Poore Brothers (NASDAQ:SNAK)
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Poore Brothers, Inc. (Nasdaq: SNAK) today reported
financial results for the fourth quarter and 2005 fiscal year ended
December 31, 2005. The Company also announced that its Board of
Directors approved a share repurchase plan.
Net revenues set a fourth quarter record of $17.0 million, 4%
above last year's fourth quarter of $16.4 million. The Company
reported a net loss of $(1.1) million, or $(0.05) per basic and
diluted share, as compared to a profit of $0.6 million, or $0.03 per
basic and diluted share last year. The decreased profitability
resulted principally from severance costs associated with departed
executives, professional service fees associated with the restatement
of second-quarter financial results, and inventory and obsolete
product write-downs associated with slow-moving new products.
For the fiscal year ended December 31, 2005, net revenue increased
10% to a record $75.3 million, compared with net revenue of $68.8
million for the previous fiscal year. Net income for the fiscal year
decreased to $0.3 million, or $0.01 per basic and diluted share,
compared with net income of $2.1 million, or $0.11 per basic and
diluted share, in the prior year period. The same factors that
affected fourth quarter results also impacted fiscal year results.
The Company's 10% revenue growth rate for the year was
attributable mainly to the introduction of Cinnabon(R) products and
moderate gross revenue growth amongst nearly all company brands. The
primary cause of the company's lower earnings for the year was slower
than expected consumer takeaway of new products which led to higher
than expected trade promotion spending rates and significant inventory
write-downs in the second half of the year. The underlying financial
progress of the company continues to be masked by the investments
associated with the company's attempts to create another national
brand to complement T.G.I. Friday's(R) snack chips.
The Company previously communicated that it intends to no longer
launch new products nationally until they are validated with thorough
small-scale market tests, thus mitigating the financial risk of new
brand launches. It also communicated that because of competitive
reasons it would no longer disclose new brand opportunities until they
are launched into test market and that it would no longer provide
annual revenue and earnings projections.
Mr. Eric J. Kufel, Chief Executive Officer, commented, "We are
disappointed with the Company's fourth quarter and fiscal 2005
performance and have taken swift action to improve the Company's
profitability, including staffing reductions, process improvements and
price increases on certain products. Much of the fourth quarter and
fiscal year loss was associated with severance payments, professional
service fees and inventory write-downs associated with new products
failing to meet sales expectations. Selling, general and
administrative expenses grew at a faster rate than revenue and
increased trade promotion investments did not generate expected rates
of growth. These issues are being addressed by streamlining the
Company's expense structure, focusing the organization on our core
profit drivers, and improving the efficiency and effectiveness of our
trade promotion investment process."
The Company also announced that its Board of Directors has
authorized a share repurchase program whereby the Company may
repurchase up to $3 million of the Company's outstanding common
shares. The repurchase program will expire on February 14, 2007.
"The repurchase program represents our commitment to improving
shareholder value and demonstrates the confidence that our Board and
management have in our capital position and future prospects," stated
Mr. Kufel. The share repurchase program will be conducted under the
provisions of Rule 10b-18 under the Securities Exchange Act of 1934.
Purchases may be made in the open market or in privately negotiated
transactions from time to time, as market conditions warrant.
The Company may also implement all or part of the repurchase
program pursuant to a plan meeting the conditions of Rule 10b5-1 under
the Exchange Act. A 10b5-1 plan permits a company to repurchase its
common shares during times when it would not normally be in the market
due to possession of material nonpublic information; provided that
such plan is entered into at a time when the company is not in
possession of material, non-public information and satisfies certain
other conditions.
All repurchases of common shares will be made in compliance with
regulations set forth by the Securities and Exchange Commission and
will be subject to market conditions, applicable legal requirements
and other factors. This program does not obligate the Company to
acquire any particular amount of common shares and the plan may be
suspended or discontinued at any time at the Company's discretion.
Mr. Kufel concluded, "Reiterating our goals for the remainder of
2006, we intend to execute one or more strategic acquisitions, return
the existing business to profitability through disciplined growth
strategies and improved efficiencies, and to test market new brand
concepts. We are dissatisfied with our financial results in 2005 and
we are committed to return the Company to its historical path of both
revenue and net income growth."
