EX-1 2 tofuttibrandsletter.txt EXHIBIT 1. CERTIFIED MAIL#7003-1680-0004-7304-2418 RETURN RECEIPT REQUESTED April 15, 2008 Mr. David Mintz, Chairman and Chief Executive Officer Mr. Franklyn Snitow Mr. Aron Forem Mr. Reuben Rapoport Mr. Philip GotthAelf Mr. Joseph K. Fischer Mr. Neal S. Axelrod c/o Mr. Steven Kass, Chief Financial Officer Tofutti Brands, Inc. 50 Jackson Drive Cranford, NJ 07016 Dear Directors. Mintz, Snitow, Forem, Rapoport, Gotthelf, Fischer, Axelrod and CFO Kass: Our investment management firm is a value investor in public companies. We believe that it is in the best interest of all shareholders for management to be good stewards of shareholder capital. Therefore, today, we have finally decided to write on behalf of all long suffering Tofutti Brands shareholders. With this record: Revenue and Net Income 2003 - 2007 --- $Millions ---
2003 2004 2005 2006 2007 Revenue 19.01 19.19 18.61 19.47 19.15 Net Income .39 .61 .35 .62 .47
Don't you think after giving shareholders a flat, "bupkus" (1), performance for the past five years in top and bottom line P & L results and Mr. Mintz's generous, for such a very small company, salary and bonus of: David Mintz Compensation vs. Tofutti Net Profits 2003 - 2007 --- $000 ---
% Mintz Compensation Total David Total Mintz Exceeded Mintz Company Vs. Company Net Year Salary Bonus Compensation Profit Company Profit 2007 450,000 350,000 800,000 465,000 +335,000 +72% 2006 450,000 350,000 800,000 620,000 +180,000 +29% 2005 450,000 350,000 800,000 350,000 +450,000 +129% 2004 306,000 350,000 656,000 610,000 + 46,000 +7.5% 2003 603,000 ___ 603,000 390,000 +213,000 +55% Total 5 Year 2,259,000 1,400,000 3,659,000 2,435,000 +1,224,000 +50%
And our stock having gone nowhere, doing nothing, i.e. more bupkus, for many years as well: End of Quarter Stock Price 2000 - 2008
DATE PRICE DATE PRICE 3/08 2.68 12/07 2.80 12/03 3.01 9/07 2.91 9/03 2.83 6/07 2.95 6/03 3.05 3/07 3.15 3/03 2.51 12/06 3.05 12/02 2.60 9/06 2.83 9/02 3.01 6/06 2.90 6/02 2.80 3/06 2.92 3/02 2.01 12/05 3.14 12/01 2.07 9/05 3.15 9/01 2.25 6/05 3.11 6/01 2.08 3/05 3.23 3/01 2.00 12/04 3.29 12/00 2.00 9/04 3.01 9/00 2.06 6/04 3.01 6/00 2.38 3/04 3.50 3/00 3.88
And for nearly three decades never ever paying a dividend, Don't you also think that it is time to call it quits and sell this company: To a major food firm that has cash to advertise the products, staff to market the products and distribution muscle to obtain placements of all products, in all venues and stores in the U.S., and internationally? Or At least spend the $800,000 a year on advertising, marketing and distribution efforts instead of on Mr. Mintz, who owns 47% of the Company, 2,630,440 shares, and who himself would profit from just a $1 per share increase in the stock price by over three times what he has been paid in salary and bonus in each of the last several years. It is incomprehensible that Mr. Mintz has in each of the last five years been paid far more than the entire Company reported in net profit -- 50% more in total. As a matter of fact Mr. Mintz would, at the current P/E ratio of 36.36 x LTM earnings, see the value of his personal stockholdings increase by $7,876,806 if he would forgo his compensation of "just" $800,000 (800,000 x 58.2% net after taxes = benefit to earnings of $465,600/5,653,467 shares outstanding = 8.24 cents/share x 36.36, the current P/E = $2.99/in market price per share x Mr. Mintz's 2,630,440 shares = $7,876,806). In other words, by this mere simple action Mr. Mintz could see his gross wealth increase almost ten-fold. What's more, instead of paying Federal Income taxes, of possibly some 39% on his $800,000 salary and bonus, he could sell off a handful of his shares if he really needed the approximate net $488,000 proceeds that he ends up with after Federal income taxes, and he would only have to pay 15% in capital gains tax on the shares he sold. What a bonanza for all concerned and most especially for Mr. Mintz! So for starters, if Mr. Mintz is interested in creating some shareholder wealth and value for all shareholders, and for his 47% ownership, he could start with forgoing any salary and accept no bonus, and yet benefit mightily, couldn't he? Shouldn't he, and the Board as well, take steps to demonstrate that not only Mr. Mintz, but all shareholders as well, are after all, in this stock to make money and see Tofutti shares increase in value? Remember, shareholders have never ever received so much as a single cent in dividends in the twenty-seven year history of the Company. In fact in all of the Company's SEC 10-K filings it is always stated that The Company has not paid and has no present intention of paying cash dividends on its common stock in the foreseeable future". Makes one think it is too bad no such claim has ever been made regarding Mr. Mintz's huge compensation package. After all, as noted above, his paydays have been more than 50% larger than the Company' Net Profits in the past five years. Indeed his 2007 compensation exceeded the Company's Net Profit by 72%. What a great mekhaye (2) for Mr. Mintz's managing no revenue or profit increases for so many years. The only shareholder to have ever benefitted financially has been Chairman, CEO Mr. Mintz. So isn't it very much worthwhile examining the arithmetic of the stock price, earnings and the multiplier? Think about it Mr. Mintz, and you the directors, and Mr. Kass, as CFO, perhaps you would lay it all out in easy to understand arithmetic to all concerned. Failing this, we repeat the question above, isn't it time to call it quits and sell this company? We would appreciate your response to the question or the suggestion. We will look forward to hearing from you at your earliest convenience. We should also be grateful to meet with you to discuss the contents of this letter further. We kindly request you to confirm to us by return mail that each of the above members of the board of directors has received this letter. Thank you. Warmly, Lawrence J. Goldstein LJG:ala (1) Certainly you all well know bupkus is a Yiddish word literally translated as "nothing". (2) Surely you know mekhaye means pleasure; something shareholders have never experienced at Tofutti Page 4 of 4 223: