Exhibit 99.1
Press Release
Pennexx Foods, Inc. Announces First Quarter Results and That Lender Claims
Default under Credit Agreement
Thursday May 8, 7:50 pm ET
PHILADELPHIA--May 8, 2003--Pennexx Foods, Inc. (OTC BB:PNNX), a leading provider
of case-ready meat to retail supermarkets in the Northeast, today reported
financial results for the first quarter ended March 31, 2003. Pennexx also
announced that its lender, Smithfield Foods, Inc., has sent Pennexx a notice of
default under the Credit Agreement between the two parties.
Revenues for the three months ended March 31, 2003 were $12.8 million compared
to $10.9 million in the comparable period of 2002, an increase of $1.9 million
or 17.4%. The Company had a net loss of $3.1 million in the three months ended
March 31, 2003 compared to net income of $0.007 million in the comparable period
of 2002. Management attributes the magnitude of the loss primarily to extremely
poor yields on meat products due to the start-up of the new plant, and to a
material increase in Indirect and General and Administrative expenses, offset in
part by labor efficiencies due to the usage of the automated equipment. As a
result of the first quarter loss and continuing losses subsequent to the end of
the quarter, the Company has virtually depleted its cash resources.
By letter received by Pennexx on May 8, 2003, Smithfield advised the Company
that Smithfield believed Pennexx to be in default of several provisions of the
Credit Agreement and that Smithfield intended to exercise its remedies
thereunder.
The Company has opened a dialogue with potential investors and the Board of
Directors of Pennexx is meeting to consider the Company's options.
About Pennexx
Established in 1999, Pennexx Foods, Inc. is a leading provider of case-ready
meat to retail supermarkets in the northeastern U.S. The company currently
provides case-ready meat within a 300-mile radius of its plants to customers in
the Northeast in order to assure delivery of product with an extended shelf
life. The company cuts, packages, processes and delivers case-ready beef, pork,
lamb and veal in compliance with the United States Department of Agriculture
("USDA") regulations. Pennexx customers include many significant supermarket
retailers.
Safe Harbor
Certain statements made herein that use the words "estimate," "project,"
"intend," "expect," "believe," "prospects" and similar expressions are intended
to identify forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks and uncertainties which could cause the actual
results, performance or achievements of the Company to be materially different
from those which may be expressed or implied by such statements, including,
among others, risks or uncertainties associated with the market for the
Company's products, and other laws, changes in competition and the loss of key
personnel. For additional information regarding these and other risks and
uncertainties associated with the Company's business, reference is made to the
Company's reports filed from time-to-time with the Securities and Exchange
Commission.
PENNEXX FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
March 31, 2003 March 31, 2002
(unaudited) (unaudited)
Net Sales $ 12,780,132 $ 10,924,971
Cost of Goods Sold 12,208,366 9,564,531
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Gross Profit $ 571,766 $ 1,360,440
Operating Expenses 3,449,318 1,302,737
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Operating (loss) income $ (2,877,552) $ 57,703
Interest expense, net 259,935 50,253
------------ ------------
Net (loss) income $ (3,137,487) $ 7,450
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Earnings per share $ (0.11) $ --
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Contact:
Pennexx Foods, Inc., Philadelphia
Michael Queen, 215/743-4331
or
Lippert/Heilshorn & Associates, Inc., New York
Jody Burfening (investors), 212/838-3777
jks@lhai.com
or
Chenoa Taitt (media), 212/838-3777
ctaitt@lhai.com