Centennial Specialty Foods Reports 2004 Results

Centennial Specialty Foods Reports 2004 Results 


DENVER, March 30  /PRNewswire-FirstCall/ -- Centennial Specialty Foods
Corporation (Nasdaq: CHLE; Boston: CSJ) reported a net loss of $798,643 for the
year ended December 31, 2004 compared to net income of $38,035 for the prior
year.  Much of this net loss was due to significant slotting fees, promotional
and marketing spending associated with the Company's expansion efforts into the
California market, where sales results have been disappointing.

Net sales before slotting fees decreased $123,906 between years, even though
new distribution was obtained in retail grocery stores in California. This
decrease was due entirely to the decline in sales of Ellis products, which
compete in the commodity product arena and have been de-emphasized by the
Company.  Sales of premium Stokes Green Chile Sauces increased 21.1% between
years, reflecting the initial customer orders in the new markets. However, very
limited reorders of products by customers in the California market have
occurred.  An aggressive promotional program was implemented during the fourth
quarter of 2004 in the California market to try to capture sales for
Centennial's products.  Even with this aggressive and expensive program, sales
of products in the new market have been very slow.  Slotting fees totaling
$516,611 were paid during 2004 to obtain shelf space in new retail grocery
stores.  Such fees were deducted against net sales, which further increased the
net loss in 2004.

Selling, general and administrative costs also increased 18.9%, or $397,909,
between years.  A significant component of this increase was attributable to
increased selling and marketing spending of approximately $200,000 associated
with our attempted expansion into new markets.  Further, directors and officers
insurance, shareholder relations and accounting and legal fees increased
approximately $400,000 as a result of additional costs associated with being a
public company and disputed matters with the Company's tenant and sole
supplier.  These increases were offset by a decrease of $200,000 in consulting
fees.  Finally, other income decreased 74.5%, or $253,775, between years.  This
was primarily due to reduced production facility income, which included rent
and EBITDA sharing income, which were reduced by production shortfall fees with
our sole supplier.  Production facility income decreased $490,093 for the year
ended December 31, 2004 compared to 2003 as a result of recording $332,652 in
production shortfall fees during 2004 and the tenant and sole supplier not
generating any EBITDA sharing income during 2004.  We recorded $170,000 of
EBITDA sharing income during 2003.  Savings on interest expense of $236,318
offset part of the reduction in production facility income.  Loss per share,
after preferred stock dividends (which for the last three quarters have not
been declared or paid, but are cumulative), was $0.36 for 2004.

All of 2004 was spent on Centennial's expansion efforts into new markets,
including retail grocery stores in Northern California and Southern California,
along with supercenter stores and club stores in Wal-Mart and Sam's Club. 
Overall, the Company was successful in obtaining placement on grocery shelves
in over 1,700 new retail grocery stores, supercenters and club stores.  As
noted above, the slotting costs associated with these store placements were
significant, costing in excess of $500,000.  Centennial utilized a variety of
different marketing approaches, including trade advertisements, coupons,
product demonstrations and low introductory pricing, to attract attention to
its products in the new markets.  Despite good shelf placement and displays at
many of the new retail grocery stores, the sales volumes in the Northern
California and Southern California markets have been very slow.  The Company
was recently notified by two supermarket customers in the California markets
with approximately 500 locations that the Company's products are being
discontinued due to slow sales volume.  "The competition for consumer purchases
in the California markets has been very strong within the Mexican foods
section," stated Bob Beckwith, Centennial's Chief Marketing Officer, adding,
"It has been very difficult for us to capture market share with our premium
Stokes Green Chile Sauces."  Due to continuing slow sales in the California
markets, Centennial does not expect any significant revenue to be generated
from these markets in the foreseeable future.

Centennial's Board of Directors has authorized management to undertake an
exploration of strategic alternatives to maximize value for its shareholders.
Given the slow performance in the California expansion market, the Company is
evaluating its business plan and reviewing other alternatives, which may
include other financing arrangements, mergers, acquisitions, and joint
ventures.  While the Company believes it has sufficient liquidity resources to
continue its current operations, management recognizes that any further
significant expansion would require greater capital resources than are
currently available to the Company.  In addition, the costs of maintaining a
public company in today's environment (including complying with Sarbanes-Oxley
requirements) are very significant and result in a large burden for a small
company like Centennial.  Accordingly, Centennial has begun preliminary
discussions with various groups to review other alternatives targeted at
growing or enhancing its operations; however, no definitive plans or agreements
have been reached.

Centennial continues to have disputes with its tenant and sole supplier. In
February 2005 the tenant and sole supplier filed suit in Adams Country Colorado
District Court against the Company's wholly owned subsidiary, Stokes Canning
Company ("Stokes"), seeking to recover costs paid by tenant for construction of
a wastewater treatment system at the plant owned by Stokes. Additionally, the
tenant contends that certain future improvements for the facility should be
paid for by Stokes.  The Company contends that the costs for the wastewater
treatment project as well as future improvements for the facility are the
responsibility of the tenant and disputes the tenant's claims.  In March 2005,
the Company filed its answer disputing tenant's claims and asserted
counterclaims for various breaches of contract.  The litigation may be lengthy
and will most likely require significant management time and financial
resources.  It remains the Company's desire to reach a global resolution of
these matters with the tenant and sole supplier; however, to date, settlement
discussions have not yet produced a mutually acceptable resolution of the
issues.

