28.6.2005: Meldung: Hain Celestial Group Announces Corporate Initiatives

The Hain Celestial Group, Inc., a leading natural and organic food and personal care products company, today announced the final implementation of its previously announced Stock Keeping Unit ("SKU") rationalization program. The Company has identified approximately 500 SKUs, with approximate annual sales of $15 million, that will be discontinued in this program. As a result, Hain Celestial"s results for the Fourth Quarter and Fiscal Year ending June 30, 2005, will include a non-cash charge to operations of approximately $8 million to $11 million for the completion of the SKU rationalization program.

"During the past year, we have streamlined our business to further focus on the highest value opportunities in our core natural and organic business. As a result, we have placed a priority on margin enhancement, leading to the SKU rationalization program, as well as efficiencies through the consolidation of our suppliers and turnkey operations," said Irwin D. Simon, President and Chief Executive Officer. "Implementing these actions now and other future growth initiatives will enable us to concentrate on areas of profitable growth for our business and should enhance our margins. These initiatives will be accretive to earnings."

SKU Rationalization Program

Hain Celestial said that among the SKUs being eliminated from the Company"s active product list are the Carb Fit(TM) low carbohydrate brand of products, which have been impacted by the recent decline in demand for low carbohydrate products across the food sector, as well as other items competitively disadvantaged as a result of small production runs and low volumes of sales. Additionally, the Company will eliminate the duplication of products across several brands resulting from its acquisitions dating back to 2001.

The Company said that over the next 12 to 18 months, the decrease in sales volume of the discontinued products is expected to be offset by the introduction of new products and brand extensions to improve sales and margins and to maintain shelf presence for the Company"s products. During this time, the Company expects the SKU rationalization program will be accretive to earnings, as its benefits are realized through future cost savings of approximately $2 million annually. These benefits include expected increases in the Company"s gross margin by 0.50% with improvements coming from reduced spoilage, warehouse and procurement costs, consolidation of co-packers and other efficiencies. The completion of this program will achieve a reduction in working capital through inventory reductions and an improvement in the Company"s Cash Conversion Cycle.

"The key to our SKU rationalization program is to maintain our valuable space at retail, by replacing discontinued SKUs with new products and faster selling products. This program will also give us the opportunity to consolidate our co-packers," said Irwin Simon.

The non-cash charge announced today results substantially from the cost of the disposal of finished goods and raw ingredients inventories and the disposal of packaging related to the discontinued products. The Company is also in the midst of a consolidation of co-packers, a process that will be enhanced under the SKU rationalization program.

Sale of Certain Non-Core Brands

The Company also announced it had reached an understanding to sell its Kineret and Kosherific? brands with an anticipated closing date of June 30, 2005. Terms of the transaction were not disclosed. The Company is also exploring the sale of other non-core brands, specifically Estee? and Featherweight? medically-directed, weight management products.

Acquisition of College Hill Poultry

Additionally, the Company announced that it has reached an understanding with Pegasus Capital Advisors, LP, a private equity firm, to establish a joint venture, Hain Pure Protein Corporation, to purchase the poultry processing facility assets of College Hill Poultry of Fredericksburg, PA. The terms of the agreement include certain rights to use the Raised Right(TM) brand of natural and organic, free range chicken, which is grown without antibiotics or animal or protein by-products. The Company will control 50.1% of the joint venture, which is expected to close on July 1, 2005. Joseph A. DePippo, an industry veteran and President of College Hill Poultry, will become the President of Hain Pure Protein Corporation.

"We are excited about entering the specialty poultry business with naturally raised chickens, a fast growing category in the natural and organic marketplace," said Mr. Simon. "This investment with Pegasus provides us with the ability to expand both our fresh, refrigerated and frozen chicken offerings to meet the increasing consumer demand for natural foods of all varieties. We are pleased to have a seasoned industry team led by Joe DePippo join us in developing our natural meat product offerings including Raised Right chicken tenders, nuggets and wings under the Hain Pure Protein name and in conjunction with some of our other established brands like Earth"s Best?. Additionally, Dave Wiggins of Pegasus, who will serve on the Board of Hain Pure Protein Corporation, provides us with great industry experience as a veteran of Empire Kosher Poultry and ConAgra."

Accelerated Vesting of Employee Stock Options

The Company also announced that, consistent with the practice of numerous other companies recently, its Board of Directors had approved the acceleration of the vesting of all outstanding stock options held by its employees. The Board"s action will reduce the Company"s compensation charges in Fiscal Years 2006 and 2007. The Board"s action does not affect options held by the Company"s Chief Executive Officer and Chief Financial Officer. This action was taken by the Company"s Board in order to provide an incentive to employees in view of the uncertainty of future equity-based compensation with the pending implementation of Financial Accounting Standards Board Statement No. 123?, "Share-Based Payments." The Company has not previously repriced its stock options, and substantially all of the accelerated 1.2 million unvested options had 13 months remaining to become fully vested. As a result of this action, the Company will record an additional Fourth Quarter non-cash charge of approximately $4 million, and at the current market price of the Company"s stock, the Company expects that the accelerated options will increase the number of shares used in the computation of diluted earnings per share by 0.8 million while reducing future stock option compensation charges.

The Company plans to release its Fourth Quarter and Fiscal Year 2005 results in late August and at that time provide guidance for Fiscal Year 2006.

The Hain Celestial Group

The Hain Celestial Group, headquartered in Melville, NY, is a leading natural and organic beverage, snack, specialty food and personal care products company in North America and Europe. Hain Celestial participates in almost all natural food categories with well-known brands that include Celestial Seasonings?, Terra Chips?, Garden of Eatin"?, Health Valley?, WestSoy?, Earth"s Best?, Arrowhead Mills?, Hain Pure Foods?, Hollywood?, Walnut Acres Organic?, Imagine Foods?, Rice Dream?, Soy Dream?, Rosetto?, Ethnic Gourmet?, Kineret?, Yves Veggie Cuisine?, Lima?, Biomarche?, Grains Noirs?, Natumi?, JASON? and Zia? Natural Skincare. For more information, visit http://www.hain-celestial.com.

Safe Harbor Statement

This press release contains forward-looking statements within and constitutes a "Safe Harbor" statement under the Private Securities Litigation Act of 1995. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve known and unknown risks and uncertainties, which could cause our actual results to differ materially from those described in the forward- looking statements. These risks include but are not limited to general economic and business conditions; the ability to implement business and acquisition strategies, integrate acquisitions, and obtain financing for general corporate purposes; competition, retention of key personnel and compliance with government regulations and other risks detailed from time-to-time in the Company"s reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the fiscal year ended June 30, 2004. The forward-looking statements made in this press release are current as of the date of this press release, and the Company does not undertake any obligation to update forward-looking statements.

Source: The Hain Celestial Group, Inc.
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