Galaxy Nutritional Foods to Remain Independent and Expect Profitable FY2007
26 Abril 2006 - 4:05PM
PR Newswire (US)
Shares to Be Delisted From American Stock Exchange ORLANDO, Fla.,
April 26 /PRNewswire-FirstCall/ -- Galaxy Nutritional Foods, Inc.
(AMEX:GXY), a leading manufacturer and marketer of healthy cheese
alternative and dairy-related products, today announced an update
to its previously announced pursuit of various strategic
alternatives. Several months ago, Galaxy Nutritional Foods
announced that it was exploring a variety of strategic
alternatives, including the potential sale of the Company. The
Company's efforts to pursue these strategic alternatives were
unsuccessful and the Board of Directors today announced an end to
that process and, therefore, that the Company was going to remain
independent. In accordance with this decision, the Company will
pursue a business strategy that is designed to enhance shareholder
value by focusing on the following initiatives: * Increasing gross
margin by optimizing cost of goods in concert with its outsource
manufacturing partner. Efforts to date have allowed gross margin to
improve above the 30% range in February and March 2006, compared
with a gross margin of 23% in the nine months ended December 31,
2005. * Reducing and/or eliminating SKUs that represent low-margin
or unprofitable products. The Company will focus exclusively upon
its popular core brands. While management expects this to result in
a reduction in total revenues, this change is also expected to
result in an increase in profitability and operating cash flow
during FY2007. * A restructuring of overhead costs to a level
consistent with profitability at lower annualized revenues in
FY2007. * A refinancing of the Company's outstanding short-term
debt, which was significantly reduced in the second half of FY2006.
"Galaxy's core brands are very relevant to today's health-conscious
consumer and continue to enjoy strong support in the market," noted
Mike Broll, Chief Executive Officer of Galaxy Nutritional Foods,
Inc. "We have regained a laser-like focus on growing the sales of
these brands, while eliminating a number of private-label and
non-core products that generate little or no profits. Initial
results from this strategy are already evident, as illustrated by
the fact that our Company was cash-flow-positive and generated an
operating profit (excluding non-recurring and non-cash items) in
February and March. Based upon information currently available to
management, we expect Galaxy to be profitable and
cash-flow-positive for the fiscal year that started April 1, 2006."
"No longer burdened with the high fixed costs of a manufacturing
facility, and with the price of our primary raw material (casein)
beginning to ease in recent months, I am confident that Galaxy will
regain credibility with investors, customers and employees as we
execute our operating plan during Fiscal 2007," concluded Broll.
The Company also announced that on April 20, 2006, it received a
letter from the American Stock Exchange ("AMEX"), notifying the
Company that it was not in compliance with AMEX's continued listing
requirements and that AMEX intends to proceed with the filing of an
application with the Securities and Exchange Commission ("SEC") to
strike the common stock from listing and registration on AMEX. The
Company does not intend to appeal this decision by AMEX. The AMEX
letter dated April 20, 2006, states, in part: "By letters dated
September 29, 2005 and October 12, 2005, AMEX advised Galaxy that
the Company was not in compliance with: (i) Section 1003(a)(i) of
the Company Guide with shareholders' equity of less than $2 million
and losses from continuing operations and/or net losses in two out
of its three most recent fiscal years; (ii) Section 1003(a)(ii) of
the Company Guide with shareholders' equity of less than $4 million
and/or net losses in three out of four most recent fiscal years;
(iii) Section 1003(a)(iv) of the Company Guide in that Galaxy has
sustained losses which are so substantial in relation to its
overall operations or its existing financial resources, or its
financial condition has become so impaired that it appears
questionable, in the opinion of the Exchange, as to whether the
Company will be able to continue operations and/or meet its
obligations as they mature. On October 28, 2005, pursuant to
Section 1009 of the Company Guide, the Company submitted its plan
of compliance to the Exchange (the "Plan"). On December 16, 2005,
the Exchange notified the Company that it accepted the Plan and
granted the Company an extension until March 29, 2007 to regain
compliance with the continued listing standards (the "Plan
Period"). The letter also advised the Company that the Exchange
Staff would initiate delisting proceedings if the Company failed to
make progress consistent with the Plan during the Plan Period. A
review of the Company's most recent financials and other pertinent
information, as well as discussions with Galaxy representatives,
indicates that the Company has not shown progress consistent with
the Plan. In addition, the Company is also not in compliance with
Section 1003(f)(iv) of the Company Guide, which states that the
Exchange will normally consider suspending dealings in or removing
from the list, a company that fails, or refuses to pay, when due,
any applicable listing fees established by the Exchange. In this
regard, Staff notes that the Company has an outstanding payable to
the Exchange of $40,448.26 related to a Listing of Additional
Shares Application dated July 12, 2005, as amended September 20,
2005 and approved by the Exchange on September 22, 2005. Based upon
the foregoing, the Exchange Staff has concluded that it is
appropriate to initiate immediate delisting proceedings at this
time." The letter states that the determination by AMEX will become
final on April 27, 2006. AMEX will then suspend trading in the
Company's common stock and will submit an application to the
Securities and Exchange Commission to strike the Company's common
stock from listing and registration on AMEX. Based upon information
provided by AMEX, it is currently anticipated that the Company's
shares will be delisted from AMEX effective on or prior to May 4,
2006. Upon the delisting of the Company's shares from AMEX,
management believes, based upon information provided by AMEX, that
the Company's common stock will be quoted on the OTC Bulletin
Board. About Galaxy Nutritional Foods, Inc Galaxy Nutritional Foods
is the leading producer of health-promoting plant-based dairy and
dairy-related alternatives for the retail and foodservice markets.
An exclusive, new and technologically advanced, safer "hot process"
is used to produce these phytonutrient-enriched products, made from
nature's best grains -- soy, rice and oats. Veggie products are low
fat and fat free (saturated fat and trans-fatty acid free),
cholesterol and lactose free, are growth hormone and antibiotic
free, and have more calcium, vitamins and other minerals than
conventional dairy products. Because they are made with plant
proteins, the products are more environmentally friendly and
economically efficient than dairy products derived solely from
animal proteins. Galaxy's products are part of the healthy and
natural foods category, the fastest growing segment of the retail
food market. Galaxy brand names include: Galaxy Nutritional Foods;
Veggie; Veggie Nature's Alternative; Veggie Slices; Soyco; Soymage;
Wholesome Valley; Lite Bakery; and Galaxy Nutritional Foods Smart
Choice Cheese Products. For more information, please visit Galaxy's
website at: http://www.galaxyfoods.com/ . Galaxy Nutritional Foods,
Inc. is headquartered in Orlando, Florida, and its common stock is
listed on the American Stock Exchange under the ticker symbol
"GXY". THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING" STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. SUCH FORWARD- LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES, OR OTHER FACTORS WHICH MAY CAUSE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THOSE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE
ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS
OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT UNANTICIPATED
EVENTS OR DEVELOPMENTS. DATASOURCE: Galaxy Nutritional Foods
CONTACT: Dawn M. Robert, Investor Relations, Galaxy Nutritional
Foods, Inc., +1-407-854-0433 Web site: http://www.galaxyfoods.com/
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