PORTLAND, Ore., July 24 /PRNewswire-FirstCall/ -- Gardenburger, Inc. (OTC Bulletin Board: GBUR) announced today that its operating income for the fiscal quarter ended June 30, 2002 was $2.7 million compared to $1.8 million for the same quarter of the last fiscal year. Gross sales for the quarter were $19.7 million compared to gross sales of $19.0 million in the same quarter of fiscal 2001.
Beginning January 1, 2002, Gardenburger has applied the consensus reached by the Emerging Issues Task Force of the Financial Accounting Standards Board in Issue No. 01-09 "Accounting for Consideration given by a Vendor to a Customer or a Reseller of the Vendor's Products." Under this consensus, cash consideration is to be classified as a reduction of revenue, unless specific criteria are met regarding goods or services that the vendor may receive in return for this consideration. Cash consideration given includes, among other costs, consumer coupons, price discounts, and slotting costs. Prior-period financial statements must be reclassified to comply with this guidance. After reclassification of such expenses, net sales for the fiscal 2002 third quarter were $17.1 million compared to net sales of $16.5 million in the same quarter of fiscal 2001.
"Gardenburger has delivered three consecutive quarters of profits at the operating income level and a $4.0 million fiscal year to date improvement in operating income versus the same period last year. Additionally, the Company stabilized sales in the first quarter and generated year over year gross sales gains in the second and third quarters. We believe Gardenburger has completed its financial turnaround and is well positioned in its efforts to continue growing profitably," said Scott Wallace, Chairman, President and Chief Executive Officer of Gardenburger, Inc.
Third Quarter Results
For the fiscal quarter ended June 30, 2002, Gardenburger posted a gross margin, after the effect of the restatement of the selling discounts, of 45 percent, compared to 42 percent during the comparative quarter last year. The improved gross margin is attributable to reduced lease expense due to the elimination of the equipment operating leases at the Clearfield, Utah manufacturing facility. The equipment was purchased by the company in January of 2002.
Restated selling and marketing expense for the third quarter was $4.0 million, compared to $3.9 million for the third quarter of fiscal 2001. General and administrative costs for the quarter decreased to $963,000 from $1.2 million in the comparative quarter of fiscal 2001. The decrease is a direct result of reduced overhead costs at Gardenburger's administrative offices. A one-time operating gain of $108,000 was realized in the third fiscal quarter of 2002 as a result of a legal settlement.
Other expense for the quarter ended June 30, 2002 was $1.2 million versus $432,000 for the quarter ended June 30, 2001. The $738,000 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 of 2002. After interest expense and preferred dividends, net income available for common shareholders was $221,000 for the third quarter of fiscal 2002, compared to $322,000 for the third quarter of fiscal 2001.
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 35,000 foodservice outlets throughout the United States and Canada. Retail customers include more than 30,000 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 reliance 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, 2001 and the Company's 2001 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.