SALINAS, CA (November 7, 2006) -- Monterey Gourmet Foods (NASDAQ: PSTA) today announced third quarter results consistent with its October 2, 2006 press release. As a result of the one-time write down of intangible assets associated with the 2005 Casual Gourmet Foods acquisition and severance costs associated with the reduction in staff, Monterey Gourmet Foods had a third quarter net loss of $3.9 million or $(.22) per share diluted. Third quarter revenues fell slightly to $22.1 million compared to $22.8 million for the third quarter 2005. Year-to-date net revenues, however, increased to $67.6 million compared to $61.6 for the same period in 2005.
Eric Eddings, President/CEO of Monterey Gourmet Foods explained, “We generated $6.0 million in cash from operating activities for the nine months ending September 30, 2006, a majority of which was generated from a reduction in working capital, compared to $1.5 million operating cash generated for the same period a year earlier. Noting the quarterly loss is in line with what was projected, we are making great progress on the actions to improve efficiencies that we outlined in early October.”
A summary of these actions is as follows:
1. Reduced salaried workforce by 10%.
2. Plant consolidations are on track to complete the consolidation within the quarter.
3. Realigned reporting responsibilities to strengthen marketing and selling efforts which will enhance sales of all Monterey Gourmet Foods brands and products.
4. Solidified fourth quarter revenue targets which has resulted in the October revenue increase of 23% over October, 2005.
5. Implemented key projects to improve efficiencies within the Company.
6. Engaged industry experts to help address cost increases in such activities as supply chain management, freight, plant utilization and brand strategies.
In conclusion, Mr. Eddings emphasized, “With the initiatives we have underway and the momentum in our core business, we remain confident that our results will continue on a positive trend in the coming quarters.”
Monterey Gourmet Foods manufactures USDA inspected, fresh gourmet refrigerated food products at its integrated 143,000 square foot corporate headquarters, distribution, and manufacturing facilities in Salinas, (Monterey County) California, Seattle, Washington, and Eugene, Oregon. Monterey Gourmet Foods has national distribution of its products in over 10,000 retail and club stores throughout the United States and selected regions of Canada, the Caribbean, Latin America, and Asia Pacific.
This press release contains forward-looking statements concerning the effect of Monterey Gourmet Foods’ corporate actions and product innovations on projected sales for future periods. Such statements are introduced by or include words or phrases such as “great progress,” “on track,” “will enhance,” “targets,” “will continue on a positive trend,” and the like. These forward-looking statements are based on currently available competitive, financial and economic data and management’s views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and investors must recognize that actual results may differ from those expressed or implied in the forward-looking statements. Consequently, the Company wishes to caution readers not to place undue reliance on any forward-looking statements. Among the factors that could cause Monterey Gourmet Foods’ actual results to differ from such forward-looking statements are the following: (i) the process associated with the integrations of recent acquisitions, processes, and products, (ii) a significant reduction of sales to two major customers currently comprising a majority of total revenues, (iii) the retention of newly acquired customers including achieving volume projections for these new customers, (iv) the Company’s ability to achieve improved production efficiencies in connection with the introduction of its new items, (v) the timely and cost-effective introduction of new products in the coming months, (vi) retention of key personnel and management, (vii) the risks inherent in food production, (viii) intense competition in the market in which the Company competes and (ix) Monterey Gourmet Foods’ ability to source competitively priced raw materials to achieve historic operating margins. In addition, the Company’s results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes, and laws and regulations in markets where the Company competes.
The Company has provided additional information regarding risks associated with the business in the Company’s Annual Report on Form 10-K for fiscal 2005, its Proxy Statement filed April 21, 2006, Forms 10-Q filed for our quarters ended March 31, 2006 and June 30, 2006, and Forms 8-K filed on January 23,2006, February 23, 2006, March 9, 2006, April 25, 2006, June 13, 2006, June 28,2006, September 11, 2006, September 21, 2006, and October 2, 2006. The Company undertakes no obligation to update or revise publicly, any forward-looking statements whether as a result of new information, future events or otherwise.
