Galaxy settles out of court

In a settlement agreement, the parties have agreed to have all claims in the patent infringement lawsuit dismissed.

Indeed, following the settlement, both firms have entered into a licensing agreement that permits Galaxy to continue using the manufacturing equipment named in the lawsuit.

There was no financial consideration in either the settlement of the lawsuit or the licensing agreement.

The term of the license extends through the life of all patents named in the lawsuit (and all related patents) and is assignable by Galaxy.

In November last year second quarter results affected by lower volume sales and exceptional charges forced Galaxy Foods, to revise its forecasts for the full year.

In the three months to September 30, the company recorded net losses of $228,145, compared to net income of $732,245 for the previous year. Operating income for the quarter was $41,927 compared to $1.7 million for 2002.

The company said that the results were impacted by a one-off $128,258 charge compared to a one-time gain of $1.4 million a year earlier. Excluding this, net profits were some $515,957 higher, helped by a sharp fall in interest expense as the company reduced its debts.

Sales were also lower in the quarter, falling 7 per cent to $9.3 million as a result of the company's decision to stop making lower margin private label and sandwich slice products in order to focus its limited funds on higher margin branded products.

Galaxy - whose brands include Veggie, Soyco, Soymage, Wholesome Valley, formagg, and Lite Baker - said that while this had caused sales to decline compared to the previous year, it had allowed it to lift gross profit to improve by 2 per cent during the period.

Galaxy has recently completed a major financial restructuring, freeing up more cash for investment in the business and allowing it to seek potential new private label partners.