The Company reported first quarter 2007 net income from discontinued vending operations of $0.3 million, or approximately $0.01 per diluted share. The Company believes that the previously announced discontinuation of its Company-owned vending operations is on track for completion by the end of the third quarter.
"We are very pleased with our first quarter operating performance," said David V. Singer, President and Chief Executive Officer. "Our first quarter net sales were in line with our projections, as we continued to drive solid growth in our core branded product lines and experienced a 5% year-to-year growth in our private label business. As expected, our overall branded business declined by 1% during the first quarter due to the decision to eliminate various unprofitable customers and product lines, which was consistent with our overall Tom's integration strategy. Our profit margins widened significantly during the quarter compared to the first quarter of 2006, reflecting a more profitable mix of revenues and more efficient operations driven by the integration of the Tom's business, improvements in our supply chain and increased efficiencies in our DSD operation. It should also be noted that revisions to our strategy around key marketing initiatives resulted in a delay in our first quarter media spending. This delay in spending resulted in a benefit of approximately $0.03 in diluted earnings per share for the first quarter compared to our original plan; however, we anticipate spending in line with our original plan for the full year."
Mr. Singer further commented, "In the coming quarters we anticipate a continuation of solid cost performance versus last year as we continue to drive improvements through our key initiatives across our DSD system and supply chain. However, our near-term outlook is tempered by the increased cost of grain-based commodities, particularly cooking oils and flour. As we move forward through the remainder of the year, we will continue to execute on our key initiatives and look for ways to mitigate the rising cost of commodities."