Vermont Pure Holdings, Ltd. Announces Preliminary Second Quarter Results

RANDOLPH, Vt., May 30 /PRNewswire-FirstCall/ — Vermont Pure Holdings, Ltd. (AMEX: VPS) announced preliminary, unaudited results for its second quarter ending April 30, 2002.

Net sales revenue increased 16% to $17.5 million from $15.1 million last year. During the quarter, the Company implemented recent accounting pronouncements which recognize promotional discounts, previously recorded as expenses, as deductions from gross sales. The Company’s gross sales for the second quarter of 2002 were $18.2 million compared to $15.5 million a year ago, a similar gain of 16%.

Operating Income increased 62% in the second quarter of 2002 to $2.2 million from $1.4 million in the second quarter 2001. Net income was $640,000 or $.03 per share compared to $74,000 or $0.00 per share the previous year. Earnings before interest, taxes depreciation and amortization (EBITDA) increased 16% to $3.4 million from $2.9 million the previous year.

Sales of the Company’s Retail products increased 50% over the previous year. The increase was driven by a 136% increase in private label sales. “We have positioned the Company to capitalize on the growing trend in retailer branded products. During the first two quarters we have experienced solid growth in our existing customer base while adding significant new customers in a variety of retail distribution channels: Supermarket (A&P), Drug (CVS) and Convenience (Quik Chek, Store 24, and Ameristop),” said Tim Fallon Chairman and CEO of Vermont Pure Holdings, Ltd. Over the past two years, Vermont Pure has undertaken a substantial capital expansion program to build its retail production capacity – doubling the size of its bottling facility and the installing a second high speed filling line. The plant is currently running at 60% of capacity and has the ability to service future growth. Sales of the Company’s branded products declined 9% on a year on year basis. “The competitive nature of the national and regional brands will continue to pressure our Vermont Pure and Hidden Spring trademarks. This validates our shift in strategy to become a major player in the private label market,” continued Fallon.

Revenues in the home & office delivery segment of the business increased 5% for the quarter to $12.3 million from $11.6 million the previous year. “We are starting to see an improvement in the economy in the Northeast which helped increase our growth rate from 3% in the first quarter to 6% in the second quarter. Sales of five-gallon water and rental income remain strong but continue to be partially offset by declines in the coffee and related products,” said Peter Baker, President of Vermont Pure Holdings, Ltd.

“We are in the final stages of implementing an automated route accounting system that will materially improve delivery and reduce administrative costs. This project is an important contribution to the synergies that we had foreseen at the outset of the merger of Vermont Pure and Crystal Rock,” Mr. Baker concluded.

Vermont Pure Holdings, Ltd., located in Randolph Vermont, is a bottler and distributor of natural spring water under the Vermont Pure(R) and Hidden Spring(R) brands. It also markets distilled with minerals added bottled water through the Crystal Rock(R) brand. The Company’s primary businesses are the marketing of these brands throughout the New England, New York, and the Mid- Atlantic regions. The Company is currently executing a growth strategy through expansion of the home and office customer base, acquisitions, and consolidation of regional home and office bottled water and coffee distributors. Vermont Pure Holdings Ltd.’s common stock trades on the American Stock Exchange under the symbol: VPS.

Note: This press release contains forward looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially from those indicated by such forward looking statements, including integration of acquisitions, ability to sustain and manage growth, changing market conditions, and other risks detailed in the company’s filings with the Securities and Exchange Commission.

CONTACT: Tim Fallon, CEO, or Bruce MacDonald, CFO, +1-802-728-3600, or
Peter Baker, President, +1-860-945-0661, all of Vermont Pure Holdings, Ltd.;
or Eugene Malone of the Corporate Investors Network, +1-888-377-9777

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