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GENESEE CORPORATION ANNOUNCES FISCAL YEAR SALES AND EARNINGS

 ROCHESTER, N.Y., June 21 /PRNewswire/ -- Genesee Corporation (NASDAQ: GENBB) today announced sales and earnings for the fiscal year ended April 30, 1993.
 Consolidated gross sales for the fiscal year were $184,417,000, down from $195,413,000 for the prior year. Fiscal 1993 resulted in a net loss of ($6,505,000), or ($4.06) per share, compared to net earnings of $7,427,000, or $4.64 per share in 1992. As previously reported, the corporation elected to implement required changes in accounting for post-retirement health care benefits and income taxes in fiscal 1993. The cumulative effect of these changes in accounting principles was a one-time, after-tax charge against earnings of $6,847,000. Net earnings for fiscal 1993 before the cumulative effect of changes in accounting principles were $342,000 after taking into account a one-time charge of $2.3 million from discontinued operations and a charge of $1 million for the current portion of required changes in accounting standards for post-retirement health care benefits.
 The decline in sales was the result of lower volume sales by the corporation's Genesee Brewing Company subsidiary in fiscal 1993. Consistently poor weather during the spring and summer of 1992 and a sluggish economy combined to depress malt beverage consumption throughout Genesee Brewing Company's key markets in the northeastern United States. Expectations for improved sales in the fourth fiscal quarter were not realized as Genesee Brewing Company's distributors reduced or delayed their spring inventory build-up in response to reduced consumer demand resulting from unseasonably cool weather in the northeast during April 1993. The decline in sales of Genesee brands during fiscal 1993 was generally consistent with the overall industry trend in Genesee's key markets.
 Sales by the corporation's Foods Division increased in fiscal 1993 despite lower than projected sales of iced tea mix caused by poor weather in the summer of 1992. Sales of private label noodles and rice side dishes continued to grow as these products gain acceptance by additional food store chains. Revenues from contract manufacturing also increased as production of infant cereal for a major international food company came on line during fiscal 1993. The corporation's Genesee Ventures subsidiary also generated increased revenues in fiscal 1993 from its real estate investments and equipment leasing business.
 In addition to lower sales by Genesee Brewing Company and the one- time charge against earnings from the cumulative effect of accounting changes, earnings in fiscal 1993 were affected by a number of other factors:
 -- In fiscal 1993, Genesee Brewing Company incurred non-recurring charges for discontinued operations of approximately $2.3 million from the previously announced closure of its Buffalo, N.Y., malting facility and the shutdown of the brewery's waste fuel incinerator. In comparison, Genesee Brewing Company's earnings in fiscal 1992 benefited from approximately $1.2 million of non-recurring income, including gain from the sale of a former distribution facility, payment in settlement of an insurance claim and a favorable settlement of litigation with a former distributor. The costs associated with closing the Buffalo malting facility will be recovered in less than two years by the savings generated by purchasing malt under a long-term contract from a commercial supplier. The decision to shut down the waste fuel incinerator will avoid substantial expenditures required to comply with increasingly stringent environmental requirements and will generate savings from more aggressive use of waste reduction and recycling strategies.
 -- The change in accounting treatment for post-retirement health care benefits requires an annual accrual to recognize liability for future post-retirement health care benefits. This created an additional $1 million of operating expense in fiscal 1993.
 -- Reduced demand for malt beverage products in Genesee Brewing Company's key markets generated intense competition and increased discounting and promotional spending throughout the industry, which resulted in lower profit margins for the corporation's brewing business.
 -- Genesee Brewing Company increased its selling and marketing expenditures by approximately $1.8 million in 1993, partially in response to increased competitive pressures and to develop a new advertising campaign.
 -- The Foods Division experienced a larger operating loss in fiscal 1993 than in the prior year due to costs and expenses associated with the start of production on a large contract manufacturing order and additional sales and marketing expenditures.
 -- Interest income generated by the corporation's short term investments and cash management activities declined approximately $500,000 in fiscal 1993 because of generally lower interest rates in fiscal 1993.
 Fiscal 1993 was a year which posed many difficult challenges for the corporation's brewing and foods businesses. "Our performance in fiscal 1993 is disappointing, especially when compared with the excellent results that we achieved last year," said John L. Wehle Jr., president and chief executive officer.
 Genesee Brewing Company is a regional brewer that generates more than 90 percent of its sales in the northeastern portion of the country. This regional focus has historically been a major reason for Genesee Brewing Company's success and popularity, but in fiscal 1993 the northeast was the area hardest hit by poor weather and economic conditions. "We didn't have the opportunity to make up lost sales by increasing sales in the southeast or southwest, where the industry showed improved sales in 1992. Although the northeast again experienced cool and rainy weather this past spring, we hope to see some improvement in the weather and in demand for malt beverages this summer," said Wehle.
 Genesee Brewing Company recently launched a new advertising campaign. Consumer response to the new campaign has been favorable and the campaign will be supported by increased media spending and a variety of special promotions and theme displays. New, innovative package configurations are planned and the process of improving packaging graphics for the Genesee brands will continue in the coming year.
 Revenues and earnings from the corporation's equipment leasing business and real estate investment activities showed continued improvement in 1993. Cheyenne Leasing Company's revenues from equipment leasing grew as it expanded its lease portfolio and generated increased residual income from equipment sold at the expiration of the lease term. The increase in revenues and earnings from the corporation's real estate investments was the result of continued high occupancy rates that generated strong rent revenues. The corporation also benefited for the entire fiscal year from the increased ownership interests in its real estate investments that were acquired in October 1991.
 Performance of the Foods Division continues to be an area of concern. Despite increased sales volume, the Foods Division showed a larger operating loss in fiscal 1993 than in fiscal 1992. A portion of the operating loss was the result of higher facility and utility costs, and increased expenditures for additional sales personnel. However, officials also attributed the poor performance to operating inefficiencies arising from rapid sales growth and the proliferation of new products and customers. A comprehensive review of Foods Division operations is under way and actions taken to date include the elimination of low volume and low margin products, modification and enhancements to packaging lines, and improvements to production scheduling and inventory controls. In addition, sales efforts will concentrate on existing products that have established track records for consumer satisfaction and profitability. "We have a broad and respected product line, such as our noodles and rice side dishes, and our strategy is to increase sales of these products to new and existing customers," stated Wehle. Wehle also noted that Karl D. Simonson, the corporation's manager of planning and development, has been appointed to the additional post of president of the Foods Division. As president, Simonson will initially focus on improving manufacturing operations. Wehle said, "Karl will be a tremendous asset to the Foods Division because of his knowledge of the Foods Division and his extensive prior experience with food processing and packaging companies."
 In the year ahead, the corporation will focus attention on increasing sales by its Genesee Brewing Company subsidiary and improving earnings from its brewing and foods businesses. "We will seek to regain the momentum that we had entering fiscal 1993," said Wehle. Wehle cited a strong balance sheet, dedicated employees and sound management as the keys to the corporation's future success.
 Genesee Corporation
 Comparative Statement of Earnings
 12 months ended April 30, 1993 April 30, 1992
 Gross Sales: $184,417,000 $195,413,000
 Less: Excise Taxes and
 Allowances $45,672,000 $50,265,000
 Net Sales $138,745,000 $145,148,000
 Earnings Before Taxes and
 Cumulative Effect of
 Accounting Changes $900,000 $12,245,000
 Net Earnings Before Cumulative
 Effect of Accounting Changes $342,000 $7,427,000
 Cumulative Effect of Accounting
 Changes $6,847,000 ---
 Net Earnings ($6,505,000) $7,427,000
 Net Earnings Per Share ($4.06) $4.64
 -0- 6/21/93
 /CONTACT: Mark Leunig of Genesee Corporation, 716-546-1030, ext. 440/
 (GENBB)


CO: Genesee Corporation ST: New York IN: FOD SU: ERN

AR -- CL020 -- 4172 06/21/93 16:28 EDT
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Date:Jun 21, 1993
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