Exhibit 99.07
Spectrum Organic Products, Inc.
Press Release March 1, 2004
Spectrum Organic Products Reports Record Sales and Profits for 2003
Spectrum Organic Products, Inc. (OTCBB--SPOP) today reported its fourth quarter
and full year results for calendar year 2003. Net income for the year was a
record of $2,663,600 or $0.06 per share on a fully-diluted basis versus net
income for the prior year of $1,120,000 or $0.02 per fully-diluted share. The
improved results were primarily attributable to the reversal of the valuation
reserve previously maintained against the Company's deferred tax assets, which
resulted in the Company recording a net benefit from income taxes of $1,566,600.
Also contributing to the improved results was impressive sales growth in all
three of the Company's primary business lines. For the fourth quarter ended
December 31, 2003 the Company reported net income of $1,386,700 or $0.03 per
fully-diluted share versus net income of $265,000 ($0.00 per share) for the
prior year. Again, the majority of the improvement was attributable to the
reversal of the reserve against the Company's deferred tax assets.
The Company reported that total net sales for the year ended December 31, 2003
were also a record of $45,676,500 compared to $40,579,300 for 2002, an increase
of 13%. Comparable net sales (after eliminating sales of disposed or
discontinued product lines from both periods) increased by 22% for 2003.(i)
Leading the way was the Spectrum Ingredients Division, whose net sales increased
by 31% versus the prior year. The SI Division benefited from the additional mass
media focus on the dangers of hydrogenated oils with respect to obesity and
cardiovascular disease. During 2003 several major food companies issued press
releases featuring a commitment to reduce or eliminate hydrogenated oils from
their packaged consumer products, which plays directly to the SI Division
product lines. This same trend toward healthy oils also benefited the Spectrum
Naturals(R) line of packaged culinary oils, dressings and butter substitutes,
which delivered net sales growth of 19% versus the prior year. Finally, the
Spectrum Essentials(R) sales of essential fatty acid nutritional supplements
increased 15% over the prior year primarily as a result of increased demand for
flax oil as a nutritionally-rich vegetarian source of Omega-3 and Omega-6
essential fatty acids. For the fourth quarter, comparable net sales increased by
25%, led by Spectrum Ingredients sales of industrial culinary oils and Spectrum
Essentials(R) nutritional supplement sales, both of which increased by 35%, and
a 15% increase in sales of Spectrum Naturals(R) culinary products.
Management believes that the Company's earnings before interest, taxes,
depreciation, amortization, the industrial accident expenses and gains on the
sale of product lines, ("EBITDA, as adjusted") is a relevant measure of the
Company's financial performance.(ii) For the year ended December 31, 2003 the
Company reported EBITDA, as adjusted of $2,436,100 compared to $2,288,500 for
the previous year, an increase of 6%. The increase was primarily attributable to
increased gross profit (+10%) as a result of the net sales growth, partially
offset by increased operating expenses (+11%), the expenses associated with the
industrial accident (+61%) and the gain recorded in the prior year on the sale
of the Organic Ingredients Division. The Company incurred $410,200 of expenses
during 2003 in connection with the industrial accident in April 2002. Included
in that amount was an accrual to cover the plea entered by the Company on
February 4, 2004 of no contest to two misdemeanor counts of violations of
CAL-OSHA regulations. For the fourth quarter ended December 31, 2003 the Company
reported EBITDA, as adjusted of $410,600 compared to $595,900 for the
corresponding period of the prior year, a decrease of 31%. The decrease was
primarily attributable to gross margin pressure and increased operating
expenses.
Spectrum President and Chief Executive Officer Neil G. Blomquist said, "Our 2003
financial results were a mixture of both good and bad. On the positive side, the
year featured double-digit sales growth in each of our three major product lines
and record net income. On the negative side, EBITDA, as adjusted increased only
6% versus the prior year as we suffered some gross margin erosion as a result of
higher raw material costs due to organic commodity prices and the weak dollar,
especially versus the euro."
Spectrum Founder and Chairman of the Board, Jethren P. Phillips, also commented,
"While we will forever mourn the loss of our two employees, Javier Del Rio and
Francisco Estrella Galvan, we put the financial uncertainty of the industrial
accident behind us by entering the no contest plea with the DA. That will enable
us to focus on our core position in healthy culinary oils and essential fatty
acid nutrition, which continues to be a key strategic advantage as consumer
awareness of the health problems associated with hydrogenated oils and trans
fats escalates."
Spectrum Organic Products, Inc. is a leading manufacturer and marketer of
organic culinary oils, vinegars, 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 industrial oils and vinegars to other manufacturers through its
Spectrum Ingredients Division.
"Safe Harbor" statements under the Private Securities Act of 1995: The
statements contained in this press 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 symbol
"SPOP".
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i The following table reconciles comparable net sales to total net sales for the
years ended December 31, 2003 and 2002:
2003 2002 % Change
---- ---- --------
Spectrum Naturals(R) Culinary Products $20,606,100 $17,268,200 +19%
Spectrum Essentials(R) Nutritional Supplements 10,353,900 9,030,400 +15%
Spectrum Ingredients/Private Label Products 14,443,400 11,065,900 +31%
---------- ---------- ----
Comparable Net Sales $45,403,400 $37,364,500 +22%
Disposed/Discontinued Product Lines 273,100 3,214,800 -92%
------- --------- ----
Total Net Sales $45,676,500 $40,579,300 +13%
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ii The following table reconciles net income to EBITDA, as adjusted for the
years ended December 31, 2003 and 2002:
2003 2002
---- ----
Net income $2,663,600 $1,120,000
Provision (benefit) from income taxes (1,566,600) 189,800
Interest expense 404,200 480,600
Depreciation and amortization 524,700 454,300
Gain on sales of product lines -- (210,300)
Industrial accident expenses 410,200 254,100
------- -------
EBITDA, as adjusted $2,436,100 $2,288,500
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