KNUR.14.Q out.Still .02 profit for 9 months.Loss on Q.
Book value .16. Finished products sales are expected to pickup in the fourth quarter as a new vegetative program begins in the Fall.
RESULTS OF OPERATIONS
Comparison of nine months ended September 30, 2003 to September 30, 2002 and comparison of third quarter ended September 30, 2003 to third quarter ended September 30, 2002
For the first nine months of 2003 net sales reached $6,554,725, an increase of $759,561 (13%) from the $5,795,164 posted for the nine months ended September 30, 2002. Plug tray sales amounted to $5,733,363, an increase of $786,422 (16%), over the $4,946,941 achieved in 2002. Finished Products sales decreased $26,861 (3%) to $821,362 for the first nine months of 2003, compared to $848,223 in 2002. Comparing the third quarters of 2003 and 2002, revenues decreased $205,582 (19%) to $886,844. Plug trays sales decreased $187,990 (20%). Finished Products sales decreased $17,592 (12%). The decrease in Finished Product sales for the quarter is attributable to a general decline in orders over the summer and increased competition from other local nurseries. Plug sales decrease for the quarter due to softer demand over the summer months from our top ten customers. Finished products sales are expected to pickup in the fourth quarter as a new vegetative program begins in the Fall. Knox Nursery Inc. will also be replacing plastic pots with degradable Ellepots.
For the first nine months of 2003 cost of sales was $ 4,517,683, an increase of $1,010,539 (29%) from the $3,507,144 posted as of September 30, 2002. Gross profit margin fell to 31% compared to 39% for the same period in 2002. Cost factors are up in almost all areas of production including; labor $210,628 (18%), cuttings and plants $110,237 (190%), seed $40,790 (3%), transport and racks costs $46,154 (45%), inventory work in process carried forward from 12/31/02 inventory over the prior year were up $374,212 (32%); and maintenance increased $44,062 (26%). For the quarter ended September 30, 2003 costs were slightly higher in comparison to the same period a year ago. Cost of sales
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increased $9,228 (1%) to $744,850. Fluctuations in costs include: labor $16,394 (5%); transport and racks ($16,182) (-73%); trays and flats ($8,798) (-14%), maintenance $15,978 (32%). Gross profit for this three-month period was down $214,810 (60%) to $141,994, compared to the third quarter of 2002, mainly due to the 19% decline in sales for the quarter.
Operating expenses for the first nine months of 2003 amounted to $1,711,537, an increase of $ 254,574 (17%) from the $1,456,963 recorded in the first nine months of 2002. Within operating expenses, insurance expense is up $115,623 (57%) due to rising liability and workers compensation policy costs following unfavorable renewals and changes in auto and excess liability insurance providers. Propane and natural gas showed an increase of $78,553 (741%) over the previous year, due to a colder winter and higher energy rates in Central Florida. Payroll taxes are up $26,658 (21%) due to higher employment levels during the peak season. Equipment lease expense is down $34,702 (88%) as 2002 was the final year of the lease agreement on the Avalon facility boilers. Computer Support is up $9,629 (46%) due to additional professional costs related to upgrading operating systems. Telephone expense decreased $11,674 (26%). Interest expense was down $42,102 (20%) due to lower credit line balances and lower rates over the prior year. Comparing operating expenses for the quarter ended September 30, 2003 with the same period a year ago shows an increase of $94,163 (20%) to $577,928. Areas showing the significant change are insurance up $44,038 (54%); legal & accounting down $4,481 (38%); propane and natural gas up $34,326 (8670%); administrative wages up $24,052 (27%); utilities up $3,805 (18%); and equipment lease expense down $14,546 (82%).
“Other, net” on the Statement of Operations increased $ 3,078 (7%) for the first nine months of 2003, and includes the following items:
2003
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2002
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change
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Miscellaneous income
$ 23,217 22,106 1,111
Net vending income
2,328 771 1,557
Gain on sale of fixed assets
1,000 -0- 1,000
Net finance charges income (expense)
19,383 19,973 (590 )
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Total “Other, net” income
$ 45,928 $ 42,850 $ 3,078
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Year to date net income is $231,208 down $433,578 (65%) over the net income of $664,786 reported for the nine months ended September 30, 2002. Included in operating expenses are non-cash charges for depreciation and amortization of $492,638 for the nine months ended September 30, 2003, and $502,601 for the same period in 2002. The Company recorded net loss in the quarter ended September 30, 2003 of $468,264 compared to net loss of $181,022 a year ago, an increase of $287,242 (159%). Non-cash charges for depreciation and amortization were $165,212 for the three months ended September 30, 2003, and $165,212 for the same period in 2002. |
