Scott:
Buy the way i have heard they earned .05 for the first quarter, can anyone confirm this figure?
Here it is. No they didn't earn .05, they lost .05.
Krantor Announces First Quarter Results
DEER PARK, N.Y.--(BUSINESS WIRE)--May 31, 1996--Krantor Corp. (NASDAQ:KRAN,KRANW) announced first
quarter results.
KRANTOR CORP.
1st Quarter Ended 1st Quarter Ended
3/31/96 3/31/95
Sales $ 13,317,057 $ 10,230,352
Gross Profit 1,773,163 1,151,699
% 13.3% 11.3%
Income Before Financing
Costs & Startup Expenses
for Subsidiary (IFD) 559,606 398,128
Per Share $ .11 $ .08
Net Income (Loss)
attributable to common
stock (265,100) 263,128
Earnings Per Share (.05) .06
Weighted Average Shares
Outstanding 4,982,546 4,726,663
Revenues increased for the quarter ended March 31, 1996, to $13,317,057 a (30.1%) increase as compared with the prior
quarter. This increase was primarily due to the company's expansion into the wholesale distribution of Kosher foods and
Specialty foods through its formation of Island Frozen & Dairy ("IFD") in May 1995.
The company had net loss of $210,100 ($.04) per share for the first quarter of 1996 as compared with a net profit of
$263,128, ($.06) per share in 1995. The loss is attributable to start-up expenses that were realized in the formation of Island
Frozen & Dairy.
Operating expenses increased by 146.5% from the prior quarter while revenues increased by 30.1% and gross profit
increased by 54.0%. The company's financing costs increased by $215,279, $.04 per share as compared to the prior quarter.
Most of the financing costs for the first quarter were one time charges in connection with the financing of Island Frozen &
Dairy. Warehousing and freight expenses for the quarter were $740,911 or 5.6% of sales as compared to $190,000 or 1.9%
of sales for the prior period. Most of the increase in costs reflects start-up expenses in establishing the distribution system for
Island Frozen & Dairy. The distribution expenses for Island Frozen & Dairy in the first quarter totaled $554,427, $.11 per
share or 74.8% of total warehousing expenses. Therefore, the increased operating costs resulting from the formation and
expansion of Island Frozen & Dairy caused the loss in the first quarter.
The gross profit increased from 11.3% in 1995 to 13.3% in 1996 as a result of the increased percentage of sales derived
from the company's wholesale business conducted through Island Frozen & Dairy and Island Wholesale Grocers.
Selling, general and administrative expenses increased for the quarter ended March 31, 1996 to $1,653,559, a $982,804
(146.5%) increase as compared with the prior quarter. This increase is primarily attributable to two factors: (i) the start-up
expenses associated with the recent entry of the company into the Kosher food and Specialty food business, and (ii) the
increase of the expenses associated with direct store distribution.
As a result of the company's recent expansion into the wholesale segment of the food distribution industry and the high
levels of inventory needed to operate successfully in that segment, the company has been experiencing cash flow shortages.
In particular, the company has incurred significant start-up costs for operations in connection with the formation of Island
Frozen & Dairy. Moreover, the wholesale business in which the company operates is one that is highly competitive and is
characterized by the need to maintain certain levels of inventory so that retail customers can have their product orders filled
without delay. The company's inventory levels decreased by 34.5% from $6,432,981 at March 31, 1995 to $4,212,471 at
March 31, 1996. The decreased inventory was needed to finance Island Frozen and Dairy's working capital needs and
primarily reflects a reduction in Krantor and Island Wholesale Grocers inventory levels.
The company believes it will need additional financing in the form of subordinated debt or equity to finance its expansion
plans and to alleviate the cash shortages it continues to experience. If the company fails to obtain such financing, it may have
to reduce the volume of its existing business and may not be able to further implement its expansion plans.
The company has consolidated its agreements with two lending institutions through a single agreement with one of those
institutions. The current consolidated lending facility provides for a total of $8 million from Fidelity Funding of California
Inc. ("Fidelity"). Under the facility, the company may borrow up to the lesser of $8 million or 80% of eligible accounts
receivables. This line funds sales activities for Krantor Corp. and its wholly owned subsidiaries, Island Wholesale Grocers
Inc. and Island Frozen & Dairy. On May 31, 1996 the company entered into a $1 million trade financing agreement with
Empire Kosher Poultry, its largest vendor. The company believes that the added facilities will assist in alleviating its current
working capital needs.
As of March 31, 1996, the company had approximately $4 million available under the facility for additional borrowing. The
facility, which expires in November 1996, was extended on May 11, 1996 through Nov. 11, 1997 by Fidelity.
Subject to available financing, the company intends to further expand its business by purchasing and maintaining short-term
inventories of well accepted, readily marketable brand-name products. The company believes that by warehousing these
products it will be able to make larger purchases during manufacturers' promotional periods, gain better access to some
product promotions ordinarily reserved for higher volume purchasers, increase sales by having more inventory available for
shipment on demand, and thereby expand its customers and supplier base. However, there can be no assurance that the
company's proposed expansion plan can be achieved. The company needs to enhance its leverage so that it can expand.
Additional working capital is required beyond the current available financing in order for the company to continue its
expansion.
Henry Platek indicated that: "Additional facilities for working capital are essential for the growth of the company. The
company's use of internally generated resources are not sufficient to maintain this level of business. We are exploring several
opportunities for financing to alleviate our working capital needs. Our new financing arrangement with Fidelity and Empire
are a step in allowing the company to achieve its goals. Most of the expenditures in connection with our expansion into IFD
have been incurred. We believe that the distribution systems are in place to generate a significant amount of business at good
margins with additional financing."
Please refer to the company's 10-Q for additional information.
CONTACT: Krantor Corp., Deer Park
Grace Sauer, Investor Relations
516/586-7500, fax 516/586-0690 |
