BESTFOODS REPORTS 2ND QTR. EARNINGS PER SHARE GROWTH OF 5.2%; E.P.S. FOR THE 1ST HALF UP 7.8%.ENGLEWOOD CLIFFS, N.J.--(BUSINESS WIRE)--July 14, 1999-- Bestfoods today reported a second-quarter increase in diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings per common share of 5.2% to $.61 per share, compared to $.58 per share in the prior year's second quarter. Net income rose 2.2% to $176 million from $172.3 million in the same quarter last year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $332.8 million was 4.6% higher, compared to $318.3 million last year. Contributing to the gains were margin improvements in all divisions. Unfavorable Latin American currency values reduced earnings by $10.7 million and financing costs were $7.4 million higher, primarily due to increased debt in connection with the company's share buyback program and a moderate rise in short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. . Fewer shares outstanding contributed $.02 per share to diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter and $.03 per share for the first half. Worldwide sales increased 1.4% to $2.15 billion. Volumes, which rose 1.2% in total, increased 11.7% in the company's small Asian operations and 3.4% in Europe, including the Oswald acquisition. Baking volumes were marginally higher; North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. consumer foods volumes declined slightly; and in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , volumes were 3.7% lower, primarily due to conditions in Brazil following the devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the real, as well as difficult conditions in Colombia. For the first half of 1999, diluted earnings per share rose 7.8% to $1.10 compared to $1.02 in the first half of 1998. Net income increased 4.7% to $320 million from $305.7 million in the same period last year. Operating income of $617.8 million was 7.1% higher than the $576.8 million earned in 1998. Worldwide sales rose 2.2% to $4.35 billion for the six months on volume growth of 1.8%. Commenting on the results, Dick Shoemate, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Bestfoods, said, "This was a solid quarter, particularly in view of the difficult economic conditions we faced in Latin America. We feel that our business in the region is holding up very well in spite of severe economic conditions in Brazil and Colombia. These difficulties include a 36% currency decline during the quarter in Brazil. Our brand strength in the region, particularly of the Knorr, Maizena, Hellmann's and AdeS brands, continues to underpin the resilience of these businesses. I'm pleased to report that in recent months we've seen a return to normal volume levels in Brazil. "Our European business continues to perform strongly, turning in a 9.3% earnings gain compared against last year's strong second quarter, which included an $18 million gain on the sale of a business. Contributing to the strong European results was a gain in operating income of 44% in our Central European businesses. Currency values in Europe were essentially flat versus last year's second quarter. "In North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , our baking division reported its seventh consecutive quarter of double-digit earnings growth, primarily reflecting continuing costs improvements. Entenmann's regular cakes grew 4.8%; bread volumes were up 4.7%; and Thomas' bagels grew 11.5%. Excluding the divested U.K. baking operations, baking volumes rose 1%. Volume growth in this business was restrained by the slowdown in Entenmann's Light cakes, Entenmann's cereal bars, and Boboli pizza shells. "In our North America consumer foods division, this quarter's slight volume decline reflected last year's second-quarter volume increase preceding July 1 price increases on Hellmann's and Best Foods Hellmann's and Best Foods are brand names that are used for the same line of mayonnaise and other food products. The Hellmann's brand is sold in the United States east of the Rocky Mountains, and also in Latin America, Europe, and Canada. mayonnaise and Mazola corn oil corn oil n. A pale yellow liquid obtained from the embryos of corn grains, used especially as a cooking and salad oil and in the manufacture of margarines. Noun 1. - the first in three years for both brands. Highlights for the quarter were gains of 9.4% in retail volumes of our relatively new pourable dressings business, an increase of 26% in pourable dressings volumes through our foodservice business, and 9.5% growth in retail volumes of Knorr and related products. We like to see this continuing growth in the North American Knorr business, which, while still quite small, has the potential of becoming a much more significant factor in our $3 billion worldwide Knorr portfolio. Four of our five main product lines posted share improvements in the last 12-week period, compared to the prior year period. "In Asia, we continue to see the benefits of economic recovery, including favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency