Wholesome & Hearty Foods reports record sales for third quarter

Business Wire, Oct 24, 1995

PORTLAND, Ore.--(BUSINESS WIRE)--Oct. 24, 1995--Wholesome & Hearty Foods Inc. (NASDAQ:WHFI) today announced financial results for the third quarter ended Sept. 30, 1995.

Net sales for the third quarter 1995 were $10.2 million, a 46 percent increase over the same period 1994. Net income was $860,000, or 10 cents per share, compared to $914,000, or 11 cents per share in the third quarter 1994.

Selling, general and administrative expenses in the third quarter were $3.7 million, a 53 percent increase over the same period 1994. However, compared to the second quarter of 1995 these expenses were flat. Gross profits for the third quarter were $5 million, a 29 percent increase over the same period 1994. As a percentage of sales, gross profits were approximately 50 percent.

"Achieving the 10 million dollar sales benchmark was a very rewarding experience," said Richard Dietz, Wholesome and Hearty's CFO. "However, we were unable to achieve equivalent earnings per share growth as a result of two occurrences.

"First, the company adjusted standard inventory costs in the fourth quarter of 1994, which resulted in a writedown of inventory. Had this adjustment been made in the third quarter of 1994, earnings would have been $743,000, or 9 cents per share, vs. reported earnings of $914,000, or 11 cents per share.

"Second, this quarter Wholesome and Hearty incurred a $180,000 expense in legal fees to defend two previously reported lawsuits. This expense deflated our potential earnings and gross profits for the quarter and should be considered when comparing the two quarters."

For the nine months ended Sept. 30, 1995, net sales increased 72 percent to $28 million, compared to $16.3 million for the same period 1994. Net income was $2.3 million, up 8 percent from $2 million in the first nine months of 1994. Earnings per share were 26 cents, up from 24 cents in the same period 1994.

Gross profits during the first nine months of 1995 increased 57 percent to $14 million compared to $9 million in 1994. As a percentage, gross profits were 50 percent, down from 55 percent in the same period 1994.

During 1995, in addition to the reasons stated above, gross profits as a percentage of sales were also affected by increased price discounting, new product start-up costs and sales increases in the lower margin club store and retail segments.

"We believe this continued sales growth supports the trend that the healthy food items we offer have become a matter of choice -- not just a passing fad," stated Paul Wenner, company founder and CEO.

"We are investing heavily in our sales and marketing efforts this year and believe that as a result we will continue to gain acceptance in new markets. Wholesome and Hearty Foods continues to promote a lifestyle of healthy eating and environmental awareness for making a better world."

Founded in 1985 by GardenChef(TM) Paul Wenner, Wholesome and Hearty Foods is an innovator in meatless, lowfat food products. Based in Portland, the company employs more than 120 people and contributes a percentage of all company profits to a number of organizations dedicated to the betterment of the environment. -0-

                    WHOLESOME & HEARTY FOODS INC.
                       Statements of Operations
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