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 ROCHESTER, N.Y., Aug. 18 /PRNewswire/ -- Curtice Burns Foods (AMEX: CBI) a Rochester, N.Y.-based food processor, today reported earnings for the quarter and the fiscal year ending on June 26, 1993, announced the initiation of a major restructuring program designed to enhance the value of Curtice Burns for the benefit of its shareholders, and clarified the situation relative to the potential sale of Agway's interest in Curtice Burns.
 Net sales for Fiscal 1993 declined 2.0 percent from the prior year to $878,627,000, and for the fourth quarter declined 2.2 percent from the prior year to $212,002,000, reflecting the divestiture of two non- strategic businesses earlier in the fiscal year. Curtice Burns sold its Upstate New York beverage bottling business in July '92, and its Northern California frozen entree business in December '92.
 Net earnings for Fiscal 1993, after a charge for restructuring to strengthen future earnings, were a loss of $23,837,000, or $2.77 per share, compared with earnings of $6,148,000 for the prior year, or $0.71 per share. The after tax effect of the restructuring charge was a loss of $29,657,000, or the equivalent of $3.45 per share. Operating earnings excluding restructuring for Fiscal 1993 were $5,820,000, or the equivalent of $0.68 per share.
 J. William Petty, president and chief executive officer, said, "This restructuring program is the beginning of the implementation of a new vision for Curtice Burns. This Company has numerous growing and profitable businesses with the potential of providing significant value to our shareholders, which are being offset in their earnings capacity by declining or unprofitable businesses -- but businesses which may well have strategic value for buyers with different portfolios than our own portfolio."
 Petty indicated that the first step in this restructuring program involves Curtice Burns selling its Meat Snacks business located in Denver, and Albany, Ore., and its Hiland Potato Chip business located in Des Moines, Iowa, as well as staff reductions in selected locations throughout the corporation. In the fiscal year ended June 26, 1993, Curtice Burns incurred after tax losses of $3,500,000 from the Meat Snacks and Hiland Potato Chip business. Of the $29,657,000 restructuring charge being taken against Fiscal 1993 earnings, approximately $26,357,000 represents a non-cash charge for the writedown of goodwill and other assets associated with the Meat Snacks and Hiland Potato Chip business.
 Petty added that additional announcements relative to this restructuring are expected in the next few months as planning is completed and implementation continues. Additional charges to Curtice Burns' earnings in connection with the overall restructuring plan may be required in Fiscal 1994 as a result of decisions yet to be made.
 "Our new vision for Curtice Burns is based on a strategic foundation of four points: A focus on a more limited number of product lines and businesses for which we have the resources to compete and grow profitably; the strengthening of our national sales and distribution capability, so as to better serve large regional and national customers; an intense effort to achieve low cost producer/distributor status consistent with the customer price pressures and consumer value culture of today's environment; and a drive to develop one highly adaptable culture for all of Curtice Burns, capable of dealing with the rapid pace of change in our industry," said Petty. "The strategy of maximum diversification and regional orientation served us well in prior decades, but that strategy will no longer give us the sales and earnings growth we need in the food business of the '90's."
 On March 22 Curtice Burns announced that Agway Inc., which owns 99 percent of Curtice Burns' Class B shares, was considering the potential sale of its
interest in the company. At its meeting held on August 9 and 10, the Curtice Burns board of directors not only authorized the restructuring described above but also authorized Curtice Burns' management together with its investment bankers, Donaldson Lufkin & Jenrette and Goldman, Sachs & Co., to pursue strategic alternatives for Curtice Burns. These options include negotiations with Pro-Fac Cooperative and its investment banker, Dillon, Read & Co. relative to Pro-Fac gaining control of the business; possible sale of the entire equity investment in Curtice Burns to a third party; and a possible expanded restructuring plan and a refinancing plan which would involve Curtice Burns exercising its option to purchase from Pro-Fac Cooperative, Inc., the property and equipment and certain other assets used by Curtice Burns in its business. Under the agreement with Pro- Fac, title to substantially all of Curtice Burns' fixed assets is held by Pro-Fac, and Pro-Fac provides the major portion of the financing of Curtice Burns' operations. Under the agreement, Curtice Burns has an option to purchase these assets from Pro-Fac at th time of purchase. Exercise of the option would result in a termination of the agreement with Pro-Fac. In such event, Curtice Burns would be required to repay all debt owed to Pro-Fac.
