Orlando, Fla.-based Galaxy Nutritional Foods, a producer of nutritious plant-based dairy alternatives, has reported a loss for its FY 2002 ended 31 March 2002, after recording around US$15m in non-cash charges and write-downs.

For the Q1 2003, ended 30 June 2002, the company is expecting to report a major turnaround in operating results based on the implementation of several cost-cutting measures and increased efficiencies as well as the completion of a strategic capital investment program. The company is also forecasting that sales, gross margin, operating profit, cash flow and EBITDA will steadily improve during FY 2003.

For its FY 2002, Galaxy reported a net loss available to common shareholders of US$(19m), or US$(1.81) loss per diluted share, versus a net loss of US$(6.48m) or US$(0.69) per diluted share for the same period one year ago. Net sales fell 4% to US$43.58m compared with US$45.42m a year ago. For the Q4 2002, the company reported net sales of US$10.08m versus sales of US$10.32m for the prior quarter ended 31 December 2001.

The US$19.1m loss for FY 2002 included approximately US$5.4m in accounts receivable and inventory write-downs, a non-cash compensation charge of around US$2.4m related to stock options, non-cash preferred stock dividends of around US$2.1m, a non-cash deferred income tax expense adjustment of US$1.5m, about US$1m in fixed asset disposals and unused trade advertising credits, about US$3.6m in interest expense of which US$818,974 was a non-cash charge related to debt discount, and depreciation and amortisation expense of around US$2.4m. EBITDA for the FY 2002, plus the aforementioned non-cash charges and write-downs was approximately (US$700,000) or (2%).

Angelo S. Morini, chairman, president and CEO stated: "During FY 2001, with demand for our product soaring, we decided to implement a strategic capital investment programme. During that year and FY 2002, we ordered and installed around US$10m in new production equipment.

Unexpected delays in equipment delivery from several manufacturers along with longer than expected equipment installation time, severely restrained our ability to fulfill customer orders and operate efficiently. Had all new equipment been delivered and installed in the projected time frame, we believe Galaxy would now be reporting a significant increase in sales and profits."

"In the past several months, Galaxy has taken several important steps to effect a turnaround," Morini continued. "These inventory reductions and product optimization measures will enable us to operate much more efficiently resulting in higher profit margins for Galaxy. We have also significantly strengthened our management team with the addition of several highly motivated and experienced professionals with very successful track records."

Morini concluded, "Our Q1 2003 is expected to show a significant improvement and steady improvement during FY 2003. We are in the middle of completing a financial restructuring, which will further secure our turnaround and return to profitable growth. The market for our products continues to skyrocket and Galaxy, despite its hurdles this past fiscal year, remains the undisputed leader in its category with a 91% share of market.

"We remained focused on building our core business as well as expanding our relationships beyond the core with leading companies."