Weekly News Update

December 7, 2000

Walnut Acres’ Trademark Acquired by Acirca; Company Plans Brand Relaunch

Less than a year after announcing plans to restructure, Walnut Acres CEO Mark Rodriguez on Dec. 1 announced that the company’s trademark has been acquired by Acirca Inc., an Arlington, Va.-based company that focuses on development of organic brands and is led by Rodriguez. Terms of the sale were not disclosed.

According to Rodriguez, Acirca did not purchase Walnut Acres’ former 400-acre farm, which remains the property of the local family that has always owned it, or its manufacturing and distributing facilities. He says the farm grew only 1 percent of the ingredients used in the former Walnut Acres products and rest were shipped to Pennsylvania from all over the country and processed at the plant. ""The inefficiency of this model led to consistent financial losses,"" Rodriguez says. As a result, the Acirca-run Walnut Acres will rely on certified-organic co-packers to manufacture the products closer to its ingredient sources and consumption markets.

In January, the newly positioned Walnut Acres is launching nationwide its new line of ready-to-serve organic soups and plans to introduce line extensions and new category products within the year.

North Castle Buys Fantasia Fresh Juice Co.

Greenwich, Conn.-based North Castle Partners on Dec. 6 announced that it has added Rosemont, Ill.-based Fantasia Fresh Juice Co. to its portfolio of juice companies that includes Saratoga Beverage Group (TOGA) and Naked Juice. Terms of the sale were not disclosed. According to North Castle, Fantasia is the leading fresh juice and premium smoothie brand in the Midwest—the No. 2 region by volume of fruit beverage consumption in the U.S. Fantasia produces, markets and distributes a line of 100-percent natural, minimally processed fruit beverages.

UNFI 1Q01 Results Top Analysts' Estimates

United Natural Foods (UNFI) on Dec. 5 topped analysts’ consensus estimates by a penny with a 1Q01 net income of $3.3 million, or $.18/diluted share vs. a 1Q00 net loss of $1 million or $.06/share. UNFI’s 1Q01 net sales totaled $244.1 million, up 11.8 percent over net sales of $218.5 million recorded in 1Q00. The company attributes its revenue improvements to increased sales to UNFI’s existing customer base, sales to new customers and increased market penetration in its eastern region.

Carole Buyers, VP at Tucker Anthony Capital Markets, raised UNFI’s FY01 EPS estimate by $.01 and its price target from $20 to $22. The firm reiterated its Strong Buy rating. Similarly, U.S. Bancorp Piper Jaffray raised its FY01 EPS estimate for UNFI from $.94 to $.96 and its 12-month price target from $18 to $20. The firm reiterated its Buy rating.

Stock & Financial News:

Green Mountain Coffee (GMCR) on Dec. 4 said that its board of directors has approved a 100 percent common stock dividend, or a two-for-one split. The dividend record date is Dec. 28, and the payment date is Jan. 11, 2001. All stockholders-of-record as of Dec. 28 will receive an additional stock certificate following the payment date of Jan. 11 granting an additional share of stock for each share owned on Dec. 28. The dividend will increase GMCR’s outstanding shares to roughly 6.2 million.

Quigley Corp. (QGLY) on Dec. 1 announced that its board of directors has authorized the repurchase of up to 1 million shares of the company’s common stock based on market conditions. According to QGLY President, Chairman and CEO Guy Quigley, the board believes the current market value of the company’s common stock makes a buy-back ""an action that’s in the best interest of all shareholders."" QGLY’s stock closed Dec. 6 at $.94/share.

According to CBS Marketplace, Drkoop.com (KOOP) on Dec. 6 said that it intends to hold a stockholders’ meeting—if necessary—to vote on a reverse stock split to remain listed on NASDAQ’s composite index. The company recently received notice from NASDAQ that it is on the verge of being delisted because its stock price has been below $1 for 30 trading days. KOOP on closed Dec. 6 at $.44/share.

Adams, Harkness & Hill on Dec. 1 downgraded Whole Foods Market (WFMI) from Strong Buy to Buy.

Galaxy Nutritional Foods (GXY) on Dec. 6 announced that it has revised its 3Q00 net sales expectations from $14.1 million to $13.1 million. According to Galaxy, the revision relates to ""an unforeseen delay by the supplier of the company's new cheese slicing equipment, which Galaxy expected to have installed in late calendar 2000."" The installation of the equipment is now underway, Galaxy says, and it expects the resulting increased capacity to be available in early 2001.

Nutraceutical Intl. Corp. (NUTR) posted a 4Q00 net income of $1 million or $.09/diluted share vs. a 4Q99 net income of $784,000 or $.06/diluted share. For FY00, NUTR reported a net income of $5.6 million or $.46/diluted share vs. a FY99 net income of $5.3 million or $.42/diluted share.

Briefly:

MotherNature.com (MTHR) on Nov. 30 announced that its shareholders have approved a plan to liquidate and dissolve the business. In a company statement, MTHR said it is proceeding with the sale of all of its assets and will make an initial distribution of the proceeds to shareholders. On Nov. 7, MTHR said it expected assets for distribution to shareholders to be worth about $15.8 million or $1/share. There is no word yet when the site will close.

According to Reuters News Service, analysts expect Coca-Cola Co. (KO) to develop its own alternative drink brands in the wake of PepsiCo’s (PEP) recent purchase of Quaker Oats (OAT), owner of Gatorade sports drink, and Norwalk, Conn.-based South Beach Beverage Co. (SoBe). In October, Pepsi upstaged Coke in a bid to acquire SoBe and swept up Quaker Oats just weeks after Coca-Cola walked away from takeover talks with the company.

Heathnet Intl. (HLNT) on Dec. 1 said its board of directors has accepted a proposal to change the company’s name to HLNT Networks Inc. Its ticker symbol will remain the same. Formal approval of corporate name change will take place at the annual general meeting in July 2001, the company said.

A new study by Washington-based Food Marketing Institute (FMI) found that African Americans each make an average of 2.2 trips to the grocery store per week and spend an average $94 per week—three-fourths of which is spent at their primary store. According to the report, ""The African American Grocery Shopper 2000,"" the market is predominately female (94 percent) and urban (65 percent), has a median income of $31,000 and an average household size of 2.9 people. For more information, visit www.fmi.org/pub/.