AMITYVILLE, N.Y., March 20 /PRNewswire-FirstCall/ -- Technology Flavors & Fragrances, Inc. (AMEX:TFF) announced today its results of operations for the three months and year ended December 31, 2002. Net sales for the fourth quarter of 2002 increased by 3% to $3,962,000 from $3,828,000 for last year's comparable period, while net sales for the year 2002 increased by 7% to $16,767,000 from $15,721,000 for year 2001. Despite the turbulent economic and political environment, the Company's net sales were favorably impacted by increased volume of business for existing customers of food and beverage products.
The results of operations for the year of 2002 showed a significant turnaround from year 2001. Net income for year 2002 was $666,000 as compared to a net loss of $(776,000), inclusive of $451,000 of severance, restructuring costs and abandoned merger costs, in year 2001. The favorable $1.4 million turnaround in earnings for 2002 was principally attributable to: (a) a 7% growth in sales, (b) improved gross margins, as a percentage of sales, to 41.9%, up from 40.2% in 2001, and (c) lower operating costs of $713,000 in 2002 as compared to 2001.
The results of operations for the fourth quarter of 2002 and 2001 reflect losses of $252,000 and $776,000, respectively. The year 2001 loss includes $451,000 of severance, restructuring and abandoned merger costs. Although the fourth quarter of 2002 operating results improved over the prior year's comparable period, it was negatively impacted by a slowdown in food and beverage flavor sales as compared to the second and third quarters of 2002, and delays in new product launches by certain customers.
Commenting on the results for the fourth quarter and year 2002, Philip Rosner, TFF's Chairman and CEO, said, "Our operating performance for 2002 as a whole showed a marked improvement over 2001 despite the continued economic weakness in the US and abroad and the uncertainty that prevails in the marketplace. The softness in sales we're experiencing during the fourth quarter of 2002, which has continued into the first quarter of 2003, is directly attributable to lower consumer demand and delays in new product launches by certain major customers. However, the Company's balance sheet remains relatively strong, and through our aggressive R&D, sales and marketing activities, particularly in the area of "Health and Nutrition," and our current backlog of approved new product developments, we expect to achieve continued growth in sales and earnings during mid-year 2003.
Founded in 1989, TFF creates, develops, manufactures and markets flavors and fragrances which are incorporated into a wide variety of consumer and institutional products, including natural and artificial flavored beverages, confections, foods, pharmaceuticals, aromatherapy products, perfumes and health and beauty products. TFF has a proprietary library of more than 36,000 flavor and fragrance product formulations that are used to develop customized products.
TFF believes its proprietary formulations are currently used in more than 1,200 products sold by more than 500 customers worldwide, approximately 50 of which are Fortune 1000 companies. TFF maintains facilities in Amityville, New York; Inglewood, California; Toronto, Canada; and Santiago, Chile. TFF is publicly traded on the AMEX and Toronto Stock Exchange under the symbol "TFF."
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 Securities 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: i) technological, manufacturing, quality control or other circumstances which could delay the sale or shipment of products; ii) economic, business, and competitive conditions in the industry and technological innovations which could affect the company's business; and iii) the company's ability 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, 2002. Our forward-looking statements speak only as to the date hereof and we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.