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Overhill Farms Reports Revenues of $47.6 Million and Net Income of Three Cents per Share for Second Quarter


Overhill Farms Reports Revenues of $47.6 Million and Net Income of Three Cents per Share for Second Quarter

LOS ANGELES, CA -- (Marketwired) -- 05/15/13 -- Overhill Farms, Inc. (NYSE MKT: OFI) today reported net income of $515,773, or $0.03 per basic and diluted common share, on net revenues of $47.6 million, for the second quarter of fiscal 2013, which ended March 31, 2013. This compares to net income of $974,401, or $0.06 per basic and diluted common share, on net revenues of $50.2 million, for the second quarter of fiscal 2012, which ended April 1, 2012.

In a separate announcement, the Company stated today that it has entered into a definitive merger agreement for Bellisio Foods, Inc. to acquire Overhill Farms in a merger transaction valued at approximately $80.9 million.

For the second quarter of fiscal year 2013, net revenues decreased $2.6 million (5.2%) to $47.6 million from $50.2 million for the second quarter of fiscal year 2012 due primarily to lower sales volume in the foodservice category.

By customer category, retail net revenues category increased $633,000 (1.9%) to $32.9 million for the second quarter of fiscal year 2013 from $32.3 million for the second quarter of fiscal year 2012 due primarily to increased sales of our portion of Boston Market products of $3.4 million, partially offset by reduced sales to Jenny Craig, Inc., Safeway Inc. and other retail accounts of $1.2 million, and $347,000 and $1.2 million, respectively. (The Company has a co-manufacturing, sales and distribution agreement with Bellisio Foods, Inc., for the Boston Market line.)

Foodservice net revenues, including airline revenues, decreased $3.2 million (17.9%) to $14.7 million for the second quarter of fiscal year 2013 from $17.9 million for the second quarter of fiscal year 2012 due primarily to decreased sales to Panda Restaurant Group, Inc. of $2.5 million.

Gross profit for the second quarter of fiscal year 2013 was $4.8 million, compared to $4.7 million for the second quarter of fiscal year 2012.

Gross margin increased to 10.2% for the second quarter of fiscal year 2013, from 9.4% for the second quarter of fiscal year 2012, largely due to more favorable commodity prices and favorable manufacturing variances partially offset by increased freight and storage expenses.

Selling, general and administrative expenses increased by $896,000 to $4.0 million (8.4% of net revenues) for the second quarter of fiscal year 2013, from $3.1 million (6.2% of net revenues) for the second quarter of fiscal year 2012, due primarily to higher brokerage and royalty expenses related to Boston Market products.

Operating income for the second quarter of fiscal year 2013 was $863,000 (1.8% of net revenues), down $759,000 compared to operating income of $1.6 million (3.2% of net revenues) for the second quarter of fiscal year 2012, due primarily to higher SG&A expenses as noted above.

For the first six months of fiscal year 2013, net revenues decreased $241,000 (0.2%) to $97.5 million from $97.7 million for the first six months of fiscal year 2012, due to a decrease in retail net revenues partially offset by an increase in foodservice net revenues.

Operating income for the first six months of fiscal year 2013 was $1.4 million (1.4% of net revenues), compared to $3.5 million (3.6% of net revenues) for the first six months of fiscal year 2012, due primarily to lower gross profit dollars and increased SG&A expenses.

Net income for the first six months of fiscal year 2013 was $847,000 or $0.05 per basic and diluted share compared to $2.1 million or $0.13 per basic and diluted share for the first six months of fiscal year 2012 due to lower operating income partially offset by a decrease in income tax expense of $755,000.

About Overhill Farms

Overhill Farms, Inc. (www.OverhillFarms.com) is a value-added manufacturer of custom high quality prepared frozen foods for branded retail, private label foodservice and airline customers. Its product line includes entrees, plated meals, bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish specialties, as well as organic and vegetarian offerings. The Company's capabilities give its customers a one-stop solution for new product development, precise replication of existing recipes, product manufacturing and packaging. Its customers include prominent nationally recognized names such as Panda Restaurant Group, Inc., Jenny Craig, Inc., Safeway Inc., Target Corporation, Pinnacle Foods Group LLC, and American Airlines, Inc. The Company also sells frozen foods under the Boston Market brand, under exclusive license with Boston Market Corporation.

