Exhibit 99.1
Vaughan Foods, Inc. Reports Second Quarter Operating Results
MOORE, Okla., August 5, 2010 — Vaughan Foods, Inc. (OTCBB:FOOD.OB), a regional leader in fresh-cut vegetables and fruit products, and a broad line of refrigerated prepared salads, sauces, soups, and side-dishes, today announced its operating results for the 2nd quarter ended June 30, 2010.
Vaughan recorded net income of $260,000, or $0.03 per share during the second quarter of 2010, continuing the profitable trend started in the first quarter, and exceeding the net income of $18,000 in the comparable quarter of 2009. Gross profit increased to 10.5 percent in the 2nd quarter from 9.6 percent in the year earlier quarter. The improved results are primarily attributable to efficiencies in production labor costs and continuing controls over selling, general and administrative expense, as management continues its focus on improvements in its manufacturing processes.
Net income for the six months ended June 30, 2010 was $377,000 or $0.05 per share compared to a net loss of $248,000 or $0.05 per share in the same period of 2009 – a year-over-year turnaround of $0.6 million. Gross profit increased to 11.5 percent in the year-to-date period of 2010 compared to 9.2 percent in the same period of 2009. The improved results of the first six months of 2010 are attributable to several factors, including efficiencies in production labor, benefits of the Company’s Enterprise Resource Planning (“ERP”) system, continued stability in commodity raw material costs, and further stabilization of the Company’s work force.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) improved to $2.3 million in the six months ended June 30, 2010 compared with $1.0 million in the period of 2009. The Company generated $0.6 million in cash from operating activities, decreased short-term borrowings on its revolving line of credit by $0.5 million, and paid off long-term debt of $0.4 million.
“Our second quarter earnings are the highest since Vaughan became a public company in 2007, and mark our second consecutive quarter of profitability,” said Herb Grimes, Chairman and CEO. The performance reflects the many improvements that our management team has made.”
Despite the seasonality, economic and other external factors that can cause our results to be uneven over any short-term range, we continue to be encouraged as our quality and diverse product lines develop customer loyalty and build solid new growth opportunities as well. Our second quarter is seasonally our strongest. We have just scratched the surface of our unique and compelling business model, and remain committed to and excited about the future of Vaughan Foods.”
Investor Conference Call
Vaughan management will host an investor conference call on Friday, August 6, 2010 at 10:00 a.m. ET to discuss these results.
Interested parties should call (877) 312-5516 (domestic) or (253) 237-1139 (international) at least 5 minutes before the scheduled start time (no passcode required). You may also access this call via the Internet at:
http://www.vaughanfoods.com
For those who are unavailable to listen to the live broadcast, a replay will be available through August 27, 2010 and can be accessed by dialing (800) 642-1687 (domestic), and (706) 645-9291 (international). The conference ID is 90738266.
About Vaughan Foods, Inc.
Vaughan Foods is an integrated manufacturer and distributor of value-added, refrigerated foods. We are uniquely able to distribute fresh-cut produce items along with a full array of value-added refrigerated prepared foods multiple times per week. We sell to both food service and retail sectors. Our products consist of fresh-cut vegetables, fresh-cut fruits, salad kits, prepared salads, dips, spreads, soups, sauces and side dishes. Our primary manufacturing facility is in Moore, Oklahoma. Our soups and sauces are manufactured in our facility in Fort Worth, Texas.
Safe Harbor Statement
This press release contains forward-looking statements about the future performance of Vaughan Foods, Inc. based on Management’s assumptions and beliefs in light of information currently available to it. There are a variety of factors that could cause actual and future results to differ materially from those anticipated by the statements made above. These factors are outlined in the Company’s Forms 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. Furthermore, Vaughan Foods, Inc. undertakes no obligation to update, amend or clarify forward-looking statements whether as a result of new information, future events, or otherwise.
Investor Relations Contact
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| Cameron Associates |
Vaughan Foods, Inc.
Consolidated Balance Sheets
(dollars in thousands)
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| June 30, |
| December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | — |
| $ | — |
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Cash receipts subject to account control agreement |
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| 971 |
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| 523 |
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Accounts receivable, net of allowance for credit losses of $56,375 at June 30, 2010 and $106,375 at December 31, 2009 |
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| 6,696 |
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| 5,312 |
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Inventories |
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| 2,817 |
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| 3,055 |
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Prepaid expenses and other assets |
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| 249 |
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| 211 |
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Deferred tax assets |
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| 271 |
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| 265 |
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Total current assets |
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| 11,004 |
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| 9,366 |
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Restricted assets: |
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Cash |
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| 528 |
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| 528 |
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Investments |
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| 757 |
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| 541 |
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Total restricted assets |
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| 1,285 |
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| 1,069 |
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Property and equipment, net |
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| 15,318 |
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| 15,797 |
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Other assets: |
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Loan origination fees, net of amortization |
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| 331 |
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| 422 |
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Intangible assets |
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| 61 |
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| 77 |
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Deferred tax assets, noncurrent |
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| 2,369 |
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| 2,656 |
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Total assets |
| $ | 30,368 |
| $ | 29,387 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
| $ | 8,397 |
| $ | 8,432 |
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Disbursements in transit |
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| 749 |
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| 1,270 |
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Line of credit |
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| 1,872 |
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| 2,322 |
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Note payable to former owners of Allison’s Gourmet Kitchens, LP |
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| 881 |
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| 876 |
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Accrued liabilities |
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| 1,662 |
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| 1,393 |
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Current portion of long-term debt |
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| 1,482 |
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| 1,138 |
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Current portion of capital lease obligation |
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| 12 |
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| 94 |
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Total current liabilities |
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| 15,055 |
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| 15,525 |
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Long term liabilities: |
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Long-term debt, net of current portion |
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| 6,285 |
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| 6,944 |
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Deferred gain on sale of assets |
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| 26 |
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| 43 |
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Total long-term liabilities |
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| 6,311 |
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| 6,987 |
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Total stockholders’ equity |
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| 9,002 |
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| 6,875 |
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Total liabilities and stockholders’ equity |
| $ | 30,368 |
| $ | 29,387 |
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Vaughan Foods, Inc.
