Central Garden & Pet Announces Fiscal 2008 First Quarter Results.Strengthens Financial Position and Takes Goodwill Impairment Charge WALNUT CREEK Walnut Creek, residential city (1990 pop. 60,569), Contra Costa co., W Calif., in the San Francisco Bay area; inc. 1914. It is the trade and shipping center of an extensive agricultural area where walnuts are among the major product. , Calif. -- Central Garden & Pet Company (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CENT)(NASDAQ:CENTA CENTA Centro Nacional de Tecnologia Agropecuaria (Mexico) ) today announced results for its first quarter ended December 29, 2007. The Company reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $314 million in the quarter, a decrease of 1% from $317 million in the comparable fiscal 2007 period. The adjusted net loss for the quarter, excluding goodwill and other intangible impairment, was $0.8 million, or $0.01 per fully diluted share compared to a net loss of $3.0 million, or $0.04 per fully diluted share, in the year ago period. The Company improved its leverage ratio to 4.25x compared to 4.92x at year-end fiscal 2007. The Company reported a net loss for the quarter of $290 million, or $4.07 per fully diluted share, compared to a net loss of $3.0 million, or $0.04 per fully diluted share, in the year ago period. Included in the results for the quarter is a non-cash, pre-tax charge of $400 million, or $289 million net of tax, related to goodwill and other intangible impairment. Also included in the results for the quarter is a pre-tax gain of $11.1 million, or $6.8 million net of tax, related to the sale of properties and legal settlement proceeds. Excluding the impact of goodwill and other intangible impairment and the gain on sale of properties and legal settlement proceeds, the Company incurred an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.7 million, or $7.6 million net of tax translating into a loss of $0.11 per fully diluted share. Net sales for the Garden Products segment were $112 million, a decrease of 3% from $115 million in the comparable fiscal 2007 period. The Garden Products operating loss was $7.3 million, which includes a non-cash other intangible impairment of $3.5 million, compared to a loss of $2.1 million in the year ago period. Branded product sales increased 2% to $98 million. Sales of other manufacturers' products declined, as planned, 23% to $14 million. Net sales for the Pet Products segment were $202 million, relatively unchanged compared to the comparable fiscal 2007 period. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the Pet Products segment was $17 million, a decline of 5% compared to $17.8 million in the year ago period. Branded product sales were $164 million, flat compared to last year. Sales of other manufacturers' products declined 1% to $38 million. Total Company depreciation and amortization for the quarter was $8.0 million compared to $6.8 million in the year ago period. "In the past three months, we have made significant strides in identifying and implementing measures to improve performance and strengthen our financial position," noted William Brown, Chairman and Chief Executive Officer of Central Garden & Pet Company. "As we look forward to the upcoming garden season, we will focus on margin improvement and working capital management. While progress has been made, there remains a great deal to be accomplished." As a result of the decline in the Company's stock price, the Company will record a one-time, non-cash pre-tax charge for goodwill and other intangible impairment of $400 million, or $4.06 per share after tax. Under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142 "Goodwill and Other Intangible Assets", the Company was required to perform an annual goodwill impairment assessment as of July 1, 2007, which required, among other things, a reconciliation of current equity market capitalization Equity Market Capitalization A measure of the total market value of an equity market. The measure is calculated by taking the market capitalization of all companies in the equity market and adding them together to arrive at the capitalization for the market as a whole. to shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . At that time, the Company determined there was no goodwill impairment. As a result of the decline in the Company's stock price since July, the Company was required to perform an interim goodwill impairment assessment. At recent stock price levels, the Company's total shareholders' equity significantly exceeds its equity market capitalization, indicating goodwill impairment. This non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. is unrelated to recent results or management's long-range forecast, which continue to call for earnings growth and margin improvement. However, according to current accounting