Genesee Corporation (Nasdaq: GENBB) announced, on Friday, results for the first fiscal quarter ended July 29, 2000.
The Corporation has previously announced that it is in the process of selling its brewing and equipment leasing businesses. Given these circumstances, the Corporation has reported these business segments as discontinued operations. The Corporation also previously announced that it has entered into a letter of intent to sell all of the outstanding stock of Ontario Foods, Inc., which represents the Corporation’s Foods Division, to Ralcorp Holdings, Inc. Under accounting rules governing the reporting of discontinued operations, results for the Foods Division cannot be included as part of discontinued operations. Therefore, the Foods Division and the Corporate segment, which operates primarily as the Corporation’s treasury function, are reported as continuing operations.
The Corporation recorded a loss from continuing operations of $529,000, or $.33 basic and diluted loss per share, compared to a restated loss from continuing operations of $544,000, or $.34 basic and diluted loss per share, in the first quarter last year.
Net revenues for the Corporation’s Foods Division were $11.1 million in the first quarter, compared to $10.5 million in the prior year period. The Foods Division recorded an operating loss of $895,000 in the first quarter of fiscal 2001, compared to a $566,000 loss in the prior year period. First quarter results in fiscal 2001 included a pre-tax charge of $900,000 for estimated costs associated with a recently discovered product quality problem involving a new product line. First quarter results last year included $704,000 of costs associated with transitioning operations to the Medina, New York facility.
The Corporation recorded net earnings from operations of the discontinued business segments of $520,000, or $.32 basic and diluted earnings per share, in the first quarter of fiscal 2001, compared to reclassified net earnings from operations of the discontinued business segments of $1.1 million, or $.66 basic and diluted earnings per share, in the first quarter last year.
Net revenues from the discontinued brewing business in the first quarter of fiscal 2001 were $23.4 million, compared to $28.4 million in the same period last year. This decrease of $5 million was due to barrel volume declining by 18% in the first quarter of fiscal 2001, compared to the prior year period. The brewing business recorded pre-tax earnings of $690,000, or $.43 basic and diluted earnings per share, in the first quarter this year, compared to pre-tax earnings of $932,000, or $.58 basic and diluted earnings per share, in the first quarter last year.
The Corporation’s discontinued equipment leasing business recorded first quarter operating income of $241,000, compared to $718,000 in the first quarter last year. The decrease is the result of the wind down plan announced in September, 1999 under which Cheyenne Leasing Company is not funding any new leases and is managing its remaining lease portfolio to maximize lease revenues and residual income.
The Corporation also announced that its Board of Directors did not disclose a dividend for the first quarter of fiscal 2001, ending a sixty-four year policy of paying a regular quarterly cash dividend. “In light of the recent announcement that the Corporation will seek shareholder approval to dissolve and liquidate, the Board felt that it would be more advantageous to shareholders to cease paying a cash dividend and instead distribute those amounts as liquidating distributions. This should allow many shareholders to receive more favorable tax treatment,” said Charles S. Wehle, Chairman of the Corporation’s Board of Directors. The timing and amount of liquidating distributions will be dependent upon shareholder approval of the proposal to dissolve and liquidate, the timing of closing the divestiture of the brewing, foods and equipment leasing businesses, the liquidation of the Corporation’s other assets, and the satisfaction of certain liabilities, the amounts of which cannot be determined at this time.
NOTE: Statements made in this news release which are not historical, including the dissolution and liquidation of the Corporation and the expected distributions therefrom, the timing and results of the sale of the Corporation’s brewing, foods and equipment leasing businesses, and the estimated costs associated with the quality problem at the Foods Division, are forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties, and there can be no assurance that the expectations or results reflected in those statements will be realized or achieved. Such risks and uncertainties include, without limitation, the possibility that costs associated with the quality problem at the Foods Division could exceed the charge taken in the first quarter, the failure of the proposed sale of the Corporation’s brewing, foods and equipment leasing businesses to close for whatever reasons, the failure of shareholders to approve the transactions, further negotiation of terms and conditions, purchase price adjustments, post-closing indemnification obligations, the failure to satisfy other conditions necessary to consummate the sale of the brewing, foods and equipment leasing businesses such as completion of satisfactory due diligence, negotiation of definitive agreements, failure to obtain necessary regulatory approvals and third party consents, and the possibility that a delay in resolving such conditions could jeopardize the transactions.
Comparative Statement of (Loss) / Earnings
THIRTEEN WEEKS THIRTEEN WEEKS
JULY 29, 2000 JULY 31, 1999
Net Revenues $11,074,000 $10,483,000
Loss From Continuing
Operations Before Income Taxes (705,000) (727,000)
Less: Income Tax Benefit (176,000) (183,000)
Loss From Continuing
Operations (529,000) (544,000)
Earnings From Discontinued
Operations, Net Of Income Tax
Expense 520,000 1,070,000
Net (Loss)/Earnings (9,000) 526,000
Basic & Diluted Loss
Per Share From Continuing Operations (.33) (.34)
Basic & Diluted Earnings
Per Share From Discontinued Operations .32 .66
Basic & Diluted Net
(Loss)/Earnings Per Share (.01) .32
Weighted Average Common Shares
Outstanding 1,620,643 1,619,461
Weighted Average and Common
Equivalent Shares 1,620,643 1,619,461