Consolidated Statements of Operations
(dollars in thousands)
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| Three Months Ended |
| Six Months Ended |
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| 2010 |
| 2009 |
| 2010 |
| 2009 |
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Net sales |
| $ | 26,226 |
| $ | 27,466 |
| $ | 47,921 |
| $ | 49,785 |
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Cost of sales |
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| 23,477 |
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| 24,826 |
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| 42,410 |
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| 45,189 |
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Gross profit |
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| 2,749 |
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| 2,640 |
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| 5,511 |
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| 4,596 |
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Selling, general and administrative |
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| 2,127 |
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| 2,329 |
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| 4,397 |
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| 4,483 |
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Operating income |
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| 622 |
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| 311 |
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| 1,114 |
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| 113 |
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Interest expense |
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| (207 | ) |
| (289 | ) |
| (477 | ) |
| (516 | ) |
Other income, net |
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| 11 |
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| 10 |
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| 21 |
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| 6 |
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Income (loss) before income taxes |
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| 426 |
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| 32 |
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| 658 |
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| (397 | ) |
Income tax expense (benefit) |
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| 166 |
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| 14 |
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| 281 |
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| (149 | ) |
Net income (loss) |
| $ | 260 |
| $ | 18 |
| $ | 377 |
| $ | (248 | ) |
Weighted average shares outstanding |
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Basic |
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| 9,380,577 |
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| 4,623,077 |
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| 7,961,212 |
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| 4,623,077 |
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Weighted average shares outstanding |
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Diluted |
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| 9,384,660 |
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| 4,759,932 |
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| 7,962,165 |
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| 4,623,077 |
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Net income (loss) per share |
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Basic |
| $ | 0.03 |
| $ | 0.00 |
| $ | 0.05 |
| $ | (0.05 | ) |
Net income (loss) per share |
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diluted |
| $ | 0.03 |
| $ | 0.00 |
| $ | 0.05 |
| $ | (0.05 | ) |
Vaughan Foods, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2010 and 2009
(dollars in thousands)
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| 2010 |
| 2009 |
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Cash flows from operating activities: |
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Net (loss) |
| $ | 377 |
| $ | (248 | ) |
Adjustments to reconcile net (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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| 1,339 |
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| 963 |
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Provision for credit losses |
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| (50 | ) |
| (9 | ) |
(Gain) loss on sale of asset |
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| (21 | ) |
| (6 | ) |
Stock based compensation expense |
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| 45 |
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| 44 |
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Deferred income taxes |
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| 281 |
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| (149 | ) |
Changes in operating assets and liabilities: |
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Accounts receivable |
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| (1,333 | ) |
| (1,819 | ) |
Inventories |
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| 238 |
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| (780 | ) |
Prepaid expenses and other assets |
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| (39 | ) |
| (117 | ) |
Accounts payable |
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| (34 | ) |
| 1,720 |
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Disbursements in transit |
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| (521 | ) |
| 1,110 |
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Accrued liabilities |
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| 269 |
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| 428 |
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Net cash provided by operating activities |
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| 551 |
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| 1,137 |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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| (713 | ) |
| (311 | ) |
Proceeds from sale of assets |
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| 20 |
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| 5 |
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Investments in Restricted assets |
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| (216 | ) |
| (706 | ) |
Net cash (used in) investing activities |
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| (909 | ) |
| (1,012 | ) |
Cash flows from financing activities: |
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Payments of loan origination fees |
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| (58 | ) |
| (204 | ) |
Proceeds from stock issue |
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| 1,706 |
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| — |
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Proceeds from line of credit |
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| — |
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| 2,931 |
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Repayments of line of credit |
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| (450 | ) |
| (1,000 | ) |
Cash receipts subject to account control agreement |
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| (448 | ) |
| (1,459 | ) |
Proceeds from notes issued to former owners of Allison’s Gourmet Kitchens, LP |
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| 5 |
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| — |
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Repayment of long-term debt and capital leases |
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| (397 | ) |
| (393 | ) |
Net cash provided by (used in) financing activities |
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| 358 |
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| (125 | ) |
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Net increase (decrease) in cash and cash equivalents |
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| — |
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| — |
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Cash and cash equivalents at beginning of period |
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| — |
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| — |
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Cash and cash equivalents at end of period |
| $ | — |
| $ | — |
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