NEWS
BULLETIN
Wednesday, November 14, 2001
CBR Brewing Company, Inc. Reports Operating Results
for the Three Months and Nine Months Ended September 30, 2001
Operations:
Hong Kong, November 14, 2001 - CBR Brewing
Company, Inc. (OTC Bulletin Board: CBRB) (the "Company") announced the results of its operations
for the three months ended September 30, 2001, reporting net sales of $21,149,347 and net income
of $499,292, as compared to net sales of $23,047,338 and a net loss of $944,398 for the three
months ended September 30, 2000. Included in net income for the three months ended September
30, 2001 were restructuring costs (as described below) of $119,043. Net income per common
share (basic and diluted) was $0.06 per common share in 2001 as compared to net loss per common
share (basic and diluted) of $0.12 in 2000. Weighted average common shares were 8,010,013 in
2001 and 2000 (basic and diluted).
For the nine months ended September 30, 2001,
the Company reported net sales of $69,284,789 and a net loss of $3,776,514, as compared to net
sales of $92,662,484 and net income of $168,354 for the nine months ended September 30, 2000.
Included in the net loss for the nine months ended September 30, 2001 was a write-off relating
to the Jilin Lianli Brewery of $478,808 and restructuring costs (as described below) of $2,687,860.
Net loss per common share (basic and diluted) was $0.47 per common share in 2001 as compared to
net income per common share (basic and diluted) of $0.02 in 2000. Weighted average common
shares were 8,010,013 in 2001 and 2000 (basic and diluted).
During the three months ended September 30,
2001 and 2000, the Company sold 39,276 metric tons and 41,430 metric tons of beer, respectively,
a decrease of 5.2%. During the nine months ended September 30, 2001 and 2000, the Company sold
125,105 metric tons and 156,449 metric tons of beer, respectively, a decrease of 20.0%. 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, and a 13.6% increase in the consumption tax on beer produced
in China. The Company expects that these pressures will continue during the remainder of 2001
and 2002.
The Company, through its subsidiaries and affiliates,
is engaged in the production, distribution and marketing of Pabst Blue Ribbon beer in China. As of
September 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.
Restructuring:
Although the Company commenced a restructuring of
its operations and marketing programs in 2001 in an attempt to increase revenues and reduce costs,
there can be no assurances that these efforts will be successful in the long-term. The restructuring
program resulted in the elimination of the positions of 538 employees, most of which were at Zhaoqing
Brewery and Noble Brewery, and the recognition of restructuring costs of $119,043 and $2,687,860 for
the three months and nine months ended September 30, 2001, respectively.
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. In August 2001, Noble China Inc.
publicly reported that it was experiencing certain financial difficulties, and that if such difficulties
continued into the first half of 2002, it would soon face insolvency and be forced to consider severe
alternatives.
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 these developments 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 structure in order to achieve improved coordination of human,
financial, production and marketing activities. However, these companies remain as legally distinct
entities. This pooled management structure is expected to improve efficiency and profitability, and
resulted in the restructuring program described above. Once the pooled management structure has
functioned effectively for a period of time, 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.
During November 2001, the Company's controlling shareholder,
Shenzhen Huaqiang Holdings Limited, announced that it had acquired an 8.9% equity interest in Noble China Inc.
Shenzhen Huaqiang Holdings Limited also announced that it had entered into an agreement to acquire an
additional 6.0% equity interest in Noble China Inc., and intended to further increase its equity interest
in Noble China Inc. to 19.5%.
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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