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NEWS
RELEASE
LEADING BRANDS, INC. ANNOUNCES
Q2 EPS $0.03 US vs. $0.02 US last year
Record Q2 and YTD Net Income Before Income Taxes
YTD $0.13 US vs. loss of ($0.02 US) last year
During Q2 the Company generated net income of $512,000 US [$682,000 Cdn] or $0.03 US [$0.04 Cdn] per share versus $301,000 US [$414,000 Cdn] or $0.02 US [$0.03 Cdn] in the same quarter last year. Net income before taxes for the quarter was $1,143,000 US [$1,521,000 Cdn] or $0.08 US [$0.10 Cdn] per share compared to a net loss before taxes of $361,000 US [$497,000 Cdn] or $0.02 US [$0.03 Cdn] in Q2 2003. The Company has recorded income tax expense of $631,000US [$839,000 Cdn] in this quarter. The income tax expense is a non-cash item in this period as the Company has tax loss carry-forwards sufficient to offset that expense. In prior comparison periods the Company was required to record income tax assets to reflect those tax loss carry forwards which correspondingly increased net income by $662,000 in the same quarter of the prior year. The Company recorded non-cash stock-based compensation expenses of $155,000 US [$206,000 Cdn] during Q2.
Revenues for the quarter were $11,073,000 US [$14,738,000 Cdn] compared to $12,481,000US [$17,178,000 Cdn] in Q2 2003. The reduction in revenue principally resulted from (1) the discontinuance of the Little Debbie�s� snack cake distribution business; (2) change in mix of co-pack products sold that include the Company supplying raw materials; and (3) lower sales volumes in the United States due to the Company re-building its sales efforts there. The Company also recorded other income of $667,000 US [$887,000 Cdn] from the settlement of certain disputes and resultant contract cancellations during the quarter.
For the first six months of its 2004 fiscal year ended February 28, 2005, the Company reported net income of $909,000 US [$1,216,000 Cdn] or $0.06 US [$0.08 Cdn] per share versus $308,000 US [$424,000 Cdn] or $0.02 US [$0.03 Cdn] during the same period last year. Net income before taxes year to date is $1,911,000 US [$2,556,000 Cdn] or $0.13 US [$0.17 Cdn] per share compared to a net loss before taxes of $354,000 US [$487,000 Cdn] or $0.02 US [$0.03 Cdn] for the first half of fiscal 2003. Revenues for the period were $20,413,000 US [$27,333,000 Cdn] versus $24,767,000 US [$34,865,000 Cdn] a year ago.
Leading Brands Chairman and CEO Ralph McRae said: �If anyone was looking for further evidence of our operational turnaround, I believe they now have it. Given that we have had to record income tax assets last year and a corresponding income tax expense this year � all the while not paying any cash income taxes � makes the before tax number more representative of the turn in the Company�s fortunes. We are very pleased to have been able to increase our year to date net income before taxes by more than $3,000,000 Cdn. Our team should be proud of what they accomplished.�
Mr. McRae continued: �We have seen dramatic cost savings and margin improvements in virtually all areas of our company, but most significantly in our US sales division and bottling plants. Moving forward, it is critical for us to maintain this focus on profitability while expanding our business.�
In conjunction with this release, you are invited to listen to the Company�s conference call, which will be held on Monday, September 20, 2004, at 8:00 am, Pacific Time, (11:00 am Eastern Time), with Ralph McRae, Chairman and CEO of Leading Brands, Inc.
