001208 Red Oak Hereford Farms Offers Results

Red Oak, IA - Red Oak Hereford Farms, Inc. reported results for the company's third quarter ended September 30, 2000. For the most recent three- month period, the company posted a net loss of ($1.3 million) or ($0.08) per common share on net revenue of $15.0 million versus a net loss of ($353,088) or ($0.02) per common share on net revenue of $19.4 million for the comparable quarter of 1999.

For the nine months ended September 30, 2000, the company posted a net loss of ($4.1 million) or $0.26 per common share on net revenue of $44.7 million versus a net loss of ($2.2 million) or ($0.14) per common share for the first nine months of 1999.

Gordon Reisinger, president and CEO of Red Oak Hereford Farms, Inc., noted that during the most recent quarter and nine months, the company's continued expansion and development of precooked consumer beef products required operating expenses that were not offset with increases in sales. Reisinger indicated that while several customers for both precooked and Premium Hereford Beef (PHB) products have deferred placement of product in their retail stores until the fourth quarter, anticipated growth in both categories and the company's continued focus on branded premium pricing reflect an opportunity for future favorable results.

“Although gross revenue and margins continued to be adversely affected by Red Oak's investment spending during the third quarter, the company made considerable progress in product development and toward solidifying its customer base both domestically and abroad,” said Reisinger. “We are especially encouraged by market acceptance of Red Oak's value-added precooked entree offerings and the top-of-mind awareness we are achieving among retail consumers,” he said. Reisinger indicated that management expects improvement in the volume of both boxed beef and precooked product sales and continues to anticipate the need for additional capital to finance receivables and inventories.

Reisinger provided the following update concerning recent events:

* The company's PHB program, fostered by its newly established relationship with Nebraska Beef, continues to grow, and demand remains strong. Red Oak is exploring various alternatives for bridge financing to allow it to escalate the program and to satisfy anticipated demand.

* Precooked entree shipments exceeded 4,000 cases for the first time in November. New accounts include Rainbow Markets, Nash Finch, Fleming's Minneapolis Division, and SuperValu Corporate Club Stores.

* Initial shipments on a nearly 10,000-case order for Wal-Mart's 452-store Division #1 launch of Red Oak's 4-oz. My Favorite Jerky and My Favorite Jerky 1- oz. Beef Sticks will commence on December 15, 2000.

* In response to receipt of purchase orders, Red Oak has slated a mid- December roll-out of its frozen burger program with two 7-Eleven divisions.

* Following its participation in SIAL 2000, Red Oak Farms-Europe (ROFE) is in discussions with a number of European retailers and caterers, including Carrefour, Ahold, Metro, Loblaw, and Air France, to name a few, as well as with a major US export agent.

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