Centennial Specialty Foods Reports Third Quarter Results DENVER,
Nov. 15 /PRNewswire-FirstCall/ -- Centennial Specialty Foods
Corporation (Nasdaq: CHLE; Boston Stock Exchange: CSJ) reported a
net loss of $100,004, or $.02 per share, for its three months ended
September 30, 2004 compared to a net loss of $138,939, or $.04 per
share, for the same period in the prior year. Loss per common
share, after giving effect to the undeclared preferred stock
dividends in arrears, was $0.07 for the three months ended
September 30, 2004. Gross sales of its products for the three
months ended September 30, 2004 increased 4.3 % over the same
period last year, due to an increase of $214,418 (22.7%) in gross
sales of the premium Stokes line of green chile sauces and a
decrease of $149,456 (26.8%) in gross sales of the Ellis line of
products. The increase in gross sales of the Stokes Green Chile
Sauces was due to first orders for product by new retail customers
in California and Arizona, as well as initial reorders of product
from customers in those new markets. Net sales, which are adjusted
for discounts, promotional allowances and slotting fees, totaled
$1,192,169 for the three months ended September 30, 2004 and were
5.2% lower than the same period in 2003. This decrease was due to
the Company's initial promotional marketing efforts in connection
with the introduction of products in California and Arizona, which
resulted in increased promotional allowances being charged against
gross sales. Total promotional allowances were $352,121 for the
three months ended September 30, 2004 compared with $230,529 for
the same period in 2003. As a result, gross profit for the three
months ended September 30, 2004 was $27,494 (6.5%) lower than the
same period in 2003. Selling, general and administrative expenses
decreased slightly by $9,514 for the three months ended September
30, 2004 compared to 2003. For the nine months ended September 30,
2004, the Company reported a net loss of $538,470, or $.11 per
share, compared to a net loss of $64,178, or $.02 per share for the
same period in 2003. Loss per common share, after giving effect to
preferred stock dividends paid and in arrears, was $0.26 for the
nine months ended September 30, 2004. Gross sales of the premium
Stokes Green Chile Sauces increased $673,370 (25.8%), offset by
lower gross sales on Ellis brand products, resulting in total gross
sales increasing just slightly between years. The increase in gross
sales of the Stokes Green Chile Sauces was primarily due to initial
orders for product by new retail customers in California and
Arizona. Net sales decreased $405,537 (11.0%) between years,
reflecting an increase in promotional costs associated with
expanding into the new markets and slotting fees being charged for
shelf space with new customers. Slotting fees incurred in 2004
total $480,997, compared to $18,817 for 2003. Selling, general and
administrative expenses increased $489,727 for the nine months
ended September 30, 2004 compared to the same period in 2003. This
increase was primarily attributable to advertising and consumer
marketing spending associated with Centennial's expansion into new
markets. Additionally, the Company incurred higher legal fees due
to issues with its tenant and sole supplier and higher costs
associated with being a public company. The increase in selling,
general and administrative expenses was partially offset by a
reduction in interest expense through more favorable financing
terms under the Company's revolving line of credit. Centennial has
been successful in expanding distribution of its premium Stokes
Green Chile Sauces into new markets. Centennial currently sells to
Albertsons, Kroger, Safeway, Wal-Mart, Sam's Club and Costco, along
with certain local and regional retail grocery stores in all of its
markets. It has added over 1,700 new stores in California and
Arizona since its expansion efforts began. Bob Beckwith, Chief
Marketing Officer for Centennial stated, "Getting distribution of
our products into retail grocery customers has been a critical
first step of our expansion plans. Getting consumers to purchase
our premium products on an on-going basis will be the real test of
our expansion." After gaining initial distribution, Centennial
began its marketing efforts in the new markets during the third
quarter of 2004. In conjunction with key retailers in each market,
a combination of advertising, in-store consumer product
demonstrations and coupon programs has been used. These marketing
efforts were primarily focused on determining whether there would
be consumer acceptance of its premium products. The feedback from
such efforts, especially the in-store product demonstrations,
showed that consumers in the new markets liked the quality and
taste of the Stokes products. Centennial is now rolling out its
"consumer trial program," a marketing campaign designed to drive
mass consumer trial of our products through low introductory shelf
pricing. Management believes this is the most cost effective way to
reach a mass number of consumers and is an approach used by large
branded food companies when introducing a premium product into a
new market. "Once people try our products, we believe our unique
taste profile will make them repeat consumers," Beckwith added.
