Exhibit 99.1
ASCENDIA BRANDS, INC. ANNOUNCES FIRST QUARTER RESULTS
Hamilton, NJ – July 17, 2007 -- Ascendia Brands, Inc. (AMEX: ASB) today reported results for its fiscal first quarter ended May 26, 2007. The Company also announced that, as a result of the delay in filing its Form 10-K for the year ended February 28, 2007, it requires additional time to prepare its quarterly report on Form 10-Q for the thirteen weeks ended May 26, 2007. The Company expects to complete the preparation and filing by July 23, 2007.
Consolidated net sales for the thirteen weeks ended March 26, 2007 increased by $17.1 million or 68.8% compared to the thirteen weeks ended March 27, 2006, from $24.8 million to $41.9 million. The Calgon™ and the healing garden brands® acquired from Coty Inc. on February 9, 2007 contributed $16.5 million to current quarter net sales. Excluding the impact of this acquisition, net sales increased by $.6 million or 2.3%.
Consolidated gross profit increased by $7.7 million to $12.4 million for the thirteen weeks ended May 26, 2007, compared to $4.7 million for the comparable period in the prior year. As a percentage of net sales, the first quarter gross profit margin was 29.5% compared to 18.7% in the prior year. The gross profit and gross profit margin were favorably impacted by the acquired Coty brands, which contributed $7.8 million to the current quarter. The gross profit in the current quarter includes a $2.2 million expense from the step-up in the value of the acquired Coty inventory as part of the purchase price allocation. Excluding the step-up, the former Coty brands contributed $10.0 million to current quarter gross profit. This step-up in the inventory value has been fully expensed as of the end of the first quarter.
Consolidated selling, general and administrative expenses increased by $8.2 million, to $12.2 million, for the thirteen weeks ended March 26, 2007, compared to $4.0 million for the comparable period in the prior year. Contributing to the increase were factors associated with the acquired Coty brands, including $2.3 million from the amortization of intangible assets identified as part of the purchase price allocation, $1.8 million in costs related to services provided by Coty under a transition services agreement, and $1.0 million in advertising and consumer promotion in support of the acquired brands. Additional expenses contributing to the increase compared to the prior period were executive salaries and bonuses of $1.4 million, non-cash stock compensation expense of $.6 million, severance of $.2 million and higher salaries, travel and rent of $.6 million.
Steven Scheyer, President and Chief Executive Officer, commented, “We are extremely pleased by the contributions of the Calgon and the healing garden brands to our first quarter. The increase in our gross profit margin reflects the benefit of our strategic shift to a branded product portfolio. With the addition of Calgon and the healing garden to our existing portfolio of branded bath and beauty care products, including Mr. Bubble®, Lander essentials®, Baby Magic®, Binaca® and Ogilvie®, we are well positioned in a leadership role within the bath category.”
Consolidated other expense increased by $2.9 million, to $6.4 million for the thirteen weeks ended March 26, 2007 compared to $3.5 million for the comparable period in the prior year. Contributing to the increase was higher interest expense of $4.5 million, partially offset by $0.9 million in income from the change in fair market value of the Company’s compound derivative liability and foreign exchange gains of $.5 million in the current quarter.
The net loss from continuing operations increased by $3.3 million to $6.2 million, $(0.15) per diluted share, for the thirteen weeks ended March 26, 2007, compared to $2.9 million, $(0.22) per diluted share, for the comparable period in the prior year. The increase is due primarily to higher interest expense, increased selling and administrative expenses and expense from the step-up in the value of the Coty inventory, partially offset by the gross profit contribution from the acquired Coty brands and the change in fair market value of the compound derivative liability.
Net loss from discontinued operations was lower by $0.4 million as a result of reduced expense at the Company’s Cenuco subsidiary. This subsidiary ceased operations effective June 30, 2007.
