Specialty Foods Group Income Fund Announces Financial Results for the Second Quarter And First Six Months of 2007

    TORONTO, Aug. 14 /CNW/ - Specialty Foods Group Income Fund (the "Fund")
(NEX: HAM.UN.H) today announced financial results for the quarter and six
months ended June 30, 2007. The Fund indirectly holds an interest in Specialty
Foods Group, Inc. ("SFG" or the "Company").
    Operating results for the second quarter of 2007 continued the favorable
trends reported for the first quarter of the year. Operating income increased
380% to $4.8 million from $1.0 million. Net sales were flat.
    For the first half of 2007, net sales were $150.0 million, a decline of
$13.6 million. Operating income increased from $416,000 to $6.2 million. The
impressive profit growth seen this year reflects the benefit of management
actions taken since late 2006 that include: closing of the Williamston, North
Carolina facility; a reduction of the salaried work staff; disposition of the
Mosey's brand; and more effective product pricing in the face of higher raw
material costs. Also, the Company has focused on its leading brands that have
all experienced sales growth compared with the first half of 2006.
    As announced by the Company in November 2006, the Board of Directors is
considering strategic alternatives for SFG's businesses, including the
possible sale of one or more of its divisions. There is no certainty that any
sale will occur.
    As previously announced in the August 1, 2007 press release, Nathan's
Famous Systems, Inc. ("NFSI") has sent SMG Inc. a letter (i) alleging that SMG
Inc., a wholly owned subsidiary of Specialty Foods Group, Inc. ("SFG") had
breached the terms of its license agreement (the "License Agreement") with
NFSI and (ii) stated that NFSI invoked its rights to terminate the License
Agreement as of July 31, 2008. As previously announced by the Fund, SMG
believes no breach has occurred and filed on July 30, 2007 for declaratory
judgment to confirm their position. SMG remains committed to fulfilling all
terms of the agreement.
    Operating results for the first six months reflect the dedicated efforts
of SFG employees and the continued support of our valued customers. We are
encouraged that the difficult decisions previously made are now showing
positive results.

    Results of Operations for the Quarters and Six Months Ended June 30, 2007
and July 1, 2006

     Statement of             Quarter      Quarter   Six Months   Six Months
     Operations                 Ended        Ended        Ended        Ended
    (in thousands             June 30,      July 1,     June 30,      July 1,
     of U.S. dollars)            2007         2006         2007         2006
    Net Sales              $   80,968   $   81,597   $  149,971   $  163,525
    Cost of Goods Sold         67,289       71,206      126,861      145,939
      Gross Profit             13,679       10,391       23,110       17,586
    Selling, General and
     Expenses                   6,327        7,709       12,083       13,905
    Restructuring               1,291            -        1,743            -
    Amortization                1,309        1,638        3,042        3,265
      Operating Income          4,752        1,044        6,242          416
    Goodwill Impairment             -          (22)           -          (22)
    Loss on Foreign
     Currency Translation
     and Transactions          (7,132)      (4,623)      (8,020)      (4,487)
    Debt Forgiveness                -       17,670            -       17,670
    Amortization of
     Deferred Financing
     Fees and Debt
     Discount                    (743)        (942)      (1,484)      (1,476)
    Interest Expense           (4,008)      (5,200)      (7,700)      (9,756)
       before Income Taxes     (7,131)       7,927      (10,962)       2,345
    Income Taxes                    -            -            -            -
      Income/(Loss) before
       Interest                (7,131)       7,927      (10,962)       2,345
     Interest                    (383)        (775)        (923)      (1,897)
      Net Income/(Loss)    $   (6,748)  $    8,702   $  (10,039)  $    4,242

    Calculation of EBITDA:
    Net income/(loss)
     from Continuing
     Operations            $   (6,748)  $    8,702   $  (10,039)  $    4,242
     interest in Continuing
     Operations                  (383)        (775)        (923)      (1,897)
    Amortization                1,309        1,638        3,042        3,265
    Goodwill Impairment             -           22            -           22
    Loss on Foreign
     Currency Translation
     and Transactions           7,132        4,623        8,020        4,487
    Debt Forgiveness                -      (17,670)           -      (17,670)
    Restructuring               1,291            -        1,743            -
    Amortization of
     Deferred Financing
     Fees and Debt
     Discount                     743          942        1,484        1,476
    Interest Expense            4,008        5,200        7,700        9,756
    EBITDA - U.S. $        $    7,352   $    2,682   $   11,027   $    3,681

    EBITDA - Cdn $         $    8,075   $    3,009   $   12,381   $    4,163

    The full report for the Fund has been filed with the Canadian securities
regulatory authorities and is available on the internet at the System for
Electronic Document Analysis and Retrieval (SEDAR) website (www.sedar.com) and
may be downloaded from the company's website (www.sfgtrust.com).

    Specialty Foods Group Income Fund is an open-ended, limited purpose trust
established under the laws of the Province of Ontario, which indirectly holds
an interest in Specialty Foods Group, Inc. ("SFG"). SFG is a leading
independent U.S. producer and marketer of premium branded and private-label
processed meat products. SFG produces a wide variety of products such as
franks, hams, bacon, luncheon meats, dry sausage and delicatessen meats. These
products are sold to a diverse customer base in the retail (e.g. supermarkets)
and foodservice (e.g., restaurants) sectors. SFG sells products under a number
of leading national and regional brands, such as Nathan's, Swift Premium,
Field, Fischer's, Liguria, and Scott Petersen as well as on a private-label

    This news release contains forward-looking statements. Such statements
involve known and unknown risks, uncertainties and other factors outside of
management's control that could cause actual results to differ materially from
those described in the forward-looking statements. The Fund does not assume
responsibility for the accuracy and completeness of those forward-looking
statements and does not undertake the obligation to publicly revise these
forward-looking statements to reflect subsequent events or circumstances.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    %SEDAR: 00018733E

For further information:

For further information: David Shapland, Executive Vice President and
CFO, Tel: (757) 952-1210, Email: investorrelations@sfgtrust.com, Website:

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