EX-99.13 2 spectrum99-3.txt PRESS RELEASE EXHIBIT 99.13 SPECTRUM ORGANIC PRODUCTS INC. News Release Contact: Andrea Proulx For Immediate Release ---------------------- --------------------- 707-778-8900 ext. 3101 andreap@spectrumorganic.com Spectrum Organic Products Reports Record Quarterly Sales -------------------------------------------------------- PETALUMA, CA (May 6, 2005) Spectrum Organic Products, Inc. (OTCBB-SPOP.OB) reported that net sales for the three months ended March 31, 2005 reached a new quarterly record for the company of $13,243,000 compared to net sales of $12,733,100 for the same period of the prior year, a growth rate of 4 percent(1). The improved sales performance was primarily attributable to increased consumer awareness of the importance of healthy oils to overall health and nutrition. Additionally, many food manufacturers continued their push to eliminate partially hydrogenated oils from their products, which drove the company's industrial sales higher. Spectrum reported net income for the quarter of $29,800 versus a net loss of $109,000 for the first quarter of 2004, which was primarily attributable to improved margins in the company's Spectrum Essentials(R) brand of nutritional supplements as a result of lower costs for organic flaxseed. Also contributing to the improved profitability in 2005 was increased sales of private label products largely due to a new relationship with a major specialty retailer. Partially offsetting those favorable trends were higher costs for certain key raw materials, such as olive oil and canola oil, in the Company's Spectrum Naturals(R) brand of culinary products. Management believes that earnings before interest, taxes, depreciation and amortization (EBITDA)(2) is an important measure of its financial performance. For the three months ending March 31, 2005 Spectrum reported EBITDA of $341,000 versus EBITDA of $40,600 for the first quarter of 2004. The increase in 2005 was primarily attributable to increased gross profit in the Spectrum Essentials(R) and private label product lines. "Our first quarter sales were an all-time record, with moderate growth delivered in all three of the company's business segments," said Neil G. Blomquist, Spectrum CEO. "We also managed to deliver a small profit for the quarter, despite heavy sales and marketing expenses associated with the Expo-West trade show held in March and the shutdown of our Iowa manufacturing facility for equipment upgrades during March." 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 industrial oils, vinegar and nutritional ingredients to other manufacturers through its Spectrum Ingredients Division. All of the company's products feature healthy oils that are free from hydrogenation 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 symbol "SPOP.OB".
---------- (1) Net sales by business segment for the three month periods ended March 31, 2005 and 2004 are summarized as follows: 2005 2004 % Change ----------- ----------- -------- Spectrum Naturals(R) Culinary Products $ 6,041,800 $ 5,817,600 +4% Spectrum Essentials(R) Nutritional Supplements 2,772,700 2,668,800 +4% Spectrum Ingredients/Private Label 4,428,500 4,246,700 +4% ----------- ----------- --- Total Net Sales $13,243,000 $12,733,100 +4% ----------- ----------- --- (2) The reconciliation of net income to EBITDA for the three month periods ended March 31, 2005 and 2004 is summarized as follows: 2005 2004 --------- --------- Net Income (Loss) $ 29,800 $(109,000) Provision (Benefit) for Income Taxes 19,900 (72,600) Interest Expense 133,900 74,000 Depreciation and Amortization Expense 157,400 148,200 --------- --------- EBITDA $ 341,000 $ 40,600 --------- --------- SPECTRUM ORGANIC PRODUCTS, INC. BALANCE SHEETS ASSETS (Unaudited) March 31, December 31, 2005 2004 ------------ ------------ Current Assets: Cash $ 13,800 $ 11,000 Accounts receivable, net 4,700,200 3,799,800 Inventories, net 8,564,600 9,564,800 Deferred income taxes - current 610,200 630,000 Prepaid expenses and other current assets 269,900 141,400 ------------ ------------ Total Current Assets 14,158,700 14,147,000 Property and Equipment, net 3,929,400 3,990,200 Other Assets: Deferred income taxes - long-term 1,529,500 1,529,500 Intangible assets, net 584,300 584,800 Other assets 251,300 251,200 ------------ ------------ Total Assets $ 20,453,200 $ 20,502,700 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Bank overdraft $ 200,900 $ 843,300 Line of credit 7,103,700 6,984,400 Accounts payable, trade 4,029,900 4,033,800 Accrued expenses 1,474,600 854,100 Current maturities of term notes payable and capital lease obligations 509,900 514,600 Current maturities of notes payable, related parties 169,500 228,200 ------------ ------------ Total Current Liabilities 13,488,500 13,458,400 Notes payable and capitalized lease obligations, less current maturities 1,250,000 1,375,000 Notes payable, related parties, less current maturities 332,400 326,200 Deferred rent 33,600 37,000 ------------ ------------ Total Liabilities 15,104,500 15,196,600 ------------ ------------ Commitments and Contingencies Stockholders' Equity: Preferred stock, 5,000,000 shares authorized, no shares issued or outstanding -- -- Common stock, no par value, 60,000,000 shares authorized, 46,444,693 and 46,405,943 issued and outstanding at March 31, 2005 and December 31, 2004, respectively 9,644,300 9,631,400 Accumulated deficit (4,295,600) (4,325,300) ------------ ------------ Total Stockholders' Equity 5,348,700 5,306,100 ------------ ------------ Total Liabilities and Stockholders' Equity $ 20,453,200 $ 20,502,700 ============ ============ SPECTRUM ORGANIC PRODUCTS, INC. STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, March 31, 2005 2004 ------------ ------------ Net Sales $ 13,243,000 $ 12,733,100 Cost of Goods Sold 10,050,600 9,830,400 ------------ ------------ Gross Profit 3,192,400 2,902,700 ------------ ------------ Operating Expenses: Sales and Marketing 2,036,600 1,981,900 General and Administrative 972,200 1,029,400 ------------ ------------ Total Operating Expenses 3,008,800 3,011,300 ------------ ------------ Income (Loss) from Operations 183,600 (108,600) Other Income (Expense): Interest Expense (133,900) (74,000) Other, net -- 1,000 ------------ ------------ Income (Loss) Before Taxes 49,700 (181,600) (Provision) Benefit for Income Taxes (19,900) 72,600 ------------ ------------ Net Income (Loss) $ 29,800 $ (109,000) ============ ============ Basic and Fully Diluted Income (Loss) Per Share $ 0.00 $ (0.00) ============ ============ Basic Weighted Average Shares Outstanding 46,423,596 46,275,557 ============ ============ Fully Diluted Weighted Average Shares Outstanding 47,198,965 46,275,557 ============ ============ SPECTRUM ORGANIC PRODUCTS, INC. STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, March 31, 2005 2004 Cash Flows from Operating Activities: ----------- ----------- Net Income (Loss) $ 29,800 $ (109,000) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and amortization expense 157,400 148,200 Provision for inventory obsolescence 42,500 18,700 Provision for uncollectible receivables 16,000 18,800 Imputed interest on note payable, related party 6,200 5,000 Revaluation of derivative financial instruments 35,300 -- Changes in Assets and Liabilities: Accounts receivable (916,500) (251,400) Inventories 957,700 1,246,700 Other assets (108,800) (160,000) Accounts payable 724,700 557,100 Other liabilities (146,800) (491,400) ----------- ----------- Net Cash Provided by Operating Activities 797,500 982,700 ----------- ----------- Cash Flows from Investing Activities: Purchase of property and equipment (96,100) (440,300) ----------- ----------- Net Cash Used in Investing Activities (96,100) (440,300) ----------- ----------- Cash Flows from Financing Activities: Decrease in bank overdraft (642,400) (513,800) Proceeds from line of credit 5,825,400 5,483,300 Repayment of line of credit (5,706,000) (5,168,700) Repayment of notes payable, related parties (58,800) (70,100) Repayment of term notes payable (125,000) (62,500) Repayment of capitalized lease obligations (4,700) (13,100) Proceeds from exercise of stock options 12,900 13,600 ----------- ----------- Net Cash Used in Financing Activities (698,600) (331,300) ----------- ----------- Net Increase in Cash 2,800 211,100 Cash, beginning of the year 11,000 7,300 ----------- ----------- Cash, end of the period $ 13,800 $ 218,400 =========== =========== Supplemental Disclosure of Cash Flow Information: Cash paid for income taxes $ -- $ 16,000 Cash paid for interest $ 127,000 $ 67,700
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