comparisons and renewed growth momentum. Bestfoods recorded especially strong progress in our large Philippines affiliate and in Pakistan, where we are acquiring an additional 19% of total shares in the business from a minority shareholder. This will bring Bestfoods' ownership of the Pakistan affiliate to more than 70%." Highlights Management Changes -- Neil Beckerman was named president of the Bestfoods Grocery unit and corporate vice president of Bestfoods. Mr. Beckerman was formerly executive vice president and group general manager of the western region of Bestfoods Baking Company. He succeeds Nina Henderson, who was named corporate vice president, global core business development. -- Merrill Eastman was named president of Bestfoods Baking Company and corporate vice president of Bestfoods. Mr. Eastman was executive vice president and group general manager of the eastern region of Bestfoods Baking Company. He replaces John Langdon who retired on June 30. -- Ian Ramsay Professor Ian Ramsay (born 1958) is the director of the Center for Corporate Law and Securities Regulation at the University of Melbourne in Melbourne, Australia. He is a lawyer, author, and prominent media commentator on corporate law and securities law issues in Australia. was named president of Bestfoods Europe, succeeding Alain Labergere, who will retire October 31. Mr. Ramsay, a corporate vice president, was named president, European operations, in September 1998. New Products -- Recent new products and product extensions include: Soups, sauces, bouillons, mealmakers, hot savory savory, name for any plant of the genus Satureja, aromatic herbs and subshrubs of the family Labiatae (mint family). Commonly cultivated as border ornamentals or potherbs are two species of the Mediterranean region and surrounding areas: summer savory (S. snacks Argentina: Knorr Pasta (bolognese Bolognese a small (5-9 lb) bichon-type dog with a distinctive coat which is long and flocked without curls. , cheese); Knorr Homemade home·made adj. 1. Made or prepared in the home: homemade pie. 2. Made by oneself. 3. Crudely or simply made. Adj. 1. soup Azerbaijan: Knorr products Benelux: Knorr (Caterplan) Gourmet Sauces Chile: JB Aji-Pembre hot sauce with condiments Israel: Knorr to Go cup soup snacks; 6 varieties of Knorr Spaghettino Malaysia: Knorr Stir-Fry sauces Norway: Knorr Pot Noodle In the UK & Ireland, Pot Noodle is a well-known brand of ramen-style snack. Its dehydrated mixture consists of wide noodles, textured soya pieces, assorted dried vegetables and flavouring powder. Each pot is also packaged with a sachet of sauce, such as soy sauce. Philippines: Knorr Hot Pot Instant Goto Senegal: Knorr cubes Thailand: Knorr Cup Jok in a box Turkey: 6 varieties of Knorr soups U.K.: Knorr Tastebreaks II cup snack Dressings Colombia: Fruco Mayomania in flexible packaging France and Switzerland: mayonnaise in a piping bag Israel: Telma mayonnaise with olive oil olive oil, pale yellow to greenish oil obtained from the pulp of olives by separating the liquids from solids. Olive oil was used in the ancient world for lighting, in the preparation of food, and as an anointing oil for both ritual and cosmetic purposes. ; Telma mayonnaise preservative-free Philippines: Lady's Choice pourable salad dressings Singapore: Mazola sunflower sunflower, any plant of the genus Helianthus of the family Asteraceae (aster family), annual or perennial herbs native to the New World and common throughout the United States. oil and canola oil Noun 1. canola oil - vegetable oil made from rapeseed; it is high in monounsaturated fatty acids canola vegetable oil, oil - any of a group of liquid edible fats that are obtained from plants Desserts Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. : Torto single serve puddings Israel: Choco Kid chocolate Eligio Sardiñas (January 6, 1910 – August 8, 1988), better known as Kid Chocolate, was a Cuban boxer who enjoyed wild success both in the boxing ring and in society life during a span of the 1930s. dessert; Sugar-free chocolate bar Bread Spreads Indonesia: Skippy jam Philippines: Lady's Choice Super Chunky chunk·y adj. chunk·i·er, chunk·i·est 1. Short and thick; stocky. 2. Containing small thick pieces: chunky peanut butter; chunky soup. spread; Lady's Choice Peanut peanut, name for a low, annual leguminous plant (Arachis hypogaea) of the family Leguminosae (pulse family) and for its edible seeds. Native to South America and cultivated there for millenia, it is said to have been introduced to Africa by early explorers, Spread with Rice Crisps Baking Entenmann's Little Bites (Chicago and Northeast); Entenmann's Fruit Tarts (Northeast) Oroweat Outdoor buns and rolls (Western Region) Acquisitions -- Completed three previously-announced acquisitions: Globus dressings business in Hungary; Captain Cook packaged seasonings business in India; Energy drink mix business in Pakistan. -- Acquiring additional 19% of affiliate in Pakistan from a minority shareholder, bringing Bestfoods' ownership of