Iowa on October 12, 2004. While the closing of the Petaluma plant was painful from a financial standpoint, the Iowa facility is a brand new, state-of-the-art production facility that will deliver lower cost and higher quality oils to the Petaluma bottling facility," said Neil G. Blomquist, Spectrum CEO. "Working in partnership with BIOWA Nutraceuticals, we expect to begin realizing the benefits of the plant relocation in 2005." Spectrum Organic Products, Inc. is a leading marketer of natural and organic culinary oils, vinegar, condiments and butter substitutes under the Spectrum Naturals(R) brand and essential fatty acid nutritional supplements under the Spectrum Essentials(R) brand. The company also produces and sells a wide range of oils, vinegar and nutritional ingredients to other manufacturers through its Spectrum Ingredients Division. All of the company's products feature healthy oils that are mechanically extracted and free of trans fats and genetically modified organisms. "Safe Harbor" statements under the Private Securities Act of 1995: The statements contained in this release, which are not historical facts, are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth or implied by the forward-looking statements. These risks and uncertainties are described in the company's Securities and Exchange Commission filings under the trading symbol "SPOP.OB".
(1) Net sales by business segment for the three months and years ended December 31, 2004 and 2003 is summarized as follows: Three months ended December 31, ------------------------------------ 2004 2003 % Change ----------- ----------- -------- Spectrum Naturals(R) Culinary Products $ 6,069,300 $ 5,154,700 +18% Spectrum Essentials(R) Nutritional Supplements 2,485,700 2,616,200 -5% Spectrum Ingredients/Other 3,626,500 4,047,600 -10% ----------- ----------- -------- Total Net Sales $12,181,500 $11,818,500 +3% ----------- ----------- -------- Years Ended December 31, ------------------------------------ 2004 2003 % Change ----------- ----------- -------- Spectrum Naturals(R) Culinary Products $24,048,400 $20,608,300 +17% Spectrum Essentials(R) Nutritional Supplements 9,566,100 10,353,900 -8% Spectrum Ingredients/Other 16,300,900 14,714,300 +11% ----------- ----------- -------- Total Net Sales $49,915,400 $45,676,500 +9% ----------- ----------- -------- (2) The reconciliation of net income or loss to EBITDA as adjusted for the three months and years ended December 31, 2004 and 2003 is summarized as follows: Three months ended December 31, ------------------------------- 2004 2003 ----------- ----------- Net Income (Loss) $ (934,400) $ 1,386,700 Benefit from Income Taxes (622,900) (1,647,800) Interest Expense 111,800 87,000 Depreciation and Amortization Expense 191,800 174,500 Manufacturing Facility Relocation 1,394,300 -- Industrial Accident Expenses -- 410,200 ----------- ----------- EBITDA as adjusted $ 140,600 $ 410,600 ----------- ----------- Years Ended December 31, ---------------------------- 2004 2003 ----------- ----------- Net Income (Loss) $ (832,700) $ 2,663,600 Benefit from Income Taxes (555,200) (1,566,600) Interest Expense 361,900 404,200 Depreciation and Amortization Expense 652,700 524,700 Manufacturing Facility Relocation 1,565,300 -- Industrial Accident Expenses -- 410,200 ----------- ----------- EBITDA as adjusted $ 1,192,000 $ 2,436,100 ----------- ----------- - -------- -End- Spectrum Organic Products, Inc. Balance Sheets As of December 31, 2004 2003 ------------ ------------ Assets Current Assets: Cash $ 11,000 $ 7,300 Accounts receivable, net 3,799,800 4,163,200 Inventories, net 9,564,800 8,007,200 Deferred income taxes - current 630,000 514,200 Prepaid expenses and other current assets 141,400 297,500 ------------ ------------ Total Current Assets 14,147,000 12,989,400 Property and Equipment, net 3,990,200 4,338,700 Other Assets: Deferred income taxes - long-term 1,529,500 1,087,700 Intangible assets, net 584,800 586,800 Other assets 251,200 218,300 ------------ ------------ Total Assets $ 20,502,700 $ 19,220,900 ============ ============ Liabilities and Stockholders' Equity Current Liabilities: Bank overdraft $ 843,300 $ 513,800 Line of credit 6,984,400 4,833,000 Accounts payable, trade 4,033,800 4,168,000 Accrued expenses 854,100 1,307,700 Current maturities of notes payable & capital lease obligations 514,600 322,300 Current maturities of notes payable, related parties 228,200 275,200 Income taxes payable -- 9,900 ------------ ------------ Total Current Liabilities 13,458,400 11,429,900 Notes payable & capital lease obligations, less current maturities 1,375,000 1,104,200 Notes payable, related parties, less current maturities 326,200 549,200 Deferred rent 37,000 50,700 ------------ ------------ Total Liabilities 15,196,600 13,134,000 ------------ ------------ Commitments and Contingencies Stockholders' Equity: Preferred stock, 5,000,000 shares authorized, no shares issued or outstanding -- -- Common stock, without par value, 60,000,000 shares authorized, 46,405,943, 46,254,777 and 45,705,571 issued and outstanding at December 31, 2004, 2003 and 2002, respectively 9,631,400 9,579,500 Accumulated deficit (4,325,300) (3,492,600) ------------ ------------ Total Stockholders' Equity 5,306,100 6,086,900 ------------ ------------ Total Liabilities and Stockholders' Equity $ 20,502,700 $ 19,220,900 ============ ============ Spectrum Organic Products, Inc. Statements of Operations For the years ended December 31, 2004 2003 2002 ------------ ------------ ------------ Net sales $ 49,915,400 $ 45,676,500 $ 40,579,300 Cost of goods sold 38,380,700 33,806,800 29,823,000 ------------ ------------ ------------ Gross profit 11,534,700 11,869,700 10,756,300 ------------ ------------ ------------ Operating Expenses: Sales and marketing 7,293,600 6,204,600 5,987,500 General and administrative 3,731,700 3,729,100 2,949,500 Manufacturing facility relocation 1,565,300 -- -- Industrial accident expenses -- 410,200 254,100 (Gain) loss on sale of product lines -- -- (210,300) ------------ ------------ ------------ Total Operating Expenses 12,590,600 10,343,900 8,980,800 ------------ ------------ ------------ Income (Loss) From Operations (1,055,900) 1,525,800 1,775,500 Other Income (Expense): Interest expense (361,900) (404,200) (480,600) Other, net 29,900 (24,600) 14,900 ------------ ------------ ------------ Income (Loss) Before Taxes (1,387,900) 1,097,000 1,309,800 Benefit (Provision) for income taxes 555,200 1,566,600 (189,800) ------------ ------------ ------------ Net Income (Loss) $ (832,700) $ 2,663,600 $ 1,120,000 ============ ============ ============ Basic and Fully Diluted Income (Loss) Per Share $ (0.02) $ 0.06 $ 0.02 ============ ============ ============ Weighted Average Shares Outstanding: Basic 46,344,585 45,845,140 45,699,627 Fully Diluted 46,344,585 47,839,765 46,306,077 Spectrum Organic Products, Inc. Statement of Stockholders' Equity For the Years Ended December 31, 2002, 2003 and 2004 Retained Earnings Total Common Stock (Accumulated Stockholders' Shares Amount Deficit) Equity ----------- ----------- ----------- ----------- Balances, January 1, 2002 45,698,661 $ 9,373,700 $(7,276,200) $ 2,097,500 Warrants net exercised by the note holders under the private placement 6,910 -- -- -- Warrants issued in connection with the private placement notes -- 49,500 -- 49,500 Non-qualified stock options issued -- 6,900 -- 6,900 Net income for the year -- -- 1,120,000 1,120,000 ----------- ----------- ----------- ----------- Balances, December 31, 2002 45,705,571 $ 9,430,100 $(6,156,200) $ 3,273,900 Warrants exercised by the note holders under the private placement 405,456 90,000 -- 90,000 Exercise of common stock options 143,750 59,400 -- 59,400 Net income for the year -- -- 2,663,600 2,663,600 ----------- ----------- ----------- ----------- Balances, December 31, 2003 46,254,777 $ 9,579,500 $(3,492,600) $ 6,086,900 Exercise of common stock options 151,166 51,900 -- 51,900 Net loss for the year -- -- (832,700) (832,700) ----------- ----------- ----------- ----------- Balances, December 31, 2004 46,405,943 $ 9,631,400 $(4,325,300) $ 5,306,100 =========== =========== =========== =========== Spectrum Organic Products, Inc. Statements of Cash Flows For the years ended December 31, 2004 2003 2002 ------------ ------------ ------------ Cash Flows From Operating Activities: Net Income (Loss) $ (832,700) $ 2,663,600 $ 1,120,000 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Provision for allowances against receivables 56,300 103,400 47,000 Provision for inventory obsolescence 332,800 210,800 262,200 Provision for industrial accident -- 410,200 254,100 Depreciation and amortization 652,700 524,700 454,300 (Gain) Loss on sale of product lines -- -- (210,300) Write-off of equipment due to plant closure 919,500 50,300 -- Writedown on equipment to fair market value 237,100 -- -- Imputed interest on notes payable and warrants issued 20,800 19,000 71,300 Imputed expense on non-qualified stock options -- -- 6,900 Changes in Assets and Liabilities: Accounts receivable 307,100 (1,191,400) 430,400 Inventories (1,890,400) (2,948,400) (1,057,700) Deferred income taxes (557,600) (1,601,900) -- Other assets 123,200 (224,300) (54,300) Accounts payable (134,200) 871,700 (500,300) Accrued expenses and other liabilities (477,200) (94,100) (106,200) ------------ ------------ ------------ Net Cash Provided by (Used in) Operating Activities (1,242,600) (1,206,400) 717,400 ------------ ------------ ------------ Cash Flows From Investing Activities: Purchase of property and equipment (1,474,100) (1,281,100) (719,300) Proceeds from sale of assets 15,300 -- -- Purchase of intellectual property -- (550,000) -- Proceeds from sale of product lines and related inventories -- -- 3,215,200 Transaction fees on sale of product lines -- -- (152,000) ------------ ------------ ------------ Net Cash Provided by (Used in) Investing Activities (1,458,800) (1,831,100) 2,343,900 ------------ ------------ ------------ Cash Flows From Financing Activities: Increase (decrease) in bank overdraft 329,500 (87,200) 29,300 Proceeds from lines of credit 21,866,000 36,210,000 43,931,000 Repayment of lines of credit (19,714,600) (33,856,600) (46,050,000) Proceeds of notes payable 754,800 1,495,200 -- Repayment of notes payable (250,000) (553,800) (545,200) Repayment of notes payable, related parties (290,800) (275,300) (371,200) Repayment of capitalized lease obligations (41,700) (49,600) (69,000) Proceeds from exercise of common stock options 51,900 59,400 -- Proceeds from exercise of common stock warrants -- 90,000 -- ------------ ------------ ------------ Net Cash Provided by (Used in) Financing Activities 2,705,100 3,032,100 (3,075,100) ------------ ------------ ------------ Net Increase (Decrease) in Cash 3,700 (5,400) (13,800) Cash, beginning of the year 7,300 12,700 26,500 ------------ ------------ ------------ Cash, end of the year $ 11,000 $ 7,300 $ 12,700 ============ ============ ============ Supplemental Disclosure of Cash Flow Information: Cash paid for income taxes $ 16,000 $ 323,500 $ 13,800 Cash paid for interest $ 359,800 $ 384,400 $ 446,300
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