MARKETING SPECIALISTS CORP
8-K, EX-99.1, 2000-05-30
GROCERIES, GENERAL LINE
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Exhibit 99.1

   

Marketing Specialists
17855 North Dallas Parkway
Dallas, Texas 75287
(Nasdaq: MKSP)

 

 

AT THE COMPANY
Gerald Leonard, President & CEO
(781) 828-4800
Timothy Byrd, Chief Financial Officer
(972) 860-7530
Randall Oxford, Media Relations

AT THE FINANCIAL RELATIONS BOARD
Analyst Info: Steve Martini
General Info: Paula Schwartz
Media Info: Judith Sylk Siegel
(212) 661-8030

   

FOR IMMEDIATE RELEASE
May 19, 2000

 
   

 

 

MARKETING SPECIALISTS CORPORATION ANNOUNCES

FIRST QUARTER 2000 FINANCIAL RESULTS

 

Highlights

 

Dallas, TX...May 19, 2000 - Marketing Specialists Corporation (Nasdaq: MKSP), a leading provider of outsourced sales and marketing services to manufacturers, suppliers and producers of food products and consumer goods, reported today its financial results for the quarter ended March 31, 2000.

First-Quarter Results

The following table sets forth the results of operations of the Company for the periods indicated. On Aug. 18, 1999, the Company completed its merger ("Merger") with Dallas-based Richmont Marketing Specialists Inc. ("Richmont"). For financial reporting purposes, the Company is presented as the accounting acquirer. Accordingly, the results of Richmont's operations have been included in the Company's consolidated statement of operations since the date of the Merger.

Unaudited Financial Summary Table
Three Months Ended March 31,

 

2000

1999

Commissions
Sales
Revenues

$94,442 
 10,524 
104,966 

$43,876
12,749
56,625

Earnings before interest, taxes, depreciation and amortization

6,513 

6,612

Income (loss) before income taxes

(6,073)

3,331

Net income (loss)

$(6,073)

$1,832

Net income (loss) per share

   
 

Basic and Diluted

$(0.39)

$0.25

 

Shares used to compute net loss per share
Basic and Diluted


15,743,867 


7,447,000

 

The Company reported that commission revenue for the three months ended March 31, 2000, increased $50.6 million (or 115 percent) to $94.4 million compared to the same period last year. Total revenues for the quarter were $105.0 million versus $56.6 million for the same period last year. This increase was primarily related to the inclusion of commissions for Richmont in 2000 as a result of the Merger.

Cash selling, general and administrative expenses (CSG&A) for the first quarter of 2000 were $89.0 million compared to $38.7 million for the first quarter of 1999. The increase in CSG&A is primarily attributable to the inclusion of Richmont expenses as a result of the Merger.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months ended March 31, 2000 were $6.5 million compared to $9.4 million in the fourth quarter of 1999. As previously announced in an April 18, 2000 release, this decrease was expected because the company's period ended March 31, 2000 represented the Company's first full quarter without any revenues related to lost manufacturer contracts subsequent to the Merger. These losses should be offset in subsequent quarters as Marketing Specialists begins to recognize revenues from its recently announced national contracts with Kellogg, SC Johnson and Aurora Foods.

The Company's net loss for the quarter ended March 31, 2000 was $(6.1) million or ($0.39) per share compared to net income of $1.8 million or $0.25 per share for the same period last year. The primary reason for this decrease was due to items related to the Merger. Depreciation and amortization increased to $6.2 million from $1.5 million and interest expense increased to $6.4 million from $1.8 million.

On March 30, 2000, the Company completed the refinancing of its credit facility, which resulted in a new, two-year $50.0 million revolving credit facility ("New Revolver") and a two-year $35.0 million term loan ("Amended Term Loan"). The Company used proceeds from the New Revolver to reduce the principal amount of the term loan to $35.0 million. As a result of the refinancing, no principal payments are required on the Amended Term Loan for two years.

Management Remarks on First Quarter Results

Commenting on the results, Gerald Leonard, president and chief executive officer of Marketing Specialists, said, "Although we continued to realize costs associated with our merger during the first quarter, our vastly increased size has given us the critical mass and resources to execute our strategy of penetrating markets coast to coast on behalf of our manufacturer partners. Our combined heritage of industry leadership and our ongoing ability to bring real value added to our business partners is evidenced by our appointment as national food broker for such premier manufacturers as Aurora Foods, Gillette, Kellogg's, and SC Johnson, as well as a host of other national and regional appointments, over the last few months."

