A.L. Van Houtte: first-quarter results and recent developments.

MONTREAL--(BUSINESS WIRE)--Sept. 14, 1995--A.L. VAN HOUTTE LTD(ME: VH )

- Growth of 20 percent in net earnings and 86 percent in cash flow - Strategic developments in the Ontario retail food market and the office coffee services sector in the US - Annual dividend of $0.16 per share - Listing on the Toronto Stock Exchange

During the Annual Meeting of Shareholders held this morning in Montreal, the management of A.L. VAN HOUTTE LTD. announced the first-quarter's results as well as recent events that took place within the Company's two major growth strategies: the marketing of gourmet coffees outside Quebec, and the expansion of its single-cup office coffee services across North America.

Consolidated Results for the First Quarter

For this 16 week-period ended July 22, 1995, A.L. Van Houtte's revenues increased by 162 percent to reach $49 million compared to $18.7 million for the same quarter of last year. It should be noted that the first quarter of the previous year did not include Red Carpet's results and included those of VKI for eight weeks only. In addition to the contribution of these entities, the Company benefited from a 42 percent growth in revenues by its other subsidiaries and divisions.

Earnings before depreciation, amortization, financial expenses and income taxes almost doubled, rising from $4.1 million to $8.1 million. The relative decline in the profit margin expressed as a percentage of revenues reflects the increase in green coffee prices and the changes in the Company's business mix following last year's expansion, especially due to the seasonal cycle of office coffee services and food vending operations. These activities slow down during the summer vacation period, particularly in July and August, which correspond to the end of the first quarter and beginning of the second. In the future, the Company expects to record approximately 60 percent of its earnings before financial expenses and income taxes during the second half of its fiscal year. In addition, the expansion achieved over the past year has led to an increase in depreciation, amortization and financial expenses, which rose by a total of $3.4 million during the first quarter.

A.L. Van Houtte thus posted net earnings of $1,614,000, up 20.4 percent over last year's result; considering the dilution of capital stock, earnings per share remained the same as those of the first quarter of the previous year, at $0.20. However, cash flow grew by 86 percent to $5.4 million or $0.66 per share compared to $0.43 one year ago.

Strategic Developments

A.L. Van Houtte today announced that its Coffee Group achieved an important breakthrough in the retail food market outside Quebec. It signed an agreement with Ontario-based Nine to Five Coffee Services Ltd., for the acquisition of its assets relating to its grocery store distribution operations. This company supplies, among others, coffee products to 76 Loeb grocery stores in Ottawa, Sudbury, London and Toronto. Within the next few months, the Company will introduce A.L. Van Houtte and Orient Express products to this network, and also plans to gradually implement its integrated concepts, including single-cup coffee brewers. Also during the first quarter, the Coffee Group undertook to supply its products to Red Carpet's outlets in the Maritimes and Ontario. A.L. Van Houtte expects to supply Red Carpet's entire Canadian network by the end of November 1995.

Major developments were announced today in the office coffee service sector as well. Red Carpet has just signed an agreement to develop a network of Filterfresh franchises in seven Northwestern U.S. states. The first of these outlets will open in Seattle in April 1996. The Company seeks to build on Red Carpet's strong foothold in Western and Central Canada to apply a systematic north-south expansion strategy.

Outlook

A.L. Van Houtte expects that the strongest growth in its revenues and earnings will be seen in the third and fourth quarters, since results for the second quarter will continue to sustain the seasonal impact. During the Annual Meeting, management said that a 15 percent to 20 percent growth in earnings per share is expected for 1995-1996 and for the following years. This growth will stem, among other things, from the expansion of the Company's office coffee service networks in North America and that of its distribution operations in the Canadian retail food market, as well as the introduction of its products throughout the Red Carpet network.

Dividend

In light of the favourable outlook for this year, A.L. Van Houtte's Board of Directors has declared an annual dividend of $0.16 per share on subordinate shares and multiple voting shares. This dividend will be paid on November 6, 1995 to all shareholders of record of the Company as at October 16, 1995. Also, A.L. Van Houtte shares will be listed on The Toronto Stock Exchange on September 27, 1995. -0-

A.L. VAN HOUTTE LTD
CONSOLIDATED STATEMENT OF EARNINGS
(In thousands of dollars, except for earnings per share
~data/unaudited)

                                      for the 16-week period
                                              ended

                                    July 22           July 23
                                     1995              1994
                                   ___________________________

REVENUES                            $49,031           $18,721

Cost of goods sold and
 operating expenses                  40,924            14,583
                                   ___________________________
                                      8,107             4,138

Depreciation and amortization         3,994             1,609
                                   ___________________________
                                      4,113             2,529

Financial expenses                    1,227               240
                                   ___________________________

Income before the undernoted items    2,886             2,289

Income taxes                          1,196               972
Equity in net earnings of companies
 subject to significant influence         1                65
Non-controlling interest                 76                42
                                   ___________________________

NET INCOME                            1,614             1,341
                                   ___________________________

EARNINGS PER SHARE                    $0.20             $0.20
                                   ___________________________

Average number of equity
 shares outstanding                   8,252             6,839
                                   ___________________________
Fully diluted earnings per share      $0.20                --
                                   ___________________________

Cash flow per share                   $0.66             $0.43
                                   ___________________________

For reference only:

Sales
 Cafe-Bistro and coffee-bar network $11,914           $11,461

Sales
 Filterfresh network (US$)          $10,693            $5,657

CONTACT: Paul-Andre Guillotte or Gerard Geoffrion, [phone]

[phone] (fax)