Wilton, Connecticut, March 14, 2008 - Drinks Americas Holdings, Ltd. (the "Company"), a leading owner, developer and marketer of premium beverages, today announced financial results for its third quarter and nine months ended January 31, 2008.
J. Patrick Kenny, CEO of the Company, stated, "As previously announced, much of the sales and product introductions that were anticipated to occur in our third quarter are just now coming to fruition. One cannot stress too strongly the number of milestones that occurred in our third quarter that have already begun to play a substantial role in the development of the proprietary products that are creating great value for our shareholders. The partnership among Dr. Dre, Interscope Geffen A&M, and the Company was completed, with three Dre products -- a cognac, a line of sparkling vodkas, and tequila -- already moving toward completion in terms of formulation, design and packaging, and selection of production partners. Trump Premium Vodka Flavors were perfected and are now arriving presold in the market. Logistical and regulatory issues normal in any international expansion initiative, were addressed to accelerate sales of Trump Super Premium Vodka into Russia. We completed a $3 million equity financing upon favorable terms, generating the additional capital necessary to build inventory and implement our business plan. Benefiting from our overall momentum, our Willie Nelson's Old Whiskey River Bourbon (including our new 1.75 liters), our Aquila Tequila (including our new Aguila Silver and Anejo), and our Damiana Liqueur grew in both volume and distribution. In order to reduce costs and mitigate the impact of the weakness of the U.S. dollar, we began to transition our glass production to China. To increase the profitability of our Newman's Own Lightly Sparkling Fruit Drinks, we completed designs to reconfigure the packaging."
Mr. Kenny further commented, "Our new product introductions, the sell-through and ongoing reorders of Trump Vodka, the introduction of Trump Premium Flavors, the positive growth trend of our bourbon and tequila portfolio, and a continuation of current trends of distributor and retailer reorders for our products, will all continue to contribute to our future revenues. The Company's unique ability to partner with iconic figures and create quality products with built-in marketing components will lead to higher margins and global footprints, with substantial brand and trademark value."
Comparison of Three Months Ended January 31, 2008 to January 31, 2007
-- Net sales were $0.6 million for the third quarter 2008, compared to
net sales of $2.7 million for the third quarter 2007. Third quarter fiscal
2007 reflected the pipeline inventory fill from our national launch of
Trump Super Premium Vodka.
-- Net dollar sales for the third quarter 2008 were comprised 42 percent
from Trump Vodka sales, 23 percent from Old Whiskey River Bourbon, 10
percent from Aquila Tequila, 7 percent from Damiana Liqueur, 4 percent from
our international wines, and 14 percent from Newman's Own Sparkling Fruit
Drinks and Sparkling Waters. Net dollar sales for third quarter 2007 were
comprised 85 percent from Trump Vodka, 5 percent from Old Whiskey River
Bourbon, 2 percent from international wines, 1 percent from our other
spirits products, and 7 percent from Newman's Own products.
-- Gross margin was 38.6% for the third quarter of this year, compared
to 45.8% for the same period last year. Gross margin was influenced by the
weakening dollar which affected our cost for glass purchased in Europe, and
our aggressive marketing and sampling program for Trump Super Premium
Vodka.
-- Selling, General and Administrative Expenses were $1.8 million for
the third quarter 2008, compared to $4.8 million for the same period last
year representing a 62% reduction. SG&A for the third quarter 2008 accrued
director's fees of $225,000.
-- Interest expense was reduced by $305,000 based on long term debt
elimination. Third quarter of 2008 interest expense was $28,000, compared
to $333,000 for the same period of the prior year.
-- Net loss for the quarter was $1.6 million, or $0.02 per share,
compared to a net loss of $5.6 million, or $0.08 per share, for the same
period last year.
Comparison of Nine Months Ended January 31, 2008 to January 31, 2007
-- Net Sales were $3.3 million for the nine months ending January 31,
2008 compared to net sales of $5.3 million for the nine months ended
January 31, 2007 with the prior year including the introduction and
pipeline inventory fill of Trump Vodka.
-- Net dollar sales for the nine months ended January 31, 2008 were
comprised 54 percent from Trump Vodka sales, 11 percent from Old Whiskey
River Bourbon, 3 percent from Aquila Tequila, 4 percent from Damiana
Liqueur, 11 percent from our international wines, and 17 percent from
Newman's Own Sparkling Fruit Drinks and Sparkling Waters. Net sales for
the nine months ended January 31, 2007 were comprised 81 percent from Trump
Vodka, 5 percent from Old Whiskey River, 2 percent from Damiana Liqueur, 6
percent from international wines, and 6 percent from Newman's Own products.
-- For the nine months ended January 31, 2008, net sales of Old Whiskey
River increased +39 percent over the same period of the prior year
($363,000 compared to $262,000); net sales of our international wines
increased +19 percent ($363,000 compared to $306,000); net sales of our
Damiana Liqueur increased +18 percent ($126,000 compared to $107,000);
Aguila Tequila increased +321 percent ($90,000 compared to $21,000); and
Newman's Own products increased +80 percent ($586,000 compared to
$326,000). Net sales of Trump Vodka were $1.8 million for first nine
months of this year compared to $4.2 million for the first nine months of
2007. The prior year was influenced by the launch and pipeline fill of
distributor inventory of Trump Vodka.
