PORTLAND, Ore., Feb. 3 /PRNewswire-FirstCall/ -- Gardenburger, Inc. (BULLETIN BOARD: GBUR) today reported financial results for the Company's first quarter of fiscal 2003. Net revenues were $9.0 million for the quarter ended December 31, 2002, compared to $10.8 million for the quarter ended December 31, 2001. The first quarter net loss available for common shareholders was $3.6 million, or $0.40 per share; and includes a $411,000 write-off of goodwill from a 1996 acquisition. The net loss available for common shareholders for the first quarter of fiscal 2002 was $1.2 million and included the benefit of a $300,000 reversal of a restructuring reserve deemed no longer needed.
"We are disappointed with our sales results for the first quarter of fiscal 2003," said Scott Wallace, Chairman of the Board, President and Chief Executive Officer of Gardenburger, Inc. "We saw a softening in our food service sales which we are currently addressing. Additionally, we continue to see pressure in the competitive veggie burger segment of the grocery channel. On a positive note, our new product sell-in is going well for our new Herb Crusted Cutlet and Crispy Nugget products. We are also launching two additional products, Barbecued Chicken and Meatless Meatloaf, which should be on shelf this spring."
First Quarter Results
For the first quarter of fiscal year 2003, Gardenburger posted a gross margin of 37 percent, compared to 39 percent during the comparative quarter last year. The reduced gross margin is attributable to a shift in the mix of product sales as the Company's non-burger products represent a greater portion of quarterly sales and their costs of production are currently higher than veggie burgers.
Selling and marketing expense for the first quarter was $3.2 million, compared to $3.0 million for the first quarter of fiscal year 2002. General and administrative costs for the quarter decreased to $1.0 million from $1.1 million in the comparative quarter of fiscal 2002. The decrease is a direct result of reduced overhead costs at Gardenburger's administrative offices.
In the quarter ended December 31, 2002, the Company expensed $411,000 representing the write-off of the unamortized portion of goodwill related to the acquisition of two companies in January 1996. New accounting standard SFAS 142, "Goodwill and Other Intangible Assets," changed the accounting for goodwill from an amortization method to an impairment approach. The remaining goodwill was deemed impaired and therefore expensed. Amortization of goodwill in fiscal 2002 totaled $123,000 or $31,000 per quarter.
The first quarter of fiscal 2002 included the benefit of a one-time reversal of the remaining portion of a restructuring reserve of $300,000. Other expense for the quarter ended December 31, 2002 was $1.1 million versus $393,000 for the quarter ended December 31, 2001. The $709,000 increase was a result of higher interest costs and fees associated with the refinancing of the Company's debt and the addition of an $8.0 million term loan related to the purchase of manufacturing equipment in January 2002.
Founded in 1985 by GardenChef Paul Wenner(TM), Gardenburger, Inc. is an innovator in meatless, low-fat food products. The Company distributes its flagship Gardenburger(R) veggie patty to more than 30,000 food service outlets throughout the United States and Canada. Retail customers include more than 24,000 grocery, natural food and club stores. Based in Portland, Ore., the Company currently employs approximately 180 people.
Statements in this press release about future events or performance are forward-looking statements that are necessarily subject to risk and uncertainty. The Company's actual results could be quite different. Important factors that could affect results include the Company's dependence on product acceptance, the Company's ability to execute its distribution plan, effectiveness of the Company's sales and marketing efforts, and intense competition in the veggie burger and other meat alternatives industry, which the Company believes will continue. Other important factors that could affect results are set forth in the Company's Annual Report on Form 10-K for the year ended September 30, 2002 and the Company's 2002 Annual Report to shareholders. Although forward-looking statements help provide complete information about the Company, investors should keep in mind that forward-looking statements are inherently less reliable than historical information.