EXHIBIT 99.15
Spectrum Organic Products Inc.
News Release Contact: Andrea Proulx
----------------------
For Immediate Release 707-778-8900 ext. 3101
- --------------------- andreap@spectrumorganic.com
Spectrum Organic Products Reports Third Quarter Results
- -------------------------------------------------------
PETALUMA, CA (November 7, 2005) Spectrum Organic Products, Inc. (OTCBB-SPOP.OB)
reported that net sales for the three months ended September 30, 2005 were a new
quarterly record of $14,801,500, an increase of 26% on a comparable basis versus
the prior year1. The increase was driven by continued strong demand by both
consumers and manufacturers for expeller-pressed culinary oils that are free
from hydrogenation and genetically-modified ingredients. Sales of the Company's
Spectrum Naturals(R) brand of culinary products and the Spectrum
Ingredients/Private Label products both increased by 34% over the prior year.
This was partially offset by an 8% decline in the Company's Spectrum
Essentials(R) nutritional supplement products, which were impacted by continued
strong competition from fish oil products as an alternate source of Omega-3
essential fatty acid supplementation.
Spectrum reported net income for the quarter of $123,400 versus net income of
$32,300 for the prior year. The improvement in 2005 was primarily attributable
to increased gross profit, partially offset by increased operating and interest
expenses. Gross margin increased by five points in the Spectrum Naturals(R)
segment on the strength of price increases and the stronger U.S. dollar versus
the euro, which served to reduce the cost of imported olive oil and vinegar.
Included in operating expense during the third quarter was $323,700 of
investment banking, legal, accounting and tax consulting expenses associated
with the Company's proposed merger with The Hain Celestial Group, Inc., which is
subject to Spectrum shareholder approval and other customary terms and
conditions as set forth in the merger agreement entered into by Hain and
Spectrum on August 23, 2005.
Net sales for the nine months ended September 30, 2005 were also an all-time
record for the Company of $42,453,900, an increase of 15% on a comparable basis
versus the prior year. Sales growth continued to be excellent on the culinary
side of the business, with the Spectrum Naturals(R) branded culinary products up
20% and the Spectrum Ingredients/Private Label product offerings up 16% for the
first nine months of fiscal 2005. Net income for the nine months ended September
30, 2005 was $549,500 versus $101,700 for the same period of the prior year.
Once again the improvement in 2005 was primarily driven by increased gross
profit, partially offset by increased operating and interest expenses. Gross
margin was up significantly in all three of the Company's business segments,
increasing on an overall basis by two points. Operating expenses increased by
$995,500 principally as a result of merger-related expenses of $421,300 and
increased compensation and benefits expenses of $618,600. Interest expense for
the nine month period was $435,900, an increase of 74% over the prior year,
primarily due to higher average borrowings under the Company's line of credit
and increases in the federal funds rate over the last year by the Federal
Reserve.
Management believes that earnings before interest, taxes, depreciation and
amortization (EBITDA)2 is an important measure of its financial performance. For
the three months ended September 30, 2005, Spectrum reported EBITDA of $528,700
versus EBITDA of $310,800 for the prior year, an increase of 70%. The increase
was primarily attributable to the increased gross profit, partially offset by
higher operating expenses. For the nine months ended September 30, 2005,
Spectrum reported better than a doubling of EBITDA to $1,830,200 versus EBITDA
of $880,400 for the prior year. Improved gross margins in all three segments,
partially offset by increased operating expenses were the driving forces behind
the sharply increased EBITDA performance year-to-date.
"Our third quarter and nine-month sales were both all-time records as consumers
continued to demand non-hydrogenated culinary oils for both general cooking
purposes and as ingredients in packaged food products. This ongoing trend
continues to play directly to the Company's Spectrum Natutrals(R) and Spectrum
Ingredients product offerings", said Neil G. Blomquist, Spectrum CEO.
