GUMM IN HISTORY->Gumtech Got 70% of Its 2nd-Half Revenue From Barter
Phoenix, Aug. 15 (Bloomberg) -- Gumtech International Inc.,
which makes specialty chewing gum, said 70 percent of its first-half revenue in 1997 came from trading obsolete inventory of weight-loss gums for advertising credits.
Gumtech shares rose 7/16 to 15 1/8 after reaching a 52-week high of 16 9/16.
On Wednesday, the Phoenix-based company entered an agreement
with Nabisco Inc., a unit of RJR Nabisco Holdings Corp., to
develop new chewing gum products, according to a filing yesterday with the Securities and Exchange Commission.
The company reported its revenue more than doubled in the first half to $4.41 million from $2.04 million a year earlier.
Even so, cash revenue for the first six months of 1997
slumped 35 percent to $1.33 million, excluding the barter
transactions.
The company said it traded away $3.08 million of unwanted Gumtech Got 70% of Its 2nd-Half Revenue From Barter
inventory for advertising during the six months ending June 30.
That amounted to 70 percent of its sales during the first half.
It bartered the inventory to Active Media Services Inc. and
SKR Resources. The inventory included old formulations of its
ChromaTrim, CitrusSlim and Jack LaLanne weight loss gums. It said
it will use the credits to promote its new Cigarrest line of
smoking cessation gum, endorsed by Morton Downey Jr.
After its barter transactions, Gumtech reported earnings of
$150,550, or 3 cents a share, in the second quarter, compared
with a loss of $338,812, or 8 cents, a year earlier.
Second-quarter revenue rose to $1.98 million from $1.15
million a year earlier. Excluding the barter transactions,
revenue fell 49 percent to $583,533. Barter was responsible for
71 percent of revenue in the second quarter.
Gumtech reported a profit of $692,125, or 12 cents a share,
for the first six months of 1997, compared with a loss of
$579,024 a year earlier.
Even so, the company reported a negative cash flow from
operations of $995,714 for the first six months of 1997, compared
with a negative $1.77 million a year earlier.
Gumtech, with 4.95 million shares outstanding, has a market Gumtech Got 70% of Its 2nd-Half Revenue From Barter (Update1) Page 3/4
value of about $75 million.
The announced agreement with Nabisco is for product
development. A Gumtech spokeswoman wouldn't say if the two
companies are discussing joint use of Gumtech's cash-draining
28,000-square-foot gum manufacturing facility.
Gary Kehoe, Gumtech's chief operating officer, was formerly
senior food technologist for Lifesavers Inc., a unit of Nabisco.
He was employed by Nabisco from 1976 until joining Gumtech in
1995.
The leased facility, which costs the company $130,000 a
month to operate, includes $2 million of gum-making equipment. In
June, Gumtech said it was operating at only 15 percent of
capacity, according to an SEC filing.
--David Evans in Los Angeles (310) 827-2348 through the New York
newsroom (212) 310-2300/sw/jb
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