-- Gross margin was 38.7 percent for the first nine months of this
fiscal year, compared to 44.6 percent for the same period last year. The
decline in gross margin was influenced by alcoholic and non-alcoholic sales
mix, the weakening dollar against the Euro, prior European glass
purchasing, and aggressive marketing/sampling for Trump Super Premium
Vodka.
-- Selling, General and Administrative Expenses were $5.8 million for
the nine months ended January 31, 2008, compared to $7.5 million for the
same period last year, a reduction of 23%.
-- Interest expense savings were $565,000 versus the same period of last
year. Interest expense was $144,000 for the first nine months of fiscal
2008 compared to $709,000 for the same period of the prior year.
-- Net loss for the nine months was $4.7 million, or $0.06 per share,
compared to a net loss of $7.6 million, or $0.12 per share, for the same
period last year.
Mr. Kenny concluded, "We clearly understand the economics of our business. We will manage our plan so that our SG&A will continue to contract. On a per case basis, our cost of doing business, our cost of glass, other components and production, have been made more efficient. Through our current and future partnerships, with our proven Iconic business model, we will naturally develop products with their own marketing components. We will compete in higher margin categories. Through Interscope and our other partners our products will enjoy untold levels of media and marketing support that will not require large cash outlays. The growth of our international footprint has been made easier as news of our growing consumer acceptance in Russia has brought our brands to the attention of other large global markets and their distributors. We believe we will continue, in a very competitive industry, with exciting and viable products to quickly build real asset value for our shareholders."
About Drinks Americas
Drinks Americas develops, owns, markets, and nationally distributes alcoholic and non-alcoholic premium beverages associated with renowned icon celebrities. Drinks Americas' portfolio of premium alcoholic beverages includes Trump Super Premium Vodka and Willie Nelson's Old Whiskey River Bourbon. The Company's non-alcoholic brands include the distribution of Paul Newman's Own Lightly Sparkling Fruit Juice Drinks and Flavored Waters.
Other products owned and distributed by Drinks Americas include award-winning Damiana Liqueur and Aguila Tequila from Mexico and Cohete Rum Guarana from Panama. Damiana, Old Whiskey River, Aguila Tequila and Cohete Rum are Gold and Silver Medal award winners respectively from the International Beverage Tasting Institute and the San Francisco International Wine and Spirits Competition.
Drinks Americas was founded in 2004 by J. Patrick Kenny, a leading expert in beverage sales and marketing. Mr. Kenny developed his industry expertise in a variety of management positions at the world's leading beverage companies, including Joseph E. Seagram and Sons and The Coca-Cola Company. He has also acted as advisor to several Fortune 500 beverage marketing companies, and has participated in several beverage industry transactions.
DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES
CONSOLIDATED BALANCE SHEETS (Unaudited)
AS OF January 31, 2008
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 1,241
Accounts receivable, net of allowance 545
Inventories 2,091
Other current assets 684
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Total current assets 4,561
Property and Equipment, at cost less accumulated
depreciation and amortization 99
Investment in Equity Investees 62
Intangible assets, net of accumulated amortization 805
Deferred loan costs, net 28
Other 685
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$ 6,240
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,115
Notes and loans payable 877
Loans payable-related party 304
Accrued expenses 1,432
Amounts received for shares to be issued 20
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Total current liabilities 4,748
Shareholders' equity:
Preferred Stock, $0.001 par value; 1,000,000 shares
authorized; issued and outstanding 11,000 shares -
Common Stock, $0.001 par value; 100,000,000 shares authorized:
Issued and outstanding 80,429,437 share 80
Additional paid-in capital 32,332
Accumulated deficit (30,920)
-------
1,492
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$ 6,240
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DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except for share amounts)
Nine months ended Three months ended
31-Jan 31-Jan
====================== ======================
2008 2007 2008 2007
========== ========== ========== ==========
Net sales $ 3,344 $ 5,259 $ 561 $ 2,681
Cost of sales 2,056 2,913 343 1,451
---------- ---------- ---------- ----------
Gross margin 1,288 2,346 218 1,230
Selling, general &
administrative expenses 5,817 7,522 1,812 4,777
---------- ---------- ---------- ----------
Loss before other income
(expense): (4,529) (5,176) (1,594) (3,547)
Other income (expense):
Interest (144) (709) (28) (333)
Loss on Extinguishment
of Debt - (1,652) - (1,652)
Other 2 (19) 2 (20)
---------- ---------- ---------- ----------
Net Other Expense -142 -2,380 -26 -2,005
---------- ---------- ---------- ----------
Net Loss ($ 4,671) ($ 7,556) ($ 1,620) ($ 5,552)
========== ========== ========== ==========
Net loss per share
(Basic and Diluted) ($ 0.06) ($ 0.12) ($ 0.02) ($ 0.08)
========== ========== ========== ==========
Weighted average number
of common shares
(basic and diluted) 79,772,098 64,837,784 80,119,931 69,708,784
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