For More Information Contact:
John Swendrowski, Chairman & CEO
Northland Cranberries, Inc.
800 First Avenue South, P.O. Box 8020
Wisconsin Rapids, WI 54495-8020
Tel: 715-424-4444 Fax: 715-422-6897
www.northlandcran.com
NEWS RELEASE
For release Friday, June 8, 2001 at 2:30 p.m. (CST)
NORTHLAND CRANBERRIES AND CLEMENT PAPPAS ANNOUNCE SALE OF NORTHLAND'S NORTH
CAROLINA BOTTLING PLANT AND CRANBERRY SAUCE BUSINESS TO CLEMENT PAPPAS; ENTER
INTO CONTRACT MANUFACTURING AGREEMENT
Wisconsin Rapids, WI -- Northland Cranberries, Inc. (Nasdaq:CBRYA),
manufacturer of Northland 100% juice cranberry blends and Seneca and Treesweet
fruit juice products, and Clement Pappas and Co., Inc., a New Jersey-based
juice, beverage and cranberry sauce producer, today jointly announced the sale
of Northland's manufacturing plant in Mountain Home, North Carolina and
Northland's cranberry sauce business to Clement Pappas for the combined sum of
approximately $13.3 million in cash, plus an additional amount for certain
inventory items. The two companies also entered into a contract manufacturing
agreement whereby certain Northland juice and juice concentrate products will
continue to be manufactured at and shipped from the Mountain Home facility.
Dean Pappas, Chief Executive Officer of Clement Pappas, said, "We are
excited about adding this plant to our current operations. The 220,000
square-foot Mountain Home plant houses four bottling and canning lines, as well
as juice processing capability, and will enable us to better serve our growing
private label business. This strategic acquisition is a significant step in
positioning Clement Pappas and Co., Inc. as a preeminent private label
distributor of juice products and cranberry sauce in North America. We are
anticipating a smooth transition of ownership and are looking forward to a
mutually beneficial contract manufacturing relationship with Northland."
John Swendrowski, Northland's Chairman and Chief Executive Officer, said,
"These actions represent some of the strategic alternatives we have been
considering over the past year in order to strengthen Northland's overall
financial position and to allow us to continue to compete in the marketplace
with our branded juice products. The proceeds of the sale of the Mountain Home
plant and the cranberry sauce business will be used primarily to reduce bank
debt. The operational significance of the transactions should be a reduction in
fixed overhead, which should result in maintaining competitive case costs. It is
important for our juice customers
Northland Cranberries, Inc.
News Release, June 8, 2001
Page 2 of 3
to know that these transactions will in no way affect our ability to produce and
deliver current or future expected orders."
Northland acquired the Mountain Home facility, which currently employs
approximately 120 people, from Seneca Foods Corporation in December of 1998. At
that time, Northland had projected a continued high rate of growth for its
branded juice division and anticipated achieving significant economies of scale
through plant ownership. However, during the ensuing two years, bumper cranberry
crops resulted in an industry oversupply and cranberry prices plummeted to
historic lows. The oversupply triggered severe price discounting by Northland's
competitors, which negatively impacted the company's sales and its ability to
operate the plant at or near full capacity. "The past year in particular has
required some very difficult financial decisions," said Swendrowski. "We feel
that our decision to sell the Mountain Home plant and the sauce business was
necessary in order to meet our financial obligations to our lenders, to reduce
overhead and to protect the interests of our shareholders. We were fortunate to
find a buyer for the Mountain Home plant that is capable of expanding the
business in that community and thereby offering the prospect of continued
employment for our former employees."
Northland is a vertically integrated grower, handler, processor and
marketer of cranberries and value-added cranberry products. The company
processes and sells Northland 100% juice cranberry blends, Seneca and Treesweet
fruit juice products, Northland fresh cranberries and other cranberry products
through retail supermarkets and other distribution channels. Northland also
sells cranberry and other fruit concentrates to industrial customers who
manufacture juice products. With 24 growing properties in Wisconsin and
Massachusetts, Northland is the world's largest cranberry grower. It is the only
publicly-owned, regularly-traded cranberry company in the United States, with
shares traded on the Nasdaq Stock Market under the listing symbol CBRYA.
Clement Pappas and Co., Inc., founded in 1942 and based in Seabrook, New
Jersey, is one of the nation's leading food processors. The company produces
juices, cocktails, fruit drinks, beverages, and cranberry sauce in a variety of
package configurations for store brands nationally and for their own label, Ruby
Kist. In addition to the Mountain Home, North Carolina acquisition, the company
has production facilities in Seabrook, New Jersey and Springdale, Arkansas.
# # #
Northland Cranberries, Inc.
News Release, June 8, 2001
Page 3 of 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this press release are "forward-looking
statements," including statements about Northland's future plans, goals and
other events, which have not yet occurred. These statements are intended to
qualify for the safe harbors from liability established by the Private
Securities Litigation Reform Act of 1995. They can generally be identified
because the context of such statements will include words such as "believes,"
"anticipates," "expects," or words of similar import. Whether or not these
forward-looking statements will be accurate in the future will depend on certain
risks and factors including risks associates with (i) the development, market
share growth and continued consumer acceptance of Northland's branded juice
products, including consumer acceptance of its new 27% Solution; (ii) the
disposition of certain litigation related to the sale of the net assets of
Northland's private label juice business; (iii) the implementation of the
marketing order of the Cranberry Marketing Committee of the United States
Department of Agriculture and the cranberry purchase program adopted by the
United States Congress; (iv) agricultural factors affecting Northland's crop and
the crop of other North American growers; (v) Northland's ability to comply with
the terms and conditions of, and to satisfy its responsibilities under, its
amended credit facility, with respect to which Northland is currently in default
of certain covenants as well as certain principal and interest payment
provisions; (vi) Northland's ability to secure additional financing and/or
generate sufficient cash from operations as may be necessary to fund working
capital requirements and continue as a going concern; (vii) the results of the
previously announced exploration of strategic alternatives; (viii) the results
of Northland's internal organizational restructuring, including, without
limitation, the results of the restructuring of certain sales and marketing
functions through an agreement with Crossmark, Inc.; (ix) Northland's ability to
manage its trade payables; and (x) Northland's ability to continue to meet the
listing requirements of The Nasdaq National Market, including, without
limitation, the requirement that its Class A Common Stock maintain a minimum bid
price above $1.00 per share. Readers should consider these risks and factors and
the impact they have when evaluating these forward-looking statements. These
statements are based only on management's knowledge and expectations on the date
of this press release. Northland will not necessarily update these statements or
other information in this press release based on future events or circumstances.
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