 "We will actively pursue these alternatives in the coming months, coordinating this effort with the restructuring activities designed to implement the new vision for Curtice Burns," said Petty.
 On July 19, 1993, Curtice Burns announced that it had signed a letter of intent for the sale of the oats portion of its National Oats business to Ralston Purina. Since Pro-Fac holds title to Curtice Burns' fixed assets, Pro-Fac's consent to the sale of any such assets is required so long as the agreement with Pro-Fac is in effect. Pro-Fac has advised Curtice Burns that it currently does not intend to consent to the sale of the oats business, or any other assets subject to the agreement between the two companies, so long as the issue of the future control of Curtice Burns is unresolved. Curtice Burns continues to believe that the sale of the oats business on the terms set forth in the letter of intent would be in its best interests; however, in view of Pro-Fac's current position, there is no assurance that a sale of the oats business will be consummated as long as the agreement with Pro-Fac is in effect.
 Fourth quarter net earnings from operations, exclusive of restructuring charges, declined 55 percent to $974,000 from $2,171,000 in the prior year, or the equivalent of 11 cents per share versus 25 cents per share in the prior year. Fourth quarter net earnings in total reflect a charge for the restructuring of $29,008,000, leading to a total net earnings loss for the fourth quarter of $28,034,000 versus the $2,171,000 profit in the same quarter for the prior year. The restructuring charge amounts to the equivalent of a loss of $3.36 per share, which when offset by the 11 cents operating earnings, results in a total net earnings per share loss of $3.25 versus the 25 cents per share profit of the same quarter in the prior year.
 In announcing the fourth quarter operating earnings decline, Petty said, "Our two major divisions -- Nalley's U.S. and Canada and Comstock Michigan Fruit, which account for 55 percent of the corporation's net sales, continued their consistent gains in earnings both for the quarter and the fiscal year. Our Finger Lakes Packaging Division is well along in its turnaround, and is supplying our internal canning operations with cans at an attractive price, while at the same time growing its outside merchant sales business. Divisions like our Southern Frozen Foods Division (specialty vegetable products) and our Brooks Foods Division (canned chili hot beans and specialty chili tomato products) continue to develop solid earnings. Our problems for the year and in the fourth quarter continue to be our snack businesses - particularly Hiland -- which are being hurt by the intense competitive pressure all regional snack businesses are feeling, our National Oats business where excess capacity in the bulk oats field has negatively impacted margins, our commodity vegetable business which continues to experience substantial price pressure due to excess commodity inventories, and our Meat Snack business.
 "As we go forward into our Fiscal 1994, we are optimistic about our business," said Petty. "A number of structural changes put in place in fiscal 1993 -- such as getting out of the commodity tomato business at our Brooks Foods Division, plant consolidations in our Comstock Michigan Fruit Division, Corporate centralization of purchasing of major ingredients and supplies to maximize volume discounts -- should give a positive lift to earnings. The announced restructuring will eliminate businesses which have been a significant drain on earnings. The Board decisions earlier this month now permit timely action to constructively resolve the issue of the potential sale of Agway's interest in Curtice Burns."
 ($000 except share data)
 Quarter Ended Year Ended
 6/26/93 6/26/92 6/26/93 6/26/92
 Net Sales $212,002 $216,672 $878,627 $896,931
 (Loss)/Income Before
 Tax (27,313) 3,648 (19,942) 10,917
 (Loss)/Net Income (28,034) 2,171 (23,837) 6,148
 (Loss) Per Share/
 Net Income (3.25) .25 (2.77) .71
 Average Number of
 Shares Outstanding 8,618,176 8,572,455 8,600,712 8,667,154
 -0- 8/18/93
 /CONTACT: Bea Slizewski of Curtice Burns Foods, 716-383-1850/

CO: Curtice Burns Foods ST: New York IN: FOD SU: ERN RCN

BM -- CL003 -- 3844 08/18/93 10:33 EDT
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Publication:PR Newswire
Date:Aug 18, 1993

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