Please replace the release with the following corrected version due to multiple revisions.
The corrected release reads:
SYNERGY BRANDS REPORTS SIX MONTHS AND THREE MONTHS RESULTS
Synergy Brands, Inc. (NASDAQ:SYBR):
Six Months Results:
- Revenues increased by 16% to $44.5 Million
- Gross Profit increased by 49% to $4.5 Million
- Operating Cash Flow increased by 17% to $487,771.
Three Months Results:
- Revenues increased by 13% to $24 Million
- Gross Profit increased by 41% to $2.4 Million
- Operating Cash Flow decreased to $354,268 from $445,195.
Synergy Brands reported its six months and three months results as of June 20, 2008. Revenues increased by 16% to $44.5 Million while gross profit increased by 49% to $4.5 million for the six months ended June 30, 2008. The reported net GAAP loss from continued operations increased to $599,907 for the six months as compared to a Net GAAP profit of $47,554 for the comparable period. The Company measures its performance before non-cash charges since major expenses in its operating statements are non-cash accruals in connection with the purchase of its Michigan Facilities, financing and corporate expenses. Below is a table summarizing the results of operations for the six months and three months of 2008 as compared to 2007.
Results of Operation |  | 3 MONTHS |  | 3 MONTHS |  |  | 6 MONTHS |  | 6 MONTHS |  | ||||||||
6/30/2008 | 6/30/2007 | CHANGE | 6/30/2008 | 6/30/2007 | CHANGE | |||||||||||||
 | ||||||||||||||||||
Revenue | 24,110,156 | 21,284,060 | 13.28 | % | 44,535,305 | 38,481,250 | 15.73 | % | ||||||||||
Gross Profit | 2,422,268 | 1,719,331 | 40.88 | % | 4,466,869 | 3,001,939 | 48.80 | % | ||||||||||
Operating Profit (loss) | 290,348 | 699,315 | -58.48 | % | 514,884 | 1,092,503 | -52.87 | % | ||||||||||
Net GAAP Profit (loss) from continuing operations attributable to shareholders | (240,916 | ) | 246,837 | -197.60 | % | (599,907 | ) | 47,554 | -1361.53 | % | ||||||||
Per Share continuing operations | (0.02 | ) | 0.03 | (0.05 | ) | - | ||||||||||||
Non Cash Charges (see reconciliation below)(a) | 595,184 | 198,358 | 200.06 | % | 1,087,378 | 368,525 | 195.06 | % | ||||||||||
Cash Flow(a) | 354,268 | 445,195 | -20.42 | % | 487,471 | 416,079 | 17.16 | % | ||||||||||
Per Share | 0.03 | 0.05 | 0.04 | 0.05 | ||||||||||||||
Net loss from discontinued operations | (82,658 | ) | -100.00 | % | (258,099 | ) | (178,918 | ) | 44.26 | % | ||||||||
Per share discontinued operations | - | (0.01 | ) | (0.02 | ) | (0.02 | ) | |||||||||||
Net GAAP profit(loss) attributable to shareholders | (240,916 | ) | 164,179 | -246.74 | % | (858,006 | ) | (131,364 | ) | -553.15 | % | |||||||
Per Share | (0.02 | ) | 0.02 | (0.07 | ) | (0.02 | ) | |||||||||||
Financing & Dividend Charges | 648,434 | 592,877 | 9.37 | % | 1,325,300 | 1,263,560 | 4.89 | % | ||||||||||
Per Share | 0.05 | 0.07 | 0.11 | 0.16 | ||||||||||||||
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Non cash Charges(a) | ||||||||||||||||||
Depreciation & Amortization | 151,228 | 5,644 | 302,456 | 11,288 | ||||||||||||||
Operating non-cash charges | 289,550 | 85,083 | 476,307 | 126,053 | ||||||||||||||
Financing Charges | 154,406 | 107,631 | 308,615 | 231,184 | ||||||||||||||
Total | 595,184 | 198,358 | 1,087,378 | 368,525 | ||||||||||||||
Per Share | 0.05 | 0.02 | 0.09 | 0.05 | ||||||||||||||
 | ||||||||||||||||||
(a) Cash Flow is defined as Net Profit (loss) from continuing operations attributable to Shareholders. |
The Company continues to grow all of its core businesses, which include its Michigan Baking mix operations, packaged meals and spices. The Company is continuing its private label programs to several national chains along with the distribution of its proprietary products under the "Loretta" label, "County Fare","Country Value", "Rich & Moist" and several others. The Company believes that penetration of proprietary labels may build franchise values for the Company brands. The Company continues to grow and expand its New York operations. The logistical plan of building a corridor between NY and Michigan operations has reduced transportation costs as percentage of sales in a rising fuel environment. In addition, commodity prices in the Wheat, Corn and Sugar markets have squeezed margins for Michigan operations as well as increased costs for consumer goods in the NY market. However, largely the Company has been able to pass along its increased costs except for forward buying accommodations provided to its major customers.
