NEWS
BULLETIN
Thursday, Aug 16, 2001
CBR Brewing Company, Inc. Reports Operating Results
for the Three Months and Six Months Ended June 30, 2001
Hong Kong, August 16, 2001 - CBR Brewing
Company, Inc. (OTC Bulletin Board: CBRB) (the "Company") announced the results of its
operations for the three months ended June 30, 2001, reporting net sales of $22,536,947
and a net loss of $3,262,181, as compared to net sales of $33,834,563 and net income of
$539,886 for the three months ended June 30, 2000. Included in the net loss for the three
months ended June 30, 2001 was a write-off relating to the Jilin Lianli Brewery of
$147,483 and restructuring costs (as described below) of $2,568,817. Net loss per common
share (basic and diluted) was $0.41 per common share in 2001 as compared to net income
per common share (basic and diluted) of $0.07 in 2000. Weighted average common shares
were 8,010,013 in 2001 and 2000 (basic and diluted).
For the six months ended June 30, 2001,
the Company reported net sales of $48,135,442 and a net loss of $4,275,806, as compared to
net sales of $69,615,145 and net income of $1,112,752 for the six months ended June 30,
2000. Included in the net loss for the six months ended June 30, 2001 was a write-off
relating to the Jilin Lianli Brewery of $478,808 and restructuring costs (as described
below) of $2,568,817. Net loss per common share (basic and diluted) was $0.53 per common
share in 2001 as compared to net income per common share (basic and diluted) of $0.14 in
2000. Weighted average common shares were 8,010,013 in 2001 and 2000
(basic and diluted).
During the three months ended June 30,
2001 and 2000, the Company sold 42,885 metric tons and 56,625 metric tons of beer,
respectively, a decrease of 24.3%. During the six months ended June 30, 2001 and 2000,
the Company sold 85,829 metric tons and 115,019 metric tons of beer, respectively, a
decrease of 25.4%. Beer sales decreased in 2001 as compared to 2000 as a result of a
decrease in volume of beer sold, reflecting a weakening in consumer demand for foreign
branded premium beers in China and increasing competition from local brands of beer.
The Company expects that these pressures will continue over the near-term. Although the
Company has commenced a restructuring of its operations and marketing programs in an
attempt to increase revenues and reduce costs, there can be no assurances that the Company
will be successful in this regard.
In May 2001, the Company implemented a
restructuring program that eliminated the positions of 504 employees, most of which were
at Zhaoqing Brewery and Noble Brewery, as a result of which the Company recorded
restructuring costs of $2,568,817 for the three months and six months ended June 30,
2001. The Company expects to eliminate the positions of another 80 to 90 employees in
the near future at a cost of approximately $400,000.
The Company, through its subsidiaries
and affiliates, is engaged in the production, distribution and marketing of Pabst Blue
Ribbon beer in China. As of June 30, 2001, the Company owned effective interests of 60%,
24% and 33% in three brewing facilities in China producing Pabst Blue Ribbon beer that
are managed by the Company. The Company produces Pabst Blue Ribbon beer under a
sublicense agreement with Guangdong Blue Ribbon Group Co. Ltd., an affiliated company,
which expires concurrently with the expiration of the existing master license agreement
between Guangdong Blue Ribbon Group Co. Ltd. and Pabst Brewing Company on November 6,
2003.
Noble China Inc. is a public company
listed on the Toronto Stock Exchange that is the 60% shareholder of a Pabst Blue Ribbon
brewing facility in Zhaoqing, China in which the Company has a 24% net equity interest.
Noble China Inc. has publicly reported that in May 1999 it entered into a license
agreement with Pabst Brewing Company granting it the right to utilize the Pabst Blue
Ribbon trademarks in connection with the production, promotion, distribution and sale of
beer in China for 30 years commencing in November 2003. Management of the Company has
met with representatives of Noble China Inc. in an attempt to explore a potential
relationship subsequent to November 2003. Management is currently unable to predict the
effect that this development may have on the Company's operations subsequent to November
2003. However, the inability of the Company to obtain a sub-license from Noble China
Inc. on acceptable terms and conditions that would enable the Company to continue to
produce and distribute Pabst Blue Ribbon beer in China would have a material adverse
effect on the Company's future results of operations, financial position and cash
flows.
During December 2000, the Company and
Noble China Inc. signed a memorandum pursuant to which a management committee was
established to evaluate the potential to coordinate and enhance the operations of the
entities in China controlled by the Company and Noble China Inc. that produce, distribute
and market Pabst Blue Ribbon beer. Effective January 1, 2001, the management, marketing,
production and operations of each company's respective operations were pooled together
under a newly-created management entity named "Blue Ribbon Enterprises" in order to
achieve improved coordination of human, financial, production and marketing activities.
However, these entities will remain as legally distinct entities. This pooled management
structure is expected to achieve greater efficiency and improved operating profitability.
After the pooled management structure has begun to function smoothly, it is expected that
the management committee will commence a study to evaluate the formation of a new unified
company to produce, distribute and market Pabst Blue Ribbon beer in
China.
Cautionary Statement Pursuant to Safe
Harbor Provisions of the Private Securities Litigation Reform Act of
1995:
This news release contains "forward-looking"
statements within the meaning of the Federal securities laws. These forward-looking
statements include, among others, statements concerning the Company expectations
regarding sales trends, gross margin trends, operating costs, the availability of funds
to finance capital expenditures and operations, facility expansion plans, and other
statements of expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical facts.
The forward-looking statements in this news release are subject to risks and
uncertainties that could cause actual results to differ materially from those results
expressed in or implied by the statements contained herein.
For further information,
contact investor relations at (310) 274-5172.
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