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Leading Brands, Inc. Announces Q1 Results Us Dollar Denominated Revenue Increased 7.5% Despite Change in Billing Structure to Major Co-Pack Customer
VANCOUVER, CANADA - July 10, 2003 - LEADING BRANDS, INC. (NASDAQ: LBIX), North America’s only fully integrated premium beverage company, announces results for its 2003 fiscal first quarter ended May 31, 2003.
Revenue for the quarter rose 7.5% to $12,286,000US ($17,686,000Cdn) from $11,431,000US ($17,978,000Cdn) in the same quarter of the prior year. Net income was $7,000US ($10,000Cdn) or $0.00 per share, compared to net income of $703,000US ($1,106,000Cdn) or $0.05US ($0.08Cdn) in Q1 of last year.
Leading Brands Chairman and CEO Ralph McRae said: “As we previously announced, commencing this fiscal year, our largest co-pack customer changed the way in which we bill them from a full case cost to co-pack fee basis. That simple adjustment reduced our revenues by more than $2,800,000US ($4,000,000Cdn) in Q1 alone. If the status quo had been maintained, we would have reported record revenues of more than $15,000,000US ($21,500,000Cdn), a US dollar denominated increase of 31% over the same period last year. Although partially assisted by the improvement in the Canadian/US dollar exchange rate that occurred during the quarter, that is much more reflective of the actual growth of our business. While such a large percentage of our volume is concentrated in our bottling operations, our company will from time to time experience revenue fluctuations of this nature. They do not impact our profitability, just our stated revenue.”
Mr. McRae continued: “During Q1 our income was negatively impacted by two principal factors. The first was the cost of our US distribution operations in March and April 2003. The second was the less than efficient operation of our two plants throughout the quarter, both of which I have earlier referenced. Income in the first quarter of last year was not affected by the commencement of operations in the United States, as we did not start shipping product there in earnest until July, 2002. Since April we have aggressively attacked the issues that have lowered profitability at our plants. Most of our major new equipment installations and product commissionings are behind us for this year.”
“We continue to increase distribution of our new products in both Canada and the US and we will provide updates on our progress in those areas in our monthly newsletter on the first of each month, posted at www.LBIX.com.”
In conjunction with this release, you are invited to listen to the Company’s conference call, which will be held on Thursday, July 10, 2003, at 8:00 am, Pacific Time, (11:00 am Eastern Time), with Ralph McRae, Chairman and CEO of Leading Brands, Inc.
TO PARTICIPATE IN THE CONFERENCE CALL PLEASE DIAL-IN:
1-416-641-6710
LEADING BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(EXPRESSED IN CANADIAN DOLLARS)
May 31 May 31
2003 2002
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Sales $ 17,686,387 $ 17,977,529
Expenses
Cost of sales 13,335,938 13,860,912
Selling, general & administration expenses 3,811,603 3,083,589
Depreciation and amortization 414,366 345,178
Interest expense 114,817 166,091
Other - (8,077)
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Total Expenses 17,676,724 17,447,693
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Net income before taxes 9,663 529,836
Future Income Taxes - 576,000
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Net Income 9,663 1,105,836
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Deficit, beginning of period (23,212,864) (13,438,168)
Preferred Share Dividends - 3,450
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Deficit, end of period (23,203,201) (12,335,782)
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EARNINGS PER SHARE
Basic $ 0.00 $ 0.08
Fully diluted $ 0.00 $ 0.07
Weighted average number of shares
outstanding 14,759,151 13,593,310
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LEADING BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME
(EXPRESSED IN UNITED STATES DOLLARS)
May 31 May 31
2003 2002
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Sales $ 12,285,626 $ 11,430,997
Expenses
Cost of sales 9,263,641 8,813,450
Selling, general & administration expenses 2,647,683 1,960,698
Depreciation and amortization 287,834 219,481
Interest expense 79,756 105,609
Other - (5,136)
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Total Expenses 12,278,914 11,094,101
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Net income before taxes 6,712 336,896
Future Income Taxes - 366,249
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Net Income 6,712 703,145
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Deficit, beginning of period (15,676,561) (9,404,297)
Preferred Share Dividends - 2,194
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Deficit, end of period (15,669,849) (8,703,346)
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EARNINGS PER SHARE
Basic $ 0.00 $ 0.05
Fully diluted $ 0.00 $ 0.04
Weighted average number of shares
outstanding 14,759,151 13,593,310
About Leading Brands, Inc.
Leading Brands, Inc. (NASDAQ:LBIX) is North America’s only fully integrated premium beverage company. The Company’s unique Integrated Distribution System (IDS) ™ offers turnkey, one-stop shopping to food and beverage brand owners, including manufacturing, distribution, sales/marketing and licensing. In addition, Leading Brands produces their own line of beverages such as TrueBlue®, LiteBlue®, TREK® Natural Sports Drinks, NITRO® Energy Drinks, INFINITY® Health Water™, Country Harvest® Juices, and Caesar’s® Cocktails.
Forward Looking Statements
Certain information contained in this press release includes forward-looking statements. Words such as “believe”, “expect,” “will,” or comparable terms, are intended to identify forward-looking statements concerning the Company’s expectations, beliefs, intentions, plans, objectives, future events or performance and other developments. All forward-looking statements included in this press release are based on information available to the Company on the date hereof. Such statements speak only as of the date hereof. Important factors that could cause actual results to differ materially from the Company’s estimations and projections are disclosed in the Company’s securities filings and include, but are not limited to, the following: general economic conditions, weather conditions, changing beverage consumption trends, pricing, availability of raw materials, economic uncertainties (including currency exchange rates), government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition and other risk factors described from time to time in securities reports filed by Leading Brands, Inc.
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