For the third quarter ended September 30, 2000, Vita Food Products, Inc. (Amex: VSF) today announced a net loss of $89,000, or $0.02 per share, compared with net income of $76,000 or $0.02 per share in the third quarter of 1999, a decrease in net income of $165,000 or $0.04 per share. Despite record third quarter sales, lower margins resulted in the quarterly loss. Net income in the third quarter of 1999 was unusually strong and not typical of the normal third quarter loss incurred by the Company in advance of its seasonally strong fourth quarter.

Net sales for the third quarter increased 3% to a record $5.43 million for a third quarter, compared with $5.26 million in the third quarter of 1999. Sales of salmon products increased 10% in the quarter while sales of herring products were relatively stable. Salmon product sales growth was due to increasing demand for the Company’s core nova-style smoked salmon products as well as increased distribution of the Company’s newer marinated salmon products.

Gross margin for the quarter decreased to 24.6% from 27.7% in the prior year. Higher costs of herring, other materials, and labor, without a corresponding increase in prices to customers, continue to result in lower margins. Contributing to the lower gross margins this quarter was a delay in production of herring products caused by improvements made to the herring production floor. This delay resulted in temporary unfavorable overhead variances, and thus higher per-unit overhead costs than otherwise anticipated. Also contributing to the quarterly loss was a higher operating expense margin, which increased to 25.5% from 23.8% in 1999. The higher operating expense margin was due to unusually low administrative costs in 1999, resulting from a one-time reclassification of certain professional fees to plant overhead expenses and the capitalization of acquisition expenses incurred during the first nine months of 1999.

“We are very pleased with our continued strong 11% year-to-date sales growth this year. Management’s decision to absorb cost increases this year and not pass them on to our customers has contributed to our sales momentum but has resulted in somewhat lower near-term profitability,” said Stephen Rubin, President of Vita Food Products, Inc. “We expect to modify our product pricing in the first quarter of 2001 to address our cost increases, while continuing to address areas of potential productivity gains in order to be as competitive as we can in the marketplace.”

Nine Month Results

For the nine months ended September 30, 2000, Vita had a net loss of $156,000, or $0.04 per share, compared with a net loss of $110,000 or $0.03 per share in the third quarter of 1999. The higher net loss was primarily due to lower gross margins which have resulted from the Company’s strategy this year of not passing along herring and other cost increases to its customers.

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.

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 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. 

    Statements of Operations                       Vita Food Products, Inc.
 
                        for the three months ended for the nine months ended
                               September 30,             September 30,
                            2000          1999         2000          1999
                         (Unaudited)  (Unaudited)   (Unaudited)  (Unaudited)
 
     Net Sales           $5,433,755    $5,257,156  $16,409,374   $14,837,838
     Cost of Goods Sold   4,095,004     3,799,511   12,111,582   $10,702,179
 
     Gross Margin         1,338,751     1,457,645    4,297,792     4,135,659
 
     Selling and
      Administrative
      Expenses
       Selling,
        Marketing &
        Distribution        948,266       888,193    2,905,047    $2,720,167
       Administrative       438,302       363,645    1,390,929    $1,346,766
 
     Total                1,386,568     1,251,838    4,295,976     4,066,933
 
     Operating Profit
      (Loss)                (47,817)      205,807        1,816        68,726
 
     Interest                93,896        85,672      284,028       242,639
 
     Income (loss)
      before Income
      Tax Expense
      (Benefit)            (141,713)      120,135     (282,212)     (173,913)
     Income Tax Expense
      (Benefit)             (52,434)       44,449     (126,418)      (64,348)
 
     Net Income (Loss)     ($89,279)      $75,686    ($155,794)    ($109,565)
 
     Basic Earnings (Loss)
      Per Share              ($0.02)        $0.02        ($0.04)      ($0.03)
     Weighted Average
      Common Shares
      Outstanding         3,719,330     3,707,477    3,714,774     3,705,652
 
     Diluted Earnings
      (Loss) Per Share        (0.02)         0.02        (0.04)        (0.03)
     Weighted Average
      Common Shares
      Outstanding         3,719,330     3,730,681    3,714,774     3,705,652