Spectrum Organic Products Reports Fourth Quarter and Full Year Results

PETALUMA, Calif.--(BUSINESS WIRE)--March 14, 2002--Spectrum Organic Products, Inc. (Nasdaq:SPOP - news) today reported its fourth quarter and full year results for calendar year 2001. Management believes that the Company's earnings before interest, taxes, depreciation, amortization and non-cash write-downs and losses on asset disposals, (``EBITDA, as adjusted'') is the most relevant measure of the Company's financial performance. For the fourth quarter ended December 31, 2001 the Company reported EBITDA, as adjusted of $705,000 compared to negative EBITDA of $108,000 for the previous year. The turnaround was primarily attributable to improved margins and reduced operating expenses. For the full year ended December 31, 2001 the Company reported EBITDA, as adjusted of $2,442,000 compared to $1,189,000 for the prior year. Once again the dramatic improvement was primarily the result of improved margins and reduced operating expenses.

The Company reported that net sales for the three months ended December 31, 2001 were $9,946,000 compared to $9,718,000 for 2000, an increase of 2.3%. The increase was primarily due to increases in the Company's industrial ingredients product lines, partially offset by lost sales associated with disposed products. In June 2001 the Company sold its tomato-based product lines to an unrelated third party in order to raise additional working capital. Comparable net sales (after eliminating sales of disposed or discontinued product lines from both periods) increased by 13.8% for the fourth quarter. Leading the way was increased industrial sales of organic fruits, vegetables, purees and concentrates which more than doubled versus the prior year. On the consumer products side, significant sales increases were achieved in Spectrum Naturals® culinary oils (+27%), mayonnaise (+21%) and in Spectrum Essentials® nutritional supplements (+20%). For the full year 2001 comparable net sales increased by 4.0% led by significant increases in consumer product sales of culinary oils (+13%), mayonnaise (+17%) and nutritional supplements (+17%).

The Company reported a net loss of $508,000 or $0.02 per share for the three months ended December 31, 2001 versus a net loss of $792,000 or $0.02 per share for the same period last year. The improvement was due to enhanced gross margins, reduced operating expenses and lower interest expense, partially offset by a non-cash write-down of $950,000 recorded in the current year for the estimated impairment of the remaining goodwill carried on the Company's books. For the full year 2001, the Company reported a net loss of $5,206,000 or $0.12 per share versus a net loss of $2,002,000 or $0.05 per share for the prior year. The increased loss for the full year was primarily due to non-cash losses associated with the goodwill impairment write-down during the fourth quarter and the sale of the Company's tomato-based product lines during the second quarter, partially offset by improved margins, reduced operating expenses and lower interest expense. Excluding these one-time non-cash losses from both years, the Company reported net income of $269,000 and $547,000 for the fourth quarter and full year ended December 31, 2001, respectively, versus net losses of $743,000 and $1,566,000 for the same periods last year. Once again improved gross margins, reduced operating expenses and sharply reduced interest expense drove the turnaround.

Spectrum CEO Jethren P. Phillips stated, ``Our fourth quarter and full year 2001 results reflect several non-recurring write-offs associated with the restructuring efforts we've made over the last two years to rid ourselves of under-performing assets, improve our margins, reduce expenses and raise working capital to deploy against our core business. EBITDA, as adjusted, operating cash flow and working capital have all dramatically improved versus the prior year. With these restructuring events and non-cash losses behind us, Spectrum's management will finally be able to focus on adding value to our core branded consumer products business during 2002.''

Spectrum Organic Products, Inc. is a leading manufacturer and marketer of culinary oils, vinegar and condiments under the Spectrum Naturals® brand and essential fatty acid nutritional supplements under the Spectrum Essentials® brand. The Company also produces and sells a wide range of industrial organic ingredients to other manufacturers.

Spectrum Organic Products, Inc., was formed in October, 1999 by the merger of Spectrum Naturals, Inc., Spectrum Commodities, Inc., Organic Food Products, Inc. and Organic Ingredients, Inc. Following the merger, Organic Food Products, Inc. (stock symbol ``OFPI''), the surviving legal entity, changed its name to Spectrum Organic Products, Inc. and began trading on the NASDAQ Bulletin Board under the ticker symbol SPOP.

The Company's future results of operations and any forward-looking statements contained in this document involve a number of risks and uncertainties. In addition to the issues discussed above, other factors that could cause actual results to differ materially are general business conditions and the general economy, competitors' pricing and marketing efforts, availability of raw materials at reasonable prices, risk of uncollectible accounts receivable, risks of inventory obsolescence due to shifts in market demand, timing of product introductions, and litigation involving product liabilities and consumer issues.

For more information, go to http://www.organic-ingredients.com, or http://www.spectrumorganic.com.

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