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Ascendia Brands, Inc. and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands, except for share and per share data)
| | May 26, 2007 | | February 28, 2007 | |
| | | | | | | |
ASSETS | | | | | | | |
Current Assets: | | | | | | | |
Cash and cash equivalents | | $ | 466 | | $ | 3,303 | |
Trade receivables, net of allowance for doubtful accounts | | | 11,651 | | | 9,444 | |
Miscellaneous receivables | | | 3,569 | | | 1,517 | |
Inventories | | | 24,649 | | | 28,633 | |
Prepaid expenses and other | | | 5,385 | | | 5,761 | |
| | | | | | | |
Total current assets | | | 45,720 | | | 48,658 | |
| | | | | | | |
Property, plant and equipment, net | | | 8,233 | | | 6,500 | |
Intangibles, net | | | 148,402 | | | 151,634 | |
Other assets, net | | | 9,910 | | | 10,103 | |
| | | | | | | |
Total assets | | $ | 212,265 | | $ | 216,895 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | |
Current Liabilities: | | | | | | | |
Accounts payable | | $ | 10,537 | | $ | 8,943 | |
Accrued expenses | | | 4,197 | | | 5,480 | |
Accrued interest | | | 2,803 | | | 1,146 | |
Reserve for customer returns | | | 720 | | | 4,479 | |
Current portion of long-term debt | | | 2,000 | | | 2,000 | |
Total current liabilities | | | 20,257 | | | 22,048 | |
Long-term debt, less current portion | | | 274,732 | | | 271,317 | |
Long-term pension obligation | | | 691 | | | 668 | |
Total liabilities | | | 295,680 | | | 294,033 | |
| | | | | | | |
Total stockholders' equity (deficit) | | | (83,415 | ) | | (77,138 | ) |
Total liabilities and stockholders' equity | | $ | 212,265 | | $ | 216,895 | |
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Ascendia Brands, Inc. and Subsidiaries
Consolidated Statement of Operations
(Amounts in thousands, except for share and per share data)
| | For the thirteen weeks ended | |
| | May 26, 2007 | | May 27, 2006 | |
| | | | | | | |
Net sales | | $ | 41,951 | | $ | 24,847 | |
Cost of sales | | | 29,565 | | | 20,193 | |
| | | | | | | |
Gross Profit | | | 12,386 | | | 4,654 | |
| | | | | | | |
Operating expenses: | | | | | | | |
Selling and marketing | | | 4,390 | | | 1,401 | |
General and administrative | | | 7,829 | | | 2,630 | |
Total operating expenses | | | 12,219 | | | 4,031 | |
| | | | | | | |
Income (loss) from operations | | | 167 | | | 623 | |
| | | | | | | |
Interest expense, net | | | (7,052 | ) | | (2,484 | ) |
Amortization of financing fees and debt discount | | | (834 | ) | | (1,171 | ) |
Gain on revaluation of compound derivative liability | | | 934 | | | | |
Other (expense) income, net | | | 552 | | | 144 | |
Total other/interest expense | | | (6,400 | ) | | (3,511 | ) |
| | | | | | | |
Income (loss) from continuing operations before income taxes | | | (6,233 | ) | | (2,888 | ) |
| | | | | | | |
Income taxes | | | — | | | — | |
| | | | | | | |
Income (Loss) from continuing operations | | | (6,233 | ) | | (2,888 | ) |
| | | | | | | |
Loss from discontinued operations | | | (286 | ) | | (656 | ) |
| | | | | | | |
Net income (loss) | | | (6,519 | ) | | (3,544 | ) |
| | | | | | | |
Series A Preferred stock beneficial conversion feature accreted as a dividend | | | — | | | 204 | |
| | | | | | | |
Net loss available to common shareholders | | $ | (6,519 | ) | $ | (3,748 | ) |
| | | | | | | |
| | | | | | | |
Basic and diluted loss per common share | | | | | | | |
Continuing operations | | $ | (0.15 | ) | $ | (0.22 | ) |
Discontinued operations | | $ | (0.01 | ) | $ | (0.05 | ) |
| | $ | (0.16 | ) | $ | (0.27 | ) |
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About Ascendia Brands
Ascendia Brands, Inc. is a leader in the value and premium value segments of the health and beauty care products sector. In November 2005, Ascendia expanded its range of product offerings through the acquisition of a series of brands, including Baby Magic®, Binaca®, Mr. Bubble® and Ogilvie®, and in February 2007 it acquired the Calgon™* and the healing garden® brands. The Company is headquartered in Hamilton, New Jersey, and operates two manufacturing facilities, in Binghamton, New York, and Toronto, Canada. Visit http://www.ascendiabrands.com for additional information.
Certain statements contained herein may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, 21E of the Exchange Act of 1934 and/or the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, statements regarding business plans, future regulatory environment and approval and, the Company’s ability to comply with the rules and policies of independent regulatory agencies. Although the Company believes the statements contained herein to be accurate as of the date they were made, it can give no assurance that such expectations will prove to be correct. The Company undertakes no obligation to update these forward-looking statements.
*Calgon is a licensed trademark.
Ascendia Contact: John D. Wille Chief Financial Officer (609) 219-0930 ext 150 jwille@ascendiabrands.com | Investor Relations Contact: John G. Nesbett IMS, Inc. (203) 972-9200 jnesbett@institutionalms.com |
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