Operating performance for the first half of 2008 has been exceptionally good in a challenging environment. The Company has been able to increase sales and gross profit to record levels. The Company believes that since its customer base consists of discount chains, its value based product mix seems to be well received in a weaker economy. However, non-cash charges increased from $368,525 to $1,087,378 for the same period increasing cash flow for the period by $71,392 to $487,481. The material increase in non-cash charges is largely due to the increase attributable to Depreciation & Amortization of the Michigan facilities and associated non-cash financing and operating charges, which did not exist in the comparable period in 2007. It is important to note that, the Company did not acquire the Michigan facility until July 1, 2007. During most of the six months of 2007, the Company co-packed its needs from the predecessor Company in Michigan and generated a fixed based gross profit for that period. In 2008, the Company expanded its Michigan facilities, and its operating profit for the period was lower than its fixed margin based arrangement in 2007. The Company expanded Michigan operations to include Spice and packaged meal distribution in addition to expanding its production lines. The purpose for this expansion was to increase capacity, which would have been limited by the acquired manufacturing facility. Management estimates that the facility acquired in 2007 had capacity to process about $12 million in annual sales. The expansion in 2008 allows processed sales to reach $50 million at current commodity pricing levels.
The Company continued to grow its NY operations predominately due to an expansion of its trucking fleet together with integrating Michigan products to its wholesale lists. Wholesale prices by consumer product manufacturers such as P&G and Clorox have been steadily increasing and thus raising wholesale costs. In addition, major manufacturers have reduced promotional rebated which also affect wholesale prices and gross margins. Gross profits for the comparable periods increased from 8% to 10%. The increase is gross profits is attributable to higher gross margins recognized from Michigan operations and increased retail store penetration with the Company's mix of wholesale consumer products.
Management believes that it can improve its results of operations in the third and fourth quarter of operations. The Company suffered from higher commodity prices in the first half that it has adjusted through price increases that should be fully in effect in second half of FY 2008.
Synergy Brands has also been granted a hearing date to appeal its delisting notice from Nasdaq scheduled for September 4, 2008. For full discussion of operations please refer to the Company's files 10Q located on its website at www.sybr.com.
Synergy Brands Related Links:
More information about the Company's products and programs as well as investor information on the following websites: www.sybr.com, www.phsgroup.com, www.perx.com.
Forward-looking statements:
This press release and Company review and assumptions made regarding the financial figures and other information, referenced and presented, state and reflect assumptions, expectations, projections, intentions and/or beliefs about past and future events that are intended as "forward-looking statements" under the Private Securities Litigation Reform Act of 1994. You can identify these statements by the fact that they do not relate to historical or current facts. They use words such as "anticipate","estimate", "project","forecast", "may","will", "should","expect", "assume","believe" and other derivations thereof and other words of similar meaning. In particular these include, but are not limited to, statements reflecting the projected business activities and goals, revenues, earnings, non-GAAP measures of operations, profit and loss of the Company and associated costs. Any or all of the Company's forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks or uncertainties. GAAP compliant figures are presented herein to compare to and use in arriving at an understanding of how the cash flow numbers presented have been determined. For a description of many of these risks and uncertainties, please refer to the Company's filings with the U.S. Securities & Exchange Commission (www.sec.gov) including Forms 10K and 10Q that can be found at www.sybr.com.
Non-GAAP Financial measures
The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). The Company is presenting various operating results, such as net profit from operations, financing and dividend charges, operating cash flow, non-cash charges, and net loss before non-cash charges. When the Company uses operating results, such terms, are considered non-GAAP financial measures. Management believes that certain non-GAAP financial measures and corresponding discussions provide additional meaningful comparisons that are relevant to the Company's businesses. More specifically, management believes these non-GAAP financial measures reflect fundamental business performance because they exclude certain items that affect operating results. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's results prepared in accordance with GAAP. In addition, the non-GAAP measures the Company is using may differ from non-GAAP measures that other companies use. A reconciliation of all non-GAAP measures to the nearest comparable GAAP used in this earnings release can be found on the Company's website at http://www.sybr.com/corporate_governance.htm.