This news release contains disclosures that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs and include, but are not limited to, statements about the Company's operations and financial performance and condition and statements regarding expectations of continued or increased sales volumes and revenues, margins, profitability, production efficiencies and expansions, anticipated freight and storage costs, cash flows and growth, anticipated amounts and timing of growth in the Company's customer base and business in the foodservice and retail market sectors, revenue growth from new customers, expectations concerning the Company's Boston Market line, contemplated or potential acquisitions or similar transactions and general economic pressures. For this purpose, statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as "continue," "efforts," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "strategy," "will," "potential," "may," "goal," "target," "prospects," "optimistic," "confident," "likely," "probable," "hope," "should," "growth," "opportunities" or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), on-going business strategies or prospects, and possible future company actions, which may be provided by management, are also forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: the Company's and other parties' ability to satisfy conditions precedent to proposed transactions, including, without limitation, obtaining any applicable regulatory and stockholder approvals; the impact of competitive products and pricing; fulfillment by suppliers of existing raw material contracts; market conditions that may affect the costs and/or availability of raw materials and the Company's ability to obtain favorable long-term purchase commitments for raw materials, and of fuels, energy, logistics and labor as well as the market for the Company's products, including customers' ability to pay and consumer demand; changes in business environment, including actions of competitors and changes in customer preferences, as well as disruptions to customers' businesses; certifications obtained by competitors; seasonality in the retail category; loss of key customers due to competitive environment or production being moved in-house by customers; natural disasters that can impact, among other things, costs of fuel and raw materials; the occurrence of acts of terrorism, such as the events of September 11, 2001, or acts of war; changes in governmental laws and regulations; change in control due to takeover or other significant changes in ownership; financial viability and resulting effect on revenues and collectability of accounts receivable of customers during deep recessionary periods; ability to obtain additional financing as and when needed, and rising costs of credit that may be associated with new borrowings; voluntary or government-mandated food recalls; and other factors as may be discussed in the Company's Annual Report on Form 10-K for the year ended September 30, 2012, Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, and other reports filed with the Securities and Exchange Commission.


 
                                                                            
                                                                            
                            OVERHILL FARMS, INC.                            
                                                                            
                      CONDENSED SUMMARY OF OPERATIONS                       
                                (Unaudited)                                 
                                                                            
                                                    For the Quarter Ended   
                                                 -------------------------- 
                                                   March 31,     April 1,   
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Net revenues                                     $ 47,590,295  $ 50,201,781 
Cost of sales                                      42,749,502    45,498,635 
                                                 ------------  ------------ 
Gross profit                                        4,840,793     4,703,146 
Selling, general and administrative expenses        3,977,367     3,081,145 
                                                 ------------  ------------ 
Operating income                                      863,426     1,622,001 
Total interest expense                                (61,913)      (77,784)
                                                 ------------  ------------ 
Income before income taxes                            801,513     1,544,217 
Income taxes                                          285,740       569,816 
                                                 ------------  ------------ 
Net income                                       $    515,773  $    974,401 
                                                 ============  ============ 
                                                                            
Net income per common share - basic              $       0.03  $       0.06 
                                                 ============  ============ 
Net income per common share - diluted            $       0.03  $       0.06 
                                                 ============  ============ 
                                                                            
Shares used in computing net income per common                              
 share, basic                                      16,046,544    15,823,271 
Weighted average common shares outstanding         16,123,164    16,023,073 
                                                                            
                                                                            
                                                                            
                            OVERHILL FARMS, INC.                            
                                                                            
                      CONDENSED SUMMARY OF OPERATIONS                       
                                (Unaudited)                                 
                                                                            
                                                  For the Six Months Ended  
                                                 -------------------------- 
                                                   March 31,     April 1,   
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Net revenues                                     $ 97,470,289  $ 97,711,491 
Cost of sales                                      89,081,775    88,323,265 
                                                 ------------  ------------ 
Gross profit                                        8,388,514     9,388,226 
Selling, general and administrative expenses        6,949,098     5,895,896 
                                                 ------------  ------------ 
Operating income                                    1,439,416     3,492,330 
Total interest expense                               (123,954)     (174,154)
                                                 ------------  ------------ 
Income before income taxes                          1,315,462     3,318,176 
Income taxes                                          468,962     1,223,783 
                                                 ------------  ------------ 
Net income                                       $    846,500  $  2,094,393 
                                                 ============  ============ 
                                                                            
Net income per common share - basic              $       0.05  $       0.13 
                                                 ============  ============ 
Net income per common share - diluted            $       0.05  $       0.13 
                                                 ============  ============ 
                                                                            
Shares used in computing net income per common                              
 share, basic                                      16,046,544    15,823,271 
Weighted average common shares outstanding         16,123,957    16,016,226 

Contacts:

James Rudis Chairman, President and CEO Overhill Farms, Inc. 323-582-9977

Alexander Auerbach Auerbach & Co. Public Relations 1-800-871-2583 auerbach@aapr.com

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