Organization Restructured Into Three Distinct Business Units Realignment Includes Workforce Reduction
SALT LAKE CITY, Utah–(BUSINESS WIRE)–Weider Nutrition International, Inc. (NYSE:WNI – news) today announced results for the three and six-month periods ended Nov. 30, 2001. The company also announced a reorganization into three strategic business units.
Strategic Business Units
Bruce Wood, Weider Nutrition’s CEO and president, stated, “We have reorganized our company to concentrate our resources and speed our products and programs to market with the goal of improving profitability. Our business unit focus is designed to make the company more responsive to industry conditions, positioning Weider Nutrition to compete more effectively in the prevailing difficult business environment.”
Under this reorganization, Weider eliminated the central sales, marketing and research and development departments, as well as several non-strategic activities. As a result, the company reduced the total domestic workforce by 25 people, including three senior management positions. The company expects to achieve annualized savings of approximately $3 million as a result of the new organizational alignment and reduction in workforce.
The business units will be managed independently, each with its own research and development, and sales and marketing resources, supported by operations and technical services, and administrative functions.
Bruce Wood will lead the Schiff Speciality Nutrition Unit, which contains the Schiff and Move Free brands, and represents the most significant strategic asset within the company. The company’s flagship brands will draw upon Wood’s 25 years of experience in marketing, sales and general management at Nabisco, Inc.
The Active Nutrition Unit, under Rick Blair’s supervision, will include American Body Building, Tiger’s Milk and Weider branded global businesses. Blair brings significant industry experience in sales, marketing and product development, and has served the company for more than ten years in several key executive positions.
Haleko, Weider’s primary European subsidiary, will remain an independent unit headed by Bruno Iversen, who recently joined the Weider Nutrition team. Iversen is the former CEO of Schuemann Sasol AG, and he has enjoyed a distinguished career in a number of chief executive positions with multinational firms based in Germany.
Wood continued, “Weider has proactively adapted to an increasingly competitive environment over the last two years. With these recent measures, we are taking another positive step forward in what we anticipate to be continued difficult market conditions.”
Quarter-end and Year-to-Date Results
For the second quarter ended Nov. 30, 2001, Weider Nutrition’s net revenues were $77.9 million, compared to $78.5 million in the quarter ended Nov. 30, 2000. For its fiscal 2002 second quarter, Weider reported a net loss of $3.9 million or $0.15 per share (diluted), compared to a net loss of $257,000 or $0.01 per share (diluted) for the same period a year ago.
Domestic operating income, including a $1.5 million charge associated with the company’s reorganization, amounted to $2.3 million for the fiscal 2002 second quarter, compared to a $.1 million operating loss for the same period a year ago. Fiscal 2002 second quarter international results, including a $1.4 million write-down of sports apparel inventories, yielded an operating loss of $1.5 million, compared to operating income of $3.0 million for the same period a year ago.
During the second fiscal 2002 quarter, Weider Nutrition recognized a non-cash valuation provision of $1.8 million to write-down previously recognized tax assets primarily pertaining to its Haleko subsidiary. In addition, the company is not recognizing an income tax benefit on current losses incurred by the Haleko subsidiary.
For the six-month period ended Nov. 30, 2001, Weider Nutrition’s net revenues were $165.1 million, compared to $169.7 million in the period ended Nov. 30, 2000. For its fiscal 2002 six-month results, Weider reported a net loss of $4.2 million or $0.16 per share (diluted), compared to net income of $1.7 million or $0.06 per share (diluted) for the same period a year ago.
Nutritional supplement revenues remained constant at approximately $150 million for the six-month periods ended Nov. 30, 2001 and 2000. Domestic operating income for the six months ended Nov. 30, 2001, amounted to $6.5 million, compared to $6.4 million, including $3.6 million in litigation settlement income, for the six months ended Nov. 30, 2000. International operating results included a $4.5 million operating loss and $1.3 million in operating income for the six-month periods ended Nov. 30, 2001 and 2000, respectively.
Joseph Baty, CFO and EVP, stated, “Similar to our first quarter fiscal 2002 performance, second quarter domestic results continued to reflect an improved operating margin. Our overall performance, however, was significantly impacted by continued operating losses in our Venice Beach sports apparel business. Having evaluated a number of strategic alternatives for Venice Beach, we are currently implementing measures aimed at improving margins on reduced revenues, as we focus the apparel business on more profitable accounts. We are hopeful that the Venice Beach business will be profitable as early as fiscal 2003, and we will continue to evaluate our progress against other strategic options.”
Baty continued, “Our focus on inventory management has resulted in improved cash flow and reduction of outstanding debt. We are continually evaluating our overall cost structure and operating cash flow to become more efficient and to strengthen our financial position. We will continue to scrutinize spending, analyze our supply chain processes and evaluate our dividend policy against reinvestment alternatives.”
Weider Nutrition International will hold a conference call today, Dec. 20, 2001 at 11 a.m. eastern time. The access number is 415/904-7387. Please call in approximately ten minutes in advance. The conference call will be broadcast live over the Internet at www.weider.com or www.streetevents.com. If you do not have Internet access, a replay of the call will be available by dialing 1-800/633-8284 and entering access code 20095415. The telephone replay will be available through Dec. 22, 2001 and the webcasting through Jan. 11, 2002.
Weider Nutrition International, Inc. develops, manufactures, markets and sells branded and private label vitamins, nutritional supplements and sports nutrition products in the United States and throughout the world and sells a line of sports apparel in Europe. To learn more about Weider, please visit the Web site www.weider.com.