Spectrum Organic Products, Inc. is a leading manufacturer and 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 oils, vinegar and nutritional ingredients to other
manufacturers through its Spectrum Ingredients Division. All of the company's
products feature healthy oils that are mechanically-extracted and free from
hydrogenation and genetically-modified ingredients.
"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 trading
symbol "SPOP.OB".
- -----------------------
1 Net sales by business segment for the three and nine month periods ended
September 30, 2005 and 2004 are summarized as follows:
Three months ended September 30,
-----------------------------------
2005 2004 % Change
----------- ----------- -------
Spectrum Naturals(R) Culinary Products $ 7,584,200 $ 5,649,400 +34%
Spectrum Essentials(R) Nutritional Supplements 2,099,800 2,281,100 -8%
Spectrum Ingredients/Other 5,117,500 3,830,700 +34%
----------- ----------- -------
Comparable Net Sales 14,801,500 11,761,200 +26%
Discontinued Product Lines -- 428,200 N/A
----------- ----------- -------
Total Net Sales $14,801,500 $12,189,400 +21%
=========== =========== =======
Nine months ended September 30,
-----------------------------------
2005 2004 % Change
----------- ----------- -------
Spectrum Naturals(R) Culinary Products $20,240,200 $16,899,700 +20%
Spectrum Essentials(R) Nutritional Supplements 7,277,400 7,080,400 +3%
Spectrum Ingredients/Other 14,638,900 12,634,100 +16%
----------- ----------- -------
Comparable Net Sales 42,156,500 36,614,200 +15%
Discontinued Product Lines 297,400 1,119,700 -73%
----------- ----------- -------
Total Net Sales $42,453,900 $37,733,900 +13%
=========== =========== =======
2 The reconciliation of net income to EBITDA for the three and nine month
periods ended September 30, 2005 and 2004 is summarized as follows:
Three months ended September 30,
2005 2004
-------- --------
Net Income $123,400 $ 32,300
Add back: Provision for Income Taxes 82,300 21,500
Interest Expense 161,700 98,300
Depreciation and Amortization Expense 161,300 158,700
-------- --------
EBITDA $528,700 $310,800
======== ========
Nine months ended September 30,
2005 2004
---------- ----------
Net Income $ 549,500 $ 101,700
Add back: Provision for Income Taxes 366,300 67,700
Interest Expense 435,900 250,100
Depreciation and Amortization Expense 478,500 460,900
---------- ----------
EBITDA $1,830,200 $ 880,400
========== ==========
SPECTRUM ORGANIC PRODUCTS, INC.
BALANCE SHEETS
ASSETS
(Unaudited)
September 30, December 31,
2005 2004
------------ ------------
Current Assets:
Cash $ 19,600 $ 11,000
Accounts receivable, net 5,111,400 3,799,800
Inventories, net 11,594,700 9,564,800
Deferred income taxes - current 581,200 630,000
Prepaid expenses and other current assets 196,800 141,400
------------ ------------
Total Current Assets 17,503,700 14,147,000
Property and Equipment, net 3,775,800 3,990,200
Other Assets:
Deferred income taxes - long-term 1,241,100 1,529,500
Intangible assets, net 583,300 584,800
Other assets 252,700 251,200
------------ ------------
Total Assets $ 23,356,600 $ 20,502,700
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank overdraft $ 436,800 $ 843,300
Line of credit 8,803,300 6,984,400
Accounts payable, trade 4,803,000 3,305,200
Accrued expenses 1,521,800 1,582,700
Current maturities of term notes payable and capital lease obligations 500,000 514,600
Current maturities of notes payable, related parties 51,100 228,200
------------ ------------
Total Current Liabilities 16,116,000 13,458,400
Notes payable and capitalized lease obligations, less
current maturities 1,000,000 1,375,000
Notes payable, related parties, less current maturities 345,300 326,200
Deferred rent 26,800 37,000
------------ ------------
Total Liabilities 17,488,100 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
September 30, 2005 and December 31, 2004, respectively 9,644,300 9,631,400
Accumulated deficit (3,775,800) (4,325,300)
------------ ------------
Total Stockholders' Equity 5,868,500 5,306,100
------------ ------------
Total Liabilities and Stockholders' Equity $ 23,356,600 $ 20,502,700
============ ============
SPECTRUM ORGANIC PRODUCTS, INC.
STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net Sales $ 14,801,500 $ 12,189,400 $ 42,453,900 $ 37,733,900
Cost of Goods Sold 11,351,100 9,411,700 31,887,200 29,093,900
------------ ------------ ------------ ------------
Gross Profit 3,450,400 2,777,700 10,566,700 8,640,000
------------ ------------ ------------ ------------
Operating Expenses:
Sales and Marketing 1,794,900 1,697,000 5,822,100 5,401,900
General and Administrative 1,288,100 932,500 3,411,600 2,836,300
------------ ------------ ------------ ------------
Total Operating Expenses 3,083,000 2,629,500 9,233,700 8,238,200
------------ ------------ ------------ ------------
Income from Operations 367,400 148,200 1,333,000 401,800
Other Income (Expense):
Interest Expense (161,700) (98,300) (435,900) (250,100)
Other -- 3,900 18,700 17,700
------------ ------------ ------------ ------------
Income Before Income Taxes 205,700 53,800 915,800 169,400
Provision for Income Taxes 82,300 21,500 366,300 67,700
------------ ------------ ------------ ------------
Net Income $ 123,400 $ 32,300 $ 549,500 $ 101,700
============ ============ ============ ============
Basic and Fully Diluted Income Per Share $ 0.00 $ 0.00 $ 0.01 $ 0.00
============ ============ ============ ============
Weighted Average Shares Outstanding 46,444,693 46,386,943 46,437,738 46,328,147
============ ============ ============ ============
Fully Diluted Average Shares Outstanding 48,418,498 48,278,211 48,313,732 48,629,181
============ ============ ============ ============
SPECTRUM ORGANIC PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months Ended
September 30, September 30,
2005 2004
Cash Flows from Operating Activities: ------------ ------------
Net Income $ 549,500 $ 101,700
Adjustments to Reconcile Net Income to Net
Cash Used in Operating Activities:
Depreciation and amortization expense 478,500 460,900
Provision for inventory obsolescence 247,900 168,100
Provision for allowances against receivables 48,500 38,700
Imputed interest on note payable, related party 19,000 15,200
Revaluation of derivative financial instruments 19,600 --
Changes in Assets and Liabilities:
Accounts receivable (1,360,100) (311,800)
Inventories (2,277,800) (2,003,900)
Other assets 280,300 (161,500)
Accounts payable 1,497,800 1,456,900
Accrued expenses and other liabilities (90,700) (533,400)
------------ ------------
Net Cash Used in Operating Activities (587,500) (769,100)
------------ ------------
Cash Flows from Investing Activities:
Purchase of property and equipment (262,600) (962,100)
------------ ------------
Net Cash Used in Investing Activities (262,600) (962,100)
------------ ------------
Cash Flows from Financing Activities:
Decrease in bank overdraft (406,500) (392,400)
Proceeds from line of credit 19,886,000 16,413,300
Repayment of line of credit (18,066,900) (14,454,200)
Proceeds from note payable -- 554,100
Repayment of bank term notes payable (375,000) (187,500)
Repayment of capitalized lease obligations (14,600) (35,500)
Repayment of notes payable, related parties (177,200) (212,300)
Proceeds from exercise of stock options 12,900 45,900
------------ ------------
Net Cash Provided by Financing Activities 858,700 1,731,400
------------ ------------
Net Increase in Cash 8,600 200
Cash, beginning of the year 11,000 7,300
------------ ------------
Cash, end of the period $ 19,600 $ 7,500
============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ 29,000 $ 16,000
Cash paid for interest $ 418,900 $ 243,300
-End-