Mr. Leonard also noted that the Company's backlog of potential new business remains brisk and that Marketing Specialists will continue pursuing both national and regional manufacturer contracts, as well as various enhancements to its service offerings on behalf of its clients. In addition, the Company recently became the first food brokerage to announce e-commerce services aimed at helping manufacturers, suppliers and producers of food products to grow their sales to online retailers.

Marketing Specialists Corporation provides outsourced sales, marketing and merchandising services to manufacturers of food and other consumer products. With more than 6,000 associates in 65 locations throughout the United States, Marketing Specialists is one of the two largest food brokers in the nation.

* * *

 

This press release contains forward-looking statements within the meaning of Section 27a of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Reliance should not be placed on forward-looking statements because they involve unknown risks, uncertainties and other factors, which are, in some cases, beyond the control of Marketing Specialists. Actual events, performance and results could differ materially from the anticipated events, performance or results expressed or implied by such forward-looking statements. The factors which may cause such differences include, among other things, Marketing Specialists' ability to consummate any of the transactions contemplated by the letters of intent to which Marketing Specialists is a party; Marketing Specialists' ability to successfully integrate any future and past acquisitions; the stockholder vote or other conditions relating to the Richmont merger; principal realignment as a result of the merger, the competitive environment; and general economic conditions. For further information, please refer to the Company's filings with the Securities and Exchange Commission.

Financial Tables Follow

# # #

To receive Marketing Specialists' latest news release and other corporate documents via FAX at no cost, dial 1-800-PRO-INFO. Use the Company's code, MKSP.

Or visit the Company's pages at www.frbinc.com.

# # #

MARKETING SPECIALISTS CORPORATION

(FORMERLY MERKERT AMERICAN CORPORATION)

CONSOLIDATED OPERATING RESULTS

(all amounts except shares in thousands)

 

Three Months Ended
March 31,

 

2000

1999

Commissions
Sales

$94,442 
 10,524 

$43,876 
 12,749 

Revenues

104,966 

56,625 

Selling expenses
Cost of sales
General and administrative
Depreciation and amortization

70,755 
9,454 
18,244 
6,224 

27,377 
11,304 
11,332 
1,457 

Operating expenses

104,677 

51,470 

Operating income

289 

5,155 

Interest expense, net
Other income, net

(6,418)
56 

(1,824)
(0)

Income (loss) before income taxes

(6,073)

3,331 

Provisions (benefit) for income taxes

       0 

 1,499 

Net income (loss)

$(6,073)

$1,832 

Net income (loss) per share

   
 

Basic and Diluted

$(0.39)

$0.25 

 

Shares used to compute net loss per share
Basic and Diluted


15,743,867 


7,447,000 


MARKETING SPECIALISTS CORPORATION AND SUBSIDIARIES
(FORMERLY MERKERT AMERICAN CORPORATION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share amounts)

 

March 31, 2000
(unaudited)

December 31, 1999

ASSETS

   

Current Assets

   
 

Cash
Restricted cash
Accounts receivable, less allowance for doubtful accounts of $4,433 and $5,730, respectively
Inventory
Properties held for sale
Prepaid expenses and other

$- 
913 

58,322 
1,696 
5,346 
    3,196 

$- 
1,200 

53,579 
1,221 
7,312 
    2,895 

 

Total current assets

69,473 

66,207 

Property, plant and equipment, net
Intangible assets
Other assets

28,558 
345,000 
   14,062 

35,204 
338,540 
    9,665 

 

Total assets

$457,093 

$449,616 

LIABILITIES AND STOCKHOLDERS' EQUITY

   

Current liabilities:

   
 

Current maturities of long-term obligations
Accounts payable
Accrued expenses

$44,837 
18,214 
   32,241 

$48,055 
14,396 
   33,664 

 

Total current liabilities

95,292 

96,115 

Long-term obligations, net of current portion

228,583 

227,831 

Other liabilities

4,303 

7,428 

Commitments and contingencies
Stockholders' equity:

   
 

Common stock, $.01 par value - Authorized - 54,000,000 shares issued and outstanding - 19,751,131 and 14,173,844, respectively
Additional paid in capital
Note for sale of common stock
Accumulated deficit
Treasury stock, at cost



198 
159,770 
(1,500)
(29,106)
      (447)



142 
143,080 
(1,500)
(23,033)
   (447)

 

Total stockholders' equity

  128,915 

  118,242 

 

Total liabilities and stockholders' equity

$457,093 

$449,616 

     



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