convention, the Company was required to place greater emphasis on current trading values than on its forecasts in performing its interim impairment assessment. The Company continues to be in compliance with the financial covenants in its credit agreement. The Company will discuss its first quarter results on a conference call today at 4:30 p.m. EST / 1:30 p.m. PST PST Paroxysmal supraventricular tachycardia, see there . Individuals may access the call by dialing 1-888-680-0890 and passcode 4935 6020 (domestic) or 617-213-4857 and passcode 4935 6020 (international). The conference call will be simultaneously broadcast over the Internet through Central's website, http://www.central.com/. To listen to the webcast, please log on to the website prior to the scheduled call time to register and download any necessary audio software. Re-play dial-in numbers for the call will be available for three weeks: 1-888-286-8010 and passcode 43595613 (domestic) and 617-801-6888 and passcode 43595613 (international). Central Garden & Pet Company is a leading innovator, marketer and producer of quality branded products for the lawn & garden and pet supplies markets. Committed to new product innovation, our products are sold to specialty independent and mass retailers in the following categories: In Lawn & Garden: Grass seed including the brands PENNINGTON[R] and THE REBELS[TM]; wild bird feed and the brands PENNINGTON[R] and KAYTEE[R]; weed and insect control and the brands AMDRO[R], SEVIN[R], IRONITE[R] and Over 'N Out[R]; and decorative outdoor patio products and the brands NORCAL NORCAL Northern California [R], NEW ENGLAND POTTERY[R] and MATTHEWS FOUR SEASONS[TM]. We also provide a host of other regional and application-specific garden brands and supplies. Pet categories include: Animal health and the brands ADAMS[TM] and ZODIAC[R]; aquatics and reptile and the brands OCEANIC[R], AQUEON[TM] and ZILLA Zil´la n. 1. (Bot.) A low, thorny, suffrutescent, crucifeous plant (Zilla myagroides) found in the deserts of Egypt. Its leaves are boiled in water, and eaten, by the Arabs. [TM]; bird & small animal and the brands KAYTEE[R], SUPER PET[R] and CRITTER TRAIL[R]; dog & cat and the brands TFH TFH Technische Fachhochschule (German: Engeneering College/University) TFH 24 Hours (Movie) TFH Thread from Hell (newsgroups) TFH Tinfoil Hat TFH Thanks For Helping [TM] / NYLABONE[R], FOUR PAWS[R], PINNACLE[R] and Avoderm[R]; and equine and the brands FARNAM[R], BRONCO bronco: see mustang. [R] and SUPER MASK[R]. We also provide a host of other application-specific Pet brands and supplies. Central Garden & Pet Company is based in Walnut Creek, California Walnut Creek is a largely affluent suburb several miles east of Oakland in Contra Costa County, California, USA, in the East Bay region of the San Francisco Bay Area. While not as large as the neighboring Concord, Walnut Creek serves as the business and entertainment hub for the , and has approximately 5,000 employees, primarily in North America and Europe. For additional information on Central Garden & Pet Company, including access to the Company's SEC filings, please visit the Company's website at http://www.central.com/. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: The statements contained in this release which are not historical facts, including future earnings expectations, margin improvements and the estimated goodwill and other intangible impairment charge are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks are described in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , filed November 28, 2007, and other Securities and Exchange Commission filings. Central undertakes no obligation to publicly update these forward-looking statements to reflect new information, subsequent events or otherwise. [TABLE OMITTED] [TABLE OMITTED] Non-GAAP Financial Measures This press release includes adjustments to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss for the fiscal quarter ended December 29, 2007. Adjusted net loss, which excludes the impact of goodwill impairment and gains from the sale of properties and a legal settlement is a non-GAAP financial measure. We believe that it is useful as a supplemental measure in evaluating the aggregate performance of our operating business. This measure is used by our management, including our chief operating decision maker, to perform such evaluation. We exclude goodwill impairment and gains from the sale of properties and a legal settlement as such items are not representative of the on-going results of operations of our business. Below is a reconciliation of this non-GAAP measure to net loss for the quarter ended December 29, 2007, excluding goodwill impairment and gains from the sale of properties and a legal settlement. [TABLE OMITTED] |
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