Vita Food Products, Inc. (Amex: VSF) yesterday announced that the company discovered an error in the unit cost of one inventory item in its standard cost system. This error affected the second quarter results for 2001, resulting in an overstatement of inventory and understatement of cost of goods sold by $193,000. The company’s restatement of previously announced earnings to correct the error reflects a reduction of earnings by $141,000, net of related tax benefit of $52,000.
“We regret the release of incorrect information that occurred. Although our earnings for the second quarter improved from the comparable period in 2000, after the correction the improvement is less than previously reported. This is our third quarter in a row, and the eleventh of the last twelve, that have shown earnings improvement over the prior year. In addition, the error did not effect the company’s cash flow or cash position,” said Clifford Bolen, Chief Financial Officer of the company. “We discovered the cause internally and have changed the process to prevent such an oversight in the future.”
For the revised second quarter ended June 30, 2001, the company announced a net loss of $88,000, or $0.02 per share, compared with a net loss of $110,000 or $0.03 per share in the second quarter of 2000, an improvement of $22,000, or $0.01 per share. The improvement in quarterly earnings was due primarily to increased sales through targeted promotional programs and a reduced cost of borrowing based on lower interest rates, partially offset by an increase in administrative costs.
Net sales for the second quarter were $5.0 million, compared with $4.8 million in the second quarter of 2000. Sales of salmon products increased 5% and sales of herring products increased 3% in the quarter.
Gross margin for the quarter increased to 26.8% from 26.5% in the prior year. The operating expense margin remained flat at 28%. The resulting operating profit improvement was $10,000.
Revised Six-Months Results
For the revised six months ended June 30, 2001, Vita had a net loss of $29,000, or $0.01 per share, compared with a net loss of $67,000, or $0.02 per share, for the six months ended June 30, 2000, an improvement of $37,000, or $0.01 per share. The profit improvement was primarily due to increased net sales through targeted promotional programs, partially offset by increased administrative costs.
On August 15, 2001 the company completed its acquisition of Virginia Honey Co., Inc. in accordance with the definitive stock purchase agreement the company signed on June 29, 2001. Terry W. Hess has entered into an employment agreement to serve as the chief executive officer of Virginia Honey. Virginia Honey is now a wholly-owned subsidiary of the company and will be reporting its earnings with the company’s effective July 1, 2001, the start of the company’s third quarter.
Virginia Honey is a manufacturer and distributor of honey, salad dressings, including its’ award-winning Vidalia® Onion Vinegarette salad dressing, sauces, jams & jellies, and gift baskets. Virginia Honey operates two manufacturing facilities in Inwood, West Virginia and Berryville, Virginia.
Vita Food Products, Inc. is the U.S. leader in the herring and retail packaged salmon markets, and is engaged in several other food segments, including cream cheese, cocktail sauce and horseradish. More than 95% of Vita’s sales are in kosher foods. Vita’s common stock is currently traded on the American Stock Exchange and Chicago Stock Exchange under the ticker symbol VSF.
This release contains forward-looking statements about the Company’s future growth, profitability and competitive position. Any such statements are subject to risks and uncertainties, including changes in economic and market conditions, industry competition, raw material prices, the success of new product introductions, management of growth and other risks noted in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s analysis only as of the date hereof.
Statements of Operations Vita Food Products, Inc.
for three months ended for six months ended
June 30, June 30,
2001 2000 2001 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net Sales $5,026,645 $4,757,217 $11,246,397 $10,975,620
Cost of Goods Sold 3,680,503 3,496,719 8,207,538 8,016,578
Gross Margin 1,346,142 1,260,498 3,038,859 2,959,042
Selling and Administrative
Selling, Marketing &
Distribution 890,381 900,711 1,894,000 1,956,781
Administrative 518,987 433,147 1,036,598 952,626
Total 1,409,368 1,333,858 2,930,598 2,909,407
Operating Profit (Loss) (63,226) (73,360) 108,261 49,635
Interest Expense 76,169 89,026 189,042 190,133
(Loss) before Income Tax
(Benefit) (139,395) (162,386) (80,781) (140,498)
Income Tax (Benefit) (51,576) (51,984) (51,576) (73,984)
Net (Loss) ($87,819) ($110,402) ($29,205) ($66,514)
Basic and Diluted (Loss)
Per Share ($0.02) ($0.03) ($0.01) ($0.02)
Weighted Average Common
Shares Outstanding 3,724,546 3,712,471 3,724,546 3,712,471