SOURCE: Overhill Farms, Inc.

December 06, 2005 16:29 ET

Overhill Farms Reports 25 Cents Net Income per Share for Fiscal Year 2005 and 21% Increase in Net Revenues

LOS ANGELES, CA -- (MARKET WIRE) -- December 6, 2005 -- Overhill Farms, Inc. (AMEX: OFI) filed its Form 10-K for fiscal year 2005 with the Securities and Exchange Commission today, reporting net income of $3,697,000 or $0.25 per basic share for fiscal year 2005 as compared to a net loss of $2,142,000 or ($0.14) per share for fiscal year 2004.

Net revenues for fiscal year 2005 increased 21.4% or $28,609,000 to $162,566,000 from $133,957,000 reported for the prior year. Highlights of the year's revenue performance are as follows:


-- Net revenues from customers in the retail sector were up 41.6% to
   $71,276,000 for the year, an increase of $20,925,000 from
   $50,351,000 reported in the prior year. This increase was attributable
   to higher sales to large national brand customers as well as to an
   existing club store customer.

-- Net revenues from foodservice customers rose 11.7% to $60,772,000
   for the year, an increase of $6,362,000 from $54,410,000 for fiscal
   year 2004. The growth was largely due to increased sales to an existing
   customer.

-- Net revenues from airline customers increased 4.5% to $30,518,000 for
   the year, an increase of $1,322,000 from $29,196,000 for the previous
   fiscal year. The increase was generated from the addition of new
   airline customers and improvements in air travel from early fiscal year
   2004 levels and was partially offset by a large airline carrier's
   decision to offer meals on only long-haul and international flights.
The Company expects sales in fiscal year 2006 to continue at or above the levels seen in fiscal year 2005, with future sales growth to be driven primarily by the retail and foodservice areas.

Gross profit for the fiscal year rose by 38.3% to $19,753,000, an increase of $5,472,000 from $14,281,000 reported last year. Gross profit as a percentage of net revenues was 12.2% for fiscal year 2005, compared to 10.7% in fiscal year 2004. Margin improvement was attributable to better leveraging of fixed costs, efficiencies due to the plant consolidation and better pricing of raw materials.

Selling, general and administrative ("SG&A") expenses declined during fiscal year 2005 to $7,850,000 or 4.8% of net revenues. This was a decrease of $186,000 or (2.3%) from $8,036,000 or 6.0% of net revenues in 2004. Demonstration and promotional expenses have declined from previous levels as a result of a decline in sales to a customer who required the Company to pay a portion of those costs. SG&A expenses included approximately $134,000 in provision for bad debt related to the write-off of Delta Airlines receivables and $152,000 of costs associated with the Company's exploration of strategic financial alternatives to improve stockholder value.

Operating income for fiscal year 2005 increased 90.6% to $11,903,000, an increase of $5,658,000 from $6,245,000 for fiscal year 2004.

The Company continues to review strategic financial alternatives resulting from Piper Jaffray's efforts and other initiatives and plans to report the outcome when it is determined.

In discussing fiscal year 2005 results, James Rudis, Overhill Farms' Chairman and Chief Executive Officer, said, "The Company continues to perform well in all areas. Revenues have increased and margins continue to improve. In addition, our liquidity remains strong as we paid debt down by $5.7 million during 2005. We anticipate further profitable operations in fiscal year 2006 as we continue our efforts to grow revenues and control costs."

Overhill Farms is a value-added supplier of custom high quality frozen foods to foodservice, retail and airline customers.

This news release contains disclosures that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs and include, but are not limited to, statements concerning the Company's operations and financial performance and condition and statements regarding expectations of continued or increased sales volume, continued profitable operations, revenue growth, cost control and the ability to achieve solid financial performance in fiscal year 2006. For this purpose, statements of historical fact may be deemed to be forward-looking statements. All statements regarding the Company's expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, projected costs or cost savings, capital expenditures, competitive positions, continuation or expansion of governmental programs, growth opportunities for existing products or products under development, benefits from new technology, plans and objectives of management for future operations and markets for stock, and statements regarding future opportunities, acquisitions or business combinations are forward-looking statements. In addition, forward-looking statements include statements in which we use words such as "continue," "efforts," "expect," "believe," "anticipate," "confident," "intend," "strategy," "plan," "will," "estimate," "project," "goal," "target," "prospects," "optimistic" or similar expressions. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, we cannot assure you that these expectations will prove to have been correct, and actual results may differ materially from those reflected in the forward-looking statements.

The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the Company's ability to identify and take advantage of any favorable strategic financial alternatives, the impact of competitive products and pricing; market conditions and weather patterns that may affect the cost of raw material as well as the market for the Company's products; changes in the Company's business environment, including actions of competitors and changes in customer preferences; the occurrence of acts of terrorism, such as the events of September 11, 2001, or acts of war; changes in governmental laws and regulations, including income taxes; market demand for new and existing products; and other factors as may be discussed in the Company's Annual Report on Form 10-K for the year ended October 2, 2005, and other reports filed with the Securities and Exchange Commission.

                           OVERHILL FARMS, INC.
                    CONDENSED SUMMARY OF OPERATIONS



                                           For the Years Ended
                                ------------   ------------   ------------
                                 October 2,    September 26,  September 28,
                                    2005           2004           2003
                                ------------   ------------   ------------
Net revenues                    $162,565,512   $133,957,475   $136,950,410

Cost of sales                    142,813,053    119,676,464    125,021,592
                                ------------   ------------   ------------

Gross profit                      19,752,459     14,281,011     11,928,818

Selling, general and
 administrative expenses           7,849,537      8,035,676     10,086,572
                                ------------   ------------   ------------

Operating income                  11,902,922      6,245,335      1,842,246

Other expenses                     6,371,326      9,755,015     11,617,173
                                ------------   ------------   ------------

Income (loss) before income
 taxes                             5,531,596     (3,509,680)    (9,774,927)

Income tax provision (benefit)     1,835,431     (1,368,024)    (3,352,629)
                                ------------   ------------   ------------

Net income (loss)               $  3,696,165   $ (2,141,656)  $ (6,422,298)
                                ============   ============   ============

Net income (loss) per share -
 basic                          $       0.25   $      (0.14)  $      (0.53)
                                ============   ============   ============

Net income (loss) per share -
 diluted                        $       0.24   $      (0.14)  $      (0.53)
                                ============   ============   ============

Weighted average shares
 outstanding - basic              14,863,716     14,805,556     12,032,331
                                ============   ============   ============

Weighted average shares
 outstanding - diluted            15,575,459     14,805,556     12,032,331
                                ============   ============   ============

Contact Information

  • Contacts:
    James Rudis, Chairman
    President and CEO
    Overhill Farms, Inc.
    323-582-9977

    Alexander Auerbach
    Auerbach & Co. Public Relations
    1-800-871-2583
    Email Contact