Del Monte Foods Company Announces Fiscal 2000 Results; Earnings Per Share Up 28% to $1.01; Net Income $53.7 Million.Business Editors SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , CA--(BUSINESS WIRE)--August 3, 2000 Del Monte Foods Del Monte Foods (NYSE: DLM) is an American food production and distribution company based in San Francisco, California. It offers canned goods in Del Monte, S&W and Contadina brands, pet foods under Kibbles n' Bits, 9Lives, Pounce, Milk-Bone and several premium brands, Company (NYSE NYSE See: New York Stock Exchange :DLM See ILM. DLM - Distributed Lock Manager on distributed VMS systems. ), today reported pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma 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 of $1.01 for fiscal 2000, up 27.8 percent from pro forma diluted earnings per share of $0.79 in fiscal 1999. Pro forma net income for the year was $53.7 million, up 28.2 percent from $41.9 million in the last fiscal year. Pro forma diluted earnings per share for the fourth fiscal quarter of 2000 was $0.25, a decrease of 10.7 percent from $0.28 for the same period in fiscal 1999. Pro forma net income for the period was $13.2 million, a decrease of 11.4 percent from $14.9 million for the fourth fiscal quarter of 1999. "Del Monte's fiscal 2000 financial performance reflected excellent year-to-year EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth of 27.8% and record EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ," said Richard G. Wolford, Chairman and Chief Executive Officer. "This strong growth was driven by strong share performance and category leadership in each of our businesses, together with significant production cost reductions." Fiscal 2000 Financial Highlights The Company reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $1,462.1 million for fiscal 2000 as compared to pro forma net sales of $1,507.4 million in the last fiscal year. Pro forma EBITDA for the year grew 11.7 percent over the prior year to $187.4 million.
Summary Table of Pro Forma Results
($ Millions) Fiscal Year Ended June 30, % Change
except per share data 2000 1999
Net sales $ 1,462.1 $ 1,507.4 (3.0)%
EBITDA $ 187.4 $ 167.8 11.7%
Net income $ 53.7 $ 41.9 28.2%
EPS $ 1.01 $ 0.79 27.8%
The decrease in sales in the current year is the result of three primary factors: the Company's ongoing strategy to decrease sales in the lower margin foodservice channel as it shifts emphasis towards sales of higher margin products; significant branded competitive activity in the Company's ketchup business; and reductions in retail trade inventory levels, primarily in the fourth quarter. Excluding the foodservice channel, net sales for the year increased approximately 1 percent over last year. Market shares and consumption for each of the Company's major businesses continue to be strong and were up for the year and the quarter. However, in the fourth quarter, net retail sales decreased as trade inventories, primarily in vegetables, dropped well below previous levels, driven by a shift in timing of Del Monte's traditional promotional spending as well as second half Y2K-related soft category trends. The Company believes that trade inventories, which are currently at historically low levels, are unlikely to trend lower in fiscal 2001. Pro forma net income for fiscal 2000 increased primarily due to lower cost of products sold as a result of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. initiatives and other favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. cost reductions and an improved product mix. "We are not satisfied with our revenue performance in fiscal 2000. However, looking forward, we see a return to historical quarterly consumption and shipment patterns as compared to fiscal 2000, when Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 shifted consumption from the second half into the first half," said Mr. Wolford. "We expect top line growth of 4 to 6% in fiscal 2001, driven by our plastic packaged Del Monte Monte (Italian, Portuguese and Spanish meaning mount) may refer to various things: Monte is the name of several places: In Brazil
In order to provide comparability among all the periods presented, the Company's pro forma results for all periods have been adjusted to exclude non-recurring items and special charges related to plant consolidation. Pro forma results also include the impact of using a 39 percent effective income tax rate. The Company's actual results include the benefit of net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. and other tax adjustments. Pro forma results for fiscal 1999 were adjusted for the August 1998 acquisition of the Company's South American business, as if this event had occurred on the first day of fiscal 1999, as well as for the completion of the February 1999 initial public offering and subsequent debt repayment. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share for fiscal 1999 were calculated based on the fully 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. shares outstanding from the date of the public equity offering through June 30, 1999. Actual diluted earnings per share for fiscal 2000 were $2.42, compared with actual diluted earnings per share of $0.23 for fiscal 1999. Actual net income for fiscal 2000 was $128.7 million as compared to actual net income of $13.5 million for fiscal 1999. Actual results for fiscal 2000 include the effect of the realization of a portion of the Company's net deferred tax assets, resulting in a credit to income tax expense of $67.7 million, or $1.27 per common share. Fourth Quarter Ended June 30, 2000 Financial Highlights The Company reported net sales of $319.7 million for the fourth quarter of fiscal 2000 compared to net sales of $369.9 million for the fourth fiscal quarter last year. Pro forma EBITDA for the quarter was $45.4 million compared with $47.6 million in the comparable quarter last year.
Summary Table of Pro Forma Results
($ Millions) Fourth Quarter Ended June 30, % Change
except per share data 2000 1999
Net sales $ 319.7 $ 369.9 (13.6)%
EBITDA $ 45.4 $ 47.6 (4.6)%
Net income $ 13.2 $ 14.9 (11.4)%
EPS $ 0.25 $ 0.28 (10.7)%
Excluding the foodservice channel, net sales for the