Results of operations for the nine months ended June 30, 2001, were negatively impacted by adverse economic factors that have affected Costa Rica, as well as North and Central America. According to information issued by the Central Bank of Costa Rica ("BCCR"), commodity exports for Costa Rica for the nine months ended June 30, 2001 decreased by 22.31% when compared to the nine months ended June 30, 2000. BCCR attributes the economic slow-down in the United States, which accounted for 52.5% of total exported commodities during fiscal year 2000, as the primary reason for this decrease. According to information issued by the Ministry of Foreign Commerce of Costa Rica, other external factors that have negatively impacted the Costa Rican economy include increases in the international price of oil and a 33.17% decrease in international investments during fiscal 2000, which has continued through fiscal year 2001.
However, the Costa Rican economy appears to be recovering. For example, the devaluation rate for the nine months ended June 30, 2001 was only 4.80%, the lowest since March 1994 according to the BCCR, while variations in the inflation rate during the same period have been within normal parameters.
During this recent economic slow down, the Costa Rican consumer's reduced purchasing power has directly affected the overall demand for goods and services in Costa Rica, including the demand for the Company's products. In response, the Company has temporarily lowered the sale price of certain products, increased volume discounts, and shifted its product mix to include more lower-priced products which, in the aggregate, have contributed to lower sales revenue than were budgeted for the Company. Because of the present economic outlook in Costa Rica, Management expects these trends to continue in the near future.
For the three months ended June 30, 2001 and 2000, operating expenses represented a 27.25% and 28.19% of total net sales, respectively. For the nine months ended June 30, 2001 and 2000, operating expenses represented a 27.04% and 26.50% of total net sales, respectively. For the three and nine months ended June 30, 2001, the Company interest and exchange rate loss increased, when compared to the same periods for fiscal 2000, due to increase in debt. There was also an increase in other income during fiscal 2001, due to gains in sales of non-productive assets. During the nine months ended June 30, 2001, the Company invested $8.55 million in assets, mainly in the production area. During the rest of the fiscal year 2001, the Company plans to restructure its short-term debt to long-term debt.
Following are the balance sheet as of June 30, 2001 and 2000, and results of operations for the three and nine months ended June 30, 2001 and 2000:
RICA FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2001 September 30,
(Unaudited) 2000
Assets
Current assets:
Cash and cash equivalents $ 2,822,762 $ 4,256,636
Short-term investments 185,061 86,557
Notes and accounts receivable 11,355,375 11,187,031
Due from related parties 1,400,013 39,618
Inventories 12,617,149 14,307,768
Prepaid expenses 992,808 557,519
Total current assets 29,373,168 30,435,129
Property, plant and equipment 47,401,196 45,425,881
Long-term receivables-trade 746,717 640,222
Long-term investments 4,861,671 3,965,385
Other assets 4,467,308 4,010,364
Cost in excess of net assets of
acquired business 2,382,973 3,705,392
Total assets $ 89,233,033 $ 88,182,373
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 13,889,151 $ 16,161,076
Accrued expenses 4,088,907 3,862,659
Notes payable 16,037,733 12,878,147
Current portion of long-term debt 5,793,698 5,680,190
Due to stockholders 74,634 76,657
Total current liabilities 39,884,123 38,658,729
Long-term debt, net of current portion 23,379,421 21,820,905
Due to stockholders 15,660 16,409
Deferred income tax liability 2,163,673 2,899,511
Total liabilities 65,442,877 63,395,554
Minority interest 1,336,445 1,336,445
Stockholders' equity:
Common stock 12,865 12,855
Preferred stock 2,216,072 2,216,072
Additional paid-in capital 25,800,940 25,760,950
Accumulated other comprehensive loss (9,432,247) (8,758,737)
Retained earnings 9,786,527 9,388,127
28,384,157 28,619,267
Less:
Due from stockholders (5,662,052) (4,900,499)
Treasury stock, at cost (268,394) (268,394)
Total stockholders' equity 22,453,711 23,450,374
Total liabilities and stockholders' equity $ 89,233,033 $ 88,182,373
RICA FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three months ended Nine months ended
June 30, June 30,
2001 2000 2001 2000
Sales $ 31,003,403 $ 29,755,427 $ 95,624,791 $ 93,181,924
Cost of sales 22,504,310 21,048,137 65,437,886 62,602,152
Gross profit 8,499,093 8,707,290 30,186,905 30,579,772
Operating expenses:
Selling 4,787,792 4,718,249 14,402,777 14,013,274
General and
administrative 3,464,185 3,404,467 10,867,061 9,996,470
Amortization of cost
in excess of net
assets of acquired
business 196,884 266,147 590,652 687,680
Total operating
expenses 8,448,861 8,388,863 25,860,490 24,697,424
Income from
operations 50,232 318,427 4,326,415 5,882,348
Other expenses
(income):
Interest expense 1,122,938 1,031,611 3,524,977 2,928,950
Interest income (304,911) (378,722) (851,684) (725,221)
Foreign exchange
loss, net 472,512 388,092 1,682,017 1,083,167
Miscellaneous, net (556,156) (331,515) (601,214) (732,797)
Other expenses, net 734,383 709,466 3,754,096 2,554,099
Income (loss) before
income taxes and
minority interest (684,151) (391,039) 572,319 3,328,249
Provision for
income taxes (107,929) (143,594) -- 262,574
Income (loss) before
minority interest (576,222) (247,445) 572,319 3,065,675
Minority interest 20,385 45,337 58,005 574,770
Net income (loss) (596,607) (292,782) 514,314 2,490,905
Preferred stock
dividends 36,499 17,426 115,915 112,170
Net income (loss)
applicable to common
stockholders $(633,106) $(310,208) $398,399 $2,378,735
Earnings (loss) per share:
Basic earnings (loss)
per share $(0.05) $(0.02) $0.03 $0.21
Diluted earnings (loss)
per share $(0.05) $(0.02) $0.03 $0.21
Weighted average number
of common shares
outstanding:
Basic 12,810,305 12,800,406 12,807,814 11,562,667
Diluted 12,810,305 12,800,406 12,807,814 11,567,038
This press release contains ``forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties or other factors which may cause actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. For more complete information concerning factors that could affect the Company's results, reference is made to the Company's registration statements, reports, or other documents filed with the Securities and Exchange Commission. For more information contact Rica Foods at (305) 477-1408, or e-mail to mmarenco@ricafoods.com and rpiedra@ricafoods.com.
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