As previously disclosed in a Form 8-K filed with the Securities and Exchange
Commission on March 1, 2005, the Company received a notice from The Nasdaq
Stock Market ("Nasdaq") stating that the bid price for the Company's common
stock had closed below the minimum $1.00 per share requirement for continued
inclusion pursuant to Marketplace Rule 4310(c)(4) (the "Rule").  In accordance
with the Rule, Nasdaq informed the Company that it will have until August 29,
2005 to regain compliance with the Rule.  In order to regain compliance with
the Rule, the bid price for the Company's common stock must close at, or above,
$1.00 per share for at least 10 consecutive business days.  If compliance with
the Rule is not demonstrated by August 29, 2005, the Company may be provided an
additional 180 calendar days by Nasdaq to regain compliance if it meets the
initial listing requirements as set forth in Marketplace Rule 4310(c), except
for bid price. If the Company is not eligible for an additional compliance
period, the Nasdaq staff will provide written notification that the Company's
securities will be delisted.  At that time the Company may appeal the Nasdaq
staff's determination to delist its securities to a Listing Qualifications
Panel.

Centennial Specialty Foods Corporation is a distributor of ethnic Southwestern
food products.  Its products are sold under the Stokes and Ellis labels, two
well-known Southwestern brands that date back almost 100 years. Principal
channels of distribution for Centennial's products are grocery retailers,
superstores and club stores in Colorado, Arizona, California and, to a lesser
extent, several major metropolitan markets in adjoining states. More
information about Centennial can be found on its website at
http://www.centennialspecialtyfoods.com/

Note Regarding Forward Looking Statements:

Certain matters discussed in this press release could contain forward-looking
information that involves risks and uncertainties that could cause actual
results to differ materially from current trends or expected results.  We
identify forward looking statements through our use of words such as "expect,"
"believe," "project," "anticipate," and similar expressions. These risks that
may affect our ability to achieve forward-looking statements are discussed in
our final prospectus in the section entitled "Risk Factors" and other documents
that are on file with the Securities and Exchange Commission.

For further information, please contact Jeffrey Nieder, CEO, or Douglas Evans,
CFO, at [phone].

Stokes and Ellis are registered trademarks of Centennial Specialty Foods
Corporation.

            CENTENNIAL SPECIALTY FOODS CORPORATION AND SUBSIDIARY

                    Consolidated Statements of Operations

                                                   For the Years Ended
                                                      December 31,
                                                   2004          2003

  Net sales                                     $4,415,857     $5,032,557
  Cost of goods sold                             3,266,756      3,211,905
  Gross profit                                   1,149,101      1,820,652
  Selling, general and administrative
   expenses                                      2,504,237      2,106,328
  Loss from operations                          (1,355,136)      (285,676)
  Other income (expense)
    Interest expense                              (226,983)      (463,301)
    Production facility income                     314,230        804,323
      Total other income                            87,247        341,022
  Income (loss) before income taxes             (1,267,889)        55,346
    Income tax benefit (expense) - current          14,478        (21,482)
    Income tax benefit - deferred                  454,768          4,171
      Total income tax benefit (expense)           469,246        (17,311)
  Net income (loss)                              $(798,643)       $38,035

  Net income (loss) before preferred stock
   dividend                                      $(798,643)       $38,035
  Preferred stock dividends - paid                (250,000)      (172,603)
  Preferred stock dividends - in arrears          (750,000)           --
        Total preferred stock dividends         (1,000,000)      (172,603)
  Net loss available to common shareholders     (1,798,643)      (134,568)
  Basic and diluted net loss per
   common share                                     $(0.36)        $(0.04)
  Basic and diluted weighted average
   common shares outstanding                     5,050,000      3,629,452



            CENTENNIAL SPECIALTY FOODS CORPORATION AND SUBSIDIARY

                          Consolidated Balance Sheet

                                             December 31, 2004
                   Assets
  Current assets
    Cash and cash equivalents                      $415,597
    Accounts receivable, net of allowance
     for doubtful accounts of $25,483               341,671
    Income taxes receivable                          14,478
    Inventory, net                                1,894,927
    Prepaid expenses                                153,219
      Total current assets                        2,819,892
  Non-current assets
    Property, plant and equipment, net            5,914,186
    Goodwill, net                                 1,634,079
    Other assets                                     56,488
      Total non-current assets                    7,604,753
  Total assets                                  $10,424,645

        Liabilities and Stockholders' Equity
  Current liabilities
    Accounts payable - trade                       $394,830
    Accrued liabilities                             800,473
      Total current liabilities                   1,195,303

  Long-term debt                                  2,436,387
  Deferred tax liability                             77,015
      Total long-term liabilities                 2,513,402
      Total liabilities                           3,708,705
  Commitments and contingencies
  Stockholders' equity
    Preferred stock (liquidation preference
     $10,750,000), 3,000,000 shares
     authorized, 2,000,000 shares issued
     and outstanding, $5 stated value,
     10% dividend                                 2,334,785
    Common stock, $0.0001 par value,
     20,000,000 shares authorized,
     5,050,000 shares issued and outstanding            505
    Additional paid-in capital                    5,794,036
    Accumulated deficit                          (1,413,386)
      Total stockholders' equity                  6,715,940
  Total liabilities and stockholders' equity    $10,424,645


DATASOURCE: Centennial Specialty Foods Corporation



CONTACT:  Jeffrey Nieder, CEO, or Douglas Evans, CFO, both of Centennial

Specialty Foods Corporation [phone]



Web site:  http://www.centennialspecialtyfoods.com/ 

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