the affiliate to more than 70%. To provide the clearest possible description of our business and outlook, this report contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on our best current information and reasonable assumptions about anticipated developments. Statements including such words as "expects", "anticipates", "intends", "plans", "believes", "estimates" and other similar expressions are intended to identify such forward-looking statements. Because of the risks and uncertainties that always exist in any operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. or business, we cannot make assurances that these expectations will prove correct. Actual results and developments may differ materially depending upon currency values, competitive pricing, consumption levels, costs and political and social conditions in the economies and environments where Bestfoods operates. ABOUT BESTFOODS: Bestfoods, formerly CPC (1) (Central Processing Complex) An IBM mainframe that has two or more central processors (CPs) that share memory. It is the collection of processors, memory and I/O subsystems manufactured with a single serial number, typically all contained in one cabinet. International Inc., is among the largest U.S. food companies, with sales of about $8.4 billion in 1998. Best known among Bestfoods' U.S. products are: Hellmann's and Best Foods mayonnaise and dressings; Mazola corn oil and margarine margarine, manufactured substitute for butter. It consists of a blend of vegetable oils or meat fats (or a combination of both) mixed with milk and salt. It was developed in the late 1860s by the French chemist Hippolyte Mège-Mouries in a contest sponsored by ; Skippy peanut butter; Knorr soups, sauces, and bouillons; Entenmann's sweet baked products; Thomas' English muffins; Arnold, Brownberry, Freihofer's, and Oroweat breads; Boboli pizza crusts; Mueller's pasta; and Karo KARO Kane Amateur Radio Operators (Kane, PA) syrup syrup /syr·up/ (sir´up) a concentrated solution of a sugar, such as sucrose, in water or other aqueous liquid, sometimes with a medicinal agent added; usually used as a flavored vehicle for drugs. . Bestfoods' global Knorr brand comprises one of the world's most extensive lines of products. Bestfoods is one of the nation's most international food companies, with operations in more than 60 countries and products marketed in 110 countries. For more information about Bestfoods, visit the company's website on the Internet at: http://www.bestfoods.com. -0-
Bestfoods - Divisional Results
($ millions) Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
Net Sales 1999 1998 % 1999 1998 %
--------- ---- ---- --- ---- ---- -----
North America $ 508.5 $ 506.6 0.4 $ 883.2 $ 882.8 --
Europe 902.6 857.9 5.2 1,897.9 1,781.6 6.5
Latin America 233.8 272.6 (14.2) 533.2 585.5 (8.9)
Asia 86.8 72.4 19.9 185.4 168.4 10.1
Baking 423.2 415.9 1.8 850.1 836.5 1.6
-------- -------- ----- -------- ------- ----
Total
Operations $2,154.9 $2,125.4 1.4 $4,349.8 $4,254.8 2.2
======== ======== ===== ======== ======== ====
Operating Income
North America $ 99.2 $ 96.9 2.3 $ 144.5 $ 141.1 2.3
Europe 157.9 144.6 9.3 316.1 274.5 15.2
Latin America 48.8 53.5 (8.8) 109.7 115.8 (5.3)
Asia 11.3 9.5 18.8 24.7 23.7 4.4
Baking 26.3 23.3 12.7 47.2 41.2 14.6
Corporate
Expenses (10.7) (9.5) 11.4 (24.4) (19.5) 25.1
-------- ------- ---- ------- ------- -----
Total Operating
Income $ 332.8 $ 318.3 4.6 $ 617.8 $ 576.8 7.1
======== ======= ==== ======= ======= =====
Bestfoods and Subsidiaries
Consolidated Statements of Income
(All figures are in millions except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
---- ---- ---- ----
Net sales $2,154.9 $2,125.4 $4,349.8 $4,254.8
Cost of sales 1,130.9 1,166.0 2,308.3 2,334.5
-------- -------- -------- --------
Gross profit 1,024.0 959.4 2,041.5 1,920.3
Operating expenses 691.2 641.1 1,423.7 1,343.5
-------- -------- -------- --------
Operating income 332.8 318.3 617.8 576.8
-------- -------- -------- --------
Financing costs 50.2 42.8 96.5 83.9
-------- -------- -------- --------
Income before
income taxes 282.6 275.5 521.3 492.9
Provision for
income taxes 97.5 97.8 179.8 175.0
-------- -------- -------- --------
185.1 177.7 341.5 317.9
Minority
stockholders'
interest 9.1 5.4 21.5 12.2
-------- -------- -------- --------
Net income $ 176.0 $ 172.3 $ 320.0 $ 305.7
======== ======== ======== ========
Average common
shares outstanding:
Basic 279.0 288.0 279.9 288.3
Diluted 288.0 298.5 288.9 299.5
Earnings per
common share:
Basic $ .62 $ .59 $ 1.13 $ 1.04
Diluted .61 .58 1.10 1.02
Cash dividends declared
per common share $ .245 $ .225 $ .49 $ .45
This is an unaudited interim statement prepared by management and
reflects all adjustments which are, in the opinion of management,
necessary to a fair statement of results for the interim periods.
Certain prior year amounts have been reclassified to conform to the
1999 presentation.
Englewood Cliffs, NJ July 14, 1999 Philip Terenzio,
Vice President and Controller
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