About Poore Brothers, Inc.
With facilities in Indiana and Arizona, Poore Brothers is a
marketer and manufacturer of Intensely Different(TM) snack foods under
a variety of owned or licensed brand names, including T.G.I.
Friday's(R), Cinnabon(R), Tato Skins(R), Poore Brothers(R), Bob's
Texas Style(R), and Boulder Canyon Natural Foods(TM). For further
information about Poore Brothers or this release, please contact Eric
Kufel, Chief Executive Officer, at (623) 932-6255, or logon to
http://www.poorebrothers.com.
Statements contained in this press release that are not historical
facts are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Because such
statements include risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking
statements. Factors that may cause actual results to differ from the
forward-looking statements contained in this press release and that
may affect the Company's prospects in general include, but are not
limited to, the potential need for additional financing,
acquisition-related risks, significant competition, customer
acceptance of new products, dependence upon major customers,
dependence upon existing and future license agreements, general risks
related to the food products industry, and such other factors as are
described in the Company's filings with the Securities and Exchange
Commission.
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POORE BROTHERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Quarter Ended Fiscal Year Ended
------------------------- -------------------------
Dec. 31, Dec. 25, Dec. 31, Dec. 25,
2005 2004 2005 2004
------------ ------------------------- ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Net revenues $17,016,160 $16,399,000 $75,332,541 $68,734,763
Cost of revenues 14,907,081 12,398,306 61,435,762 52,747,106
(Gain) on sale of
equipment/Brand
discontinuance
costs -- 308,104 (194,359) 1,722,863
------------ ------------ ------------ ------------
Gross profit 2,109,079 3,692,590 14,091,138 14,264,794
Selling, general &
administrative
expenses 3,762,808 2,565,069 13,638,684 10,558,544
------------ ------------ ------------ ------------
Operating
income (loss) (1,653,729) 1,127,521 452,454 3,706,250
Interest income
(expense), net (45,454) (19,093) 49,274 (164,797)
------------ ------------ ------------ ------------
Income (loss)
before income
taxes (1,699,183) 1,108,428 501,728 3,541,453
Income tax benefit
(provision) 632,764 (464,739) (221,244) (1,406,739)
------------ ------------ ------------ ------------
Net income
(loss) $(1,066,419) $643,689 $280,484 $2,134,714
============ ============ ============ ============
Earnings (loss) per
common share:
-------------------
Basic $(0.05) $0.03 $0.01 $0.11
============ ============ ============ ============
Diluted $(0.05) $0.03 $0.01 $0.11
============ ============ ============ ============
Weighted average
number of common
shares:
-------------------
Basic 20,053,509 19,141,844 19,763,992 18,794,977
============ ============ ============ ============
Diluted 20,053,509 19,319,000 19,763,992 18,947,553
============ ============ ============ ============
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POORE BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 25,
2005 2004
------------ ------------
(unaudited) (unaudited)
Current assets $21,411,795 $19,013,368
Property and equipment, net 10,109,654 10,815,963
Other assets, net 10,282,120 10,287,956
------------ ------------
Total assets $41,803,569 $40,117,287
============ ============
Current liabilities $7,522,523 $7,299,274
Long-term debt 1,681,432 1,729,134
Other long-term liabilities 2,356,757 2,280,793
------------ ------------
Total liabilities 11,560,712 11,309,201
Shareholders' equity 30,242,857 28,808,086
------------ ------------
Total liabilities and shareholders'
equity $41,803,569 $40,117,287
============ ============
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POORE BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
-----------------------
Dec. 31, Dec. 25,
2005 2004
----------- -----------
(unaudited) (unaudited)
Net cash flows from operating activities $487,266 $6,547,129
Net cash flows from investing activities (281,999) (455,769)
Net cash flows from financing activities (185,512) 344,560
----------- -----------
Net increase in cash 19,755 6,435,920
Cash and cash equivalents at beginning of
period 9,675,490 3,239,570
----------- -----------
Cash and cash equivalents at end of period $9,695,245 $9,675,490
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