TO PARTICIPATE IN THE CONFERENCE CALL PLEASE DIAL-IN:
1-416-641-6679
The Company will continue to provide operational updates in its monthly newsletter on the first of most months, posted at www.LBIX.com.�
(TABLES FOLLOW)
LEADING BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS) AND DEFICIT
(Unaudited)
(EXPRESSED IN CANADIAN DOLLARS)
Three months Three months Six months Six months
ending August ending August ending August ending August
31, 2004 31, 2003 31, 2004 31, 2003
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Sales $ 14,737,556 $ 17,178,255 $ 27,332,917 $ 34,864,642
Expenses (Income)
Cost of sales 10,271,357 12,950,913 18,804,446 26,286,851
Operations, selling, general
& administration expenses 3,427,664 4,207,622 6,045,806 8,019,226
Depreciation and amortization 305,329 391,399 607,504 805,764
Interest expense 99,464 125,282 203,642 240,099
Other income from settlements and sale of assets (887,481) - (884,965) -
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Total Expenses 13,216,333 17,675,216 24,776,433 35,351,940
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Net income (loss) before taxes 1,521,223 (496,961) 2,556,484 (487,298)
Income tax - current - - (405) -
Income tax - provision future income tax (839,233) 911,030 (1,339,590) 911,030
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Net Income 681,990 414,069 1,216,489 423,732
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Deficit, beginning of period, as previously reported (26,318,594) (23,203,201) (25,735,980) (23,212,864)
Adjustment for change in accounting for stock-based
compensation - - (1,117,113) -
Accumulated deficit, beginning of period, as restated (26,318,594) (23,203,201) (26,853,093) (23,212,864)
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Deficit, end of period ($ 25,636,604) ($ 22,789,132) ($ 25,636,604) ($ 22,789,132)
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EARNINGS PER SHARE
Basic $ 0.04 $ 0.03 $ 0.08 $ 0.03
Fully diluted $ 0.04 $ 0.03 $ 0.08 $ 0.03
Weighted average number of shares outstanding 15,040,169 14,962,955 15,040,169 14,861,053
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LEADING BRANDS, INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS) AND DEFICIT
(Unaudited)
(EXPRESSED IN UNITED STATES DOLLARS)
Three months Three months Six months Six months
ending August ending August ending August ending August
31, 2004 31, 2003 31, 2004 31, 2003
---------------------------------------------------------------------------------------------------------------------
Sales $ 11,073,376 $ 12,481,475 $ 20,412,958 $ 24,767,102
Expenses (Income)
Cost of sales 7,717,602 9,409,949 14,044,971 18,673,591
Operations, selling, general
& administration expenses 2,575,448 3,057,198 4,516,826 5,704,881
Depreciation and amortization 229,416 284,385 453,481 572,219
Interest expense 74,734 91,028 151,982 170,784
Other income from settlements and sale of assets (666,828) - (664,962) -
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Total Expenses 9,930,372 12,842,560 18,502,298 25,121,475
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Net income (loss) before taxes 1,143,004 (361,085) 1,910,660 (354,373)
Income tax - current - - (300) -
Income tax - provision future income tax (630,575) 661,942 (1,001,595) 661,942
---------------------------------------------------------------
Net Income 512,429 300,857 908,765 307,569
---------------------------------------------------------------
Deficit, beginning of period, as previously reported (17,964,065) (15,669,849) (17,524,051) (15,676,561)
Adjustment for change in accounting for stock-based
compensation - - (836,350) -
Accumulated deficit, beginning of period, as restated (17,964,065) (15,669,849) (18,360,401) (15,676,561)
---------------------------------------------------------------
Deficit, end of period ($ 17,451,636) ($ 15,368,992) ($ 17,451,636) ($ 15,368,992)
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EARNINGS PER SHARE
Basic $ 0.03 $ 0.02 $ 0.06 $ 0.02
Fully diluted $ 0.03 $ 0.02 $ 0.06 $ 0.02
Weighted average number of shares outstanding 15,040,169 14,962,955 15,040,169 14,861,053
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About Leading Brands, Inc.
Leading Brands, Inc. (NASDAQ: LBIX) is North America's only fully integrated premium beverage company. The Company's unique Integrated Distribution System™(IDS)™ offers turnkey, one-stop shopping to food and beverage brand owners, including product development, manufacturing, distribution, sales, marketing and licensing. In addition, Leading Brands produces their own line of beverages such as TREK�, Soy2O�, Pez� 100% Juices�, Country Harvest� Juices, Caesar�s� Bloody Caesar Cocktails, Cool Canadian� Water, Infinity� and Brand X Originals�.
Safe Harbor.Disclaimer: The Company relies upon the Safe Harbor Laws of 1933, 1934, and 1995 for all public news releases, newsletters and other statements. Statements, which are not historical facts, are forward-looking statements. The Company, through its management, makes forward-looking public statements concerning its expected future operations, performance and other developments. Such forward-looking statements are necessarily estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. It is impossible to identify all such factors. Factors which could cause actual results to differ materially from those estimated by the Company include, but are not limited to, general economic conditions, weather conditions, changing beverage consumption trends, pricing, availability of raw materials, economic uncertainties (including currency exchange rates), government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition and other factors which may be identified from time to time in the Company's public announcement.
We Build Brands™
©2004 Leading Brands, Inc.
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