Initial reorders of product by retail grocery customers in the new
markets has begun. Ultimately, the Company's sales growth will be
driven by consumer demand in our new markets. Centennial is
continuing to work with major retailers and regional chains as it
executes its expansion strategy. "Each market provides unique
opportunities for Centennial to increase its distribution over the
next 18 to 24 months. We will continue to evaluate new market
expansion opportunities as they arise and actively pursue those
that make sense for the company," stated Jeffrey Nieder, CEO for
Centennial. The Company believes it has sufficient funding
available under its revolving line of credit to finance future
market expansions. As of September 30, 2004, availability under the
line of credit was approximately $2.6 million. "I am excited about
the opportunities ahead for Centennial. People in new markets are
just beginning to discover the unique alternative Stokes Green
Chile Sauces provides compared to typical Mexican sauces," Nieder
added. The Company is continuing negotiations with its tenant and
sole supplier to resolve certain outstanding claims. While the
Company and tenant have not been able to finalize the previously
disclosed MOU transaction, both sides are working to reach an
acceptable resolution. Centennial Specialty Foods Corporation is a
distributor of ethnic Southwestern food products. Its products are
sold under the Stokes and Ellis labels, two well-known Southwestern
brands that date back almost 100 years. Principal channels of
distribution for Centennial's products are grocery retailers,
superstores and club stores in Colorado, Arizona, California and,
to a lesser extent, several major metropolitan markets in adjoining
states. More information about Centennial can be found on its
website at http://www.centennialspecialtyfoods.com/. Note Regarding
Forward Looking Statements: Certain matters discussed in this press
release could contain forward- looking information that involves
risks and uncertainties that could cause actual results to differ
materially from current trends or expected results. We identify
forward looking statements through our use of words such as
"expect," "believe," "project," "anticipate," and similar
expressions. These risks that may affect our ability to achieve
forward-looking statements are discussed in our Annual Report on
Form 10-KSB for the year ended December 31, 2003 and in other
documents that are on file with the Securities and Exchange
Commission. For further information please contact Jeffrey Nieder
or Doug Evans, (303) 292-4018, at Centennial Specialty Foods
Corporation. Stokes and Ellis are registered trademarks of
Centennial Specialty Foods Corporation. CENTENNIAL SPECIALTY FOODS
CORPORATION AND SUBSIDIARY Consolidated Unaudited Statements of
Operations For the Three Months For the Nine Months Ended September
30, Ended September 30, 2004 2003 2004 2003 Net sales $1,192,169
$1,258,037 $3,266,716 $3,672,253 Cost of goods sold 796,849 835,223
2,416,739 2,378,067 Gross profit 395,320 422,814 849,977 1,294,186
Selling, general and administrative expenses 666,000 675,513
1,978,698 1,488,971 Loss from operations (270,680) (252,699)
(1,128,721) (194,785) Other income (expense) Interest expense
(40,531) (126,820) (183,759) (383,135) Rent income 152,475 158,580
457,766 475,742 Total other income 111,944 31,760 274,007 92,607
Loss before income taxes (158,736) (220,939) (854,714) (102,178)
Income tax benefit - deferred 58,732 -- 316,244 -- Income tax
benefit - pro forma -- 82,000 -- 38,000 Total income tax benefit
58,732 82,000 316,244 38,000 Net loss $(100,004) $(138,939)
$(538,470) $(64,178) Net loss before preferred stock dividends
$(100,004) $(138,939) $(538,470) $(64,178) Preferred stock
dividends - paid -- -- (250,000) -- Preferred stock dividends -
arrears (250,000) -- (500,000) -- Total preferred stock dividends
(250,000) -- (750,000) -- Net loss available to common shareholders
$(350,004) $(138,939) $(1,288,470) $(64,178) Basic and diluted net
loss per common share $(0.07) $(0.04) $(0.26) $(0.02) Basic and
diluted weighted average common shares outstanding 5,050,000
3,500,000 5,050,000 3,500,000 CENTENNIAL SPECIALTY FOODS
CORPORATION AND SUBSIDIARY Consolidated Balance Sheets September
30, December 31, 2004 2003 Assets (unaudited) Current assets Cash
and cash equivalents $132,347 $6,076,479 Accounts receivable, net
of allowance for doubtful accounts of $25,483 and $25,483,
respectively 561,504 303,848 Other receivable 57,497 -- Inventory,
net 2,090,419 1,043,540 Prepaid expenses 92,264 186,086 Total
current assets 2,934,031 7,609,953 Non-current assets Property,
plant and equipment, net 5,967,891 6,112,215 Goodwill, net
1,634,079 1,634,079 Other assets 63,549 70,000 Other long-term
receivable -- 170,000 Total non-current assets 7,665,519 7,986,294
Total assets $10,599,550 $15,596,247 Liabilities and Stockholders'
Equity Current liabilities Accounts payable - trade $391,635
$1,022,268 Accrued liabilities 620,957 578,134 Accrued dividends
payable -- 172,603 Related party payable -- 365,394 Current portion
of long-term debt -- 750,250 Note payable - stockholder -- 908,900
Total current liabilities 1,012,592 3,797,549 Long-term debt
($2,603,572 available under $5,000,000 line of credit) 2,396,428
3,503,454 Deferred tax liability 214,418 530,662 Total long-term
liabilities 2,610,846 4,034,116 Total liabilities 3,623,438
7,831,665 Commitments and contingencies Stockholders' equity
Preferred stock (liquidation preference $10,500,000), 3,000,000
shares authorized, 2,000,000 shares issued and outstanding, $5
stated value, 10% dividend 2,334,785 2,334,785 Common stock,
$0.0001 par value, 20,000,000 shares authorized, 5,050,000 shares
issued and outstanding 505 505 Additional paid-in capital 5,794,036
5,794,036 Accumulated deficit (1,153,214) (364,744) Total
stockholders' equity 6,976,112 7,764,582 Total liabilities and
stockholders' equity $10,599,550 $15,596,247 DATASOURCE: Centennial
Specialty Foods Corporation CONTACT: Jeffrey Nieder or Doug Evans
of Centennial Specialty Foods Corporation, +1-303-292-4018 Web
site: http://www.centennialspecialtyfoods.com/
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