Gardenburger Announces Second Quarter Fiscal 2003 Results

PORTLAND, Ore., May 2 /PRNewswire-FirstCall/ -- Gardenburger, Inc. (BULLETIN BOARD: GBUR) today reported financial results for the Company's second quarter of fiscal 2003. Net revenues were $12.4 million for the quarter ended March 31, 2003, compared to $11.6 million for the quarter ended March 31, 2002. The second quarter net loss available for common shareholders was $2.5 million, or $0.28 per share. The net loss available for common shareholders for the second quarter of fiscal 2002 was $2.8 million or $0.31 per share and included expenses of $730,000 for debt restructuring.

"We are pleased with our sales results for the second quarter of fiscal 2003," said Scott Wallace, Chairman of the Board, President and Chief Executive Officer of Gardenburger, Inc. "Sales for the quarter were a 7% improvement over the second quarter of fiscal 2002. New product sales for our new Herb Crusted Cutlet and Crispy Nugget products are going well and this quarter we launched two additional products, Barbecued Chicken and Meatless Meatloaf, which are just now reaching the grocery shelves."

Second Quarter Results

For the second quarter of fiscal 2003, Gardenburger posted a gross margin of 35 percent, compared to 40 percent during the comparative quarter last year. The reduced gross margin is attributable to new product startup costs, increased trade promotion discounts and new product placement costs.

Selling and marketing expense for the second quarter of fiscal 2003 was $3.4 million, compared to $3.3 million for the second quarter of fiscal 2002. The higher expense level is due to increased variable selling costs and inventory storage costs. General and administrative costs for the quarter were $1.0 million and at a comparable level to the second quarter of fiscal 2002.

In the second quarter of fiscal 2002 other non-operating expense included one-time expenses of $730,000 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.

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