Technology Flavors & Fragrances, Inc. - TFF - Achieves Profitable Fourth Quarter 1998 Results
Sales Increased by 41%, Resulting in a $1.2 Million Turnaround in Net Income
AMITYVILLE, N.Y.--(BUSINESS WIRE)--March 25, 1999--Technology Flavors & Fragrances, Inc. (OTCBB: TFFI, TSE: TFF) announced today its financial results of operations for the fourth quarter and year ended December 31, 1998.
Sales for the fourth quarter of 1998 rose 41% to $3,417,000 compared to $2,425,000 for the fourth quarter of 1997. Gross profit, as a percentage of sales, for the fourth quarter of 1998 improved to 42.5%.
The Company also reported net income for the fourth quarter of 1998 of $106,000, or $.01 per share, as compared to a net loss of $(1,094,000), or $(.09) per share for the fourth quarter of 1997, a $1.2 million turnaround. EBITDA from continuing operations for the fourth quarter of 1998 was $185,000 as compared to $(948,000) for last year's comparable quarter.
TFF's positive operating results during the fourth quarter of 1998 were principally attributable to:
-- an increase in existing and new product launches -- higher gross margin percentages on new products and favorable
product mix, and -- significant reductions in operating costs and improved operating
efficiencies.
Sales for the year ended December 31, 1998 decreased to $13,888,000 from $18,022,000 in the prior year, due principally to a decrease in demand for a significant customer's new product line which had generated substantial sales for the Company during the product line's initial launch in January 1997.
The Company's net loss for the year ended December 31, 1998 of $(2,036,000) included a net gain of $975,000 relative to discontinued operations, a one-time non-cash write-down of $1,723,000 of intangible assets and other charges aggregating $397,000. The net loss for the year ended December 31, 1997 was $(648,000).
Commenting on the fourth quarter of 1998 positive results, Philip Rosner, TFF's Chairman and Chief Executive, said, ''The Company's goals for the fourth quarter of 1998 and in 1999 include becoming profitable based on the Company's current level of sales, expanding its sales base, improving its gross margins and reducing its operating costs.
''The divestiture of the seasoning division resulted in a financially stronger balance sheet, principally through significant debt reduction, and enabled the Company to focus on expanding the Company's flavor and fragrance operations.
''We have begun expanding our sales force and developing new sales and marketing programs in 1999, including introducing a new service that forms strategic alliances with customers in which TFF conducts all of the customers' research and development activities resulting in cost savings to our customers and, we believe, more innovative products for them. I am extremely pleased with the significant progress and momentum the Company has achieved during the fourth quarter and the dedication and hard work from its team of management and employees.''
Technology Flavors & Fragrances (TFF) develops, manufactures and markets flavors and fragrances that are incorporated by its customers into a wide variety of consumer and institutional products, including natural and artificial flavored beverages, confections, foods, tobaccos, pharmaceuticals, aromatherapy essential oils, perfumes, and health and beauty products. TFF maintains facilities in Amityville, New York; Inglewood, California; Toronto, Canada; and Santiago, Chile.
Certain statements made herein, including without limitation, statements containing the words ''believes,'' ''anticipates,'' ''may,'' ''intends,'' ''expects,'' and words of similar import constitute ''forward-looking'' statements within the meaning of the Private Litigation Reform Act of 1995.
Such statements involve known and unknown risks, uncertainties, and other factors which may cause actual Company results to differ materially from expectations. Such factors include the following: 1) technological, manufacturing, quality control or other circumstances which could delay the sale or shipment of the Company's products; 2) economic, business, and competitive conditions in the industry and technological innovations which could affect the Company's business; and 3) the Company's inability to protect its trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company. Certain of these factors are discussed in more detail in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1998.
Technology Flavors & Fragrances, Inc.
Consolidated Statements of Operations
(In U.S. Dollars)
Three Months Ended Years Ended
December 31, December 31,
1998 1997 1998 1997
-------- -------- -------- --------
Net sales $ 3,416,713 $ 2,425,076 $ 13,888,242 $ 18,022,348
Cost of
sales 1,966,230 1,792,756 8,288,245 11,013,889
------------ ------------ ------------ ------------
Gross
profit 1,450,483 632,320 5,599,997 7,008,459
------------ ------------ ------------ ------------
Operating
expenses:
Selling 560,371 788,647 2,713,869 2,941,765
General and
administrative 347,437 464,916 1,917,868 1,958,448
Research and
development 310,173 367,091 1,396,158 1,603,545
Amortization
expense 27,026 189,617 354,375 566,243
Write-down of
intangible
assets and
other charges 85,000 -- 2,119,760 --
------------ ------------ ------------ ------------
Total operating
expenses 1,330,007 1,810,271 8,502,030 7,070,001
------------ ------------ ------------ ------------
Income (loss)
from operations 120,476 (1,177,951) (2,902,033) (61,542)
Interest
expense, net (14,029) (47,528) (107,787) (230,921)
------------ ------------ ------------ ------------
Income (loss) before
provision for
income taxes 106,447 (1,225,479) (3,009,820) (292,463)
Provision for
income taxes -- (4,420) (1,730) (8,840)
------------ ------------ ------------ ------------
Income (loss)
from continuing
operations 106,447 (1,229,899) (3,011,550) (301,303)
Discontinued
operations:
Gain on disposal
of discontinued
operations -- -- 1,080,157 --
Income (loss)
from discontinued
operations -- 135,804 (104,881) (346,855)
------------ ------------ ------------ ------------
-- 135,804 975,276 (346,855)
------------ ------------ ------------ ------------
Net income
(loss) $ 106,447 $ (1,094,095) $ (2,036,274)$ (648,158)
============ ============ ============ ============
Net income (loss)
per common share:
Continuing
operations $ .01 $ (.10) $ (.24)$ (.02)
Discontinued
operations -- .01 .08 (.03)
------------ ------------ ------------ ------------
Net income
(loss) per
common share $ .01 $ (.09) $ (.16)$ (.05)
============ ============ ============ ============
Weighted average
common shares
outstanding 12,449,623 12,284,598 12,399,623 12,038,875
============ ============ ============ ============
Technology Flavors & Fragrances, Inc., is quoted on the Over-the-Counter Bulletin Board under the symbol of ''TFFI'' and on the Toronto Stock Exchange under the symbol of ''TFF''.
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Contact:
Technology Flavors & Fragrances, Inc., Amityville
Joseph A. Gemmo, VP/CFO
516/842-7600, ext. 301
or
Investor Information:
Investor Communications Co.
John Blalock
800/419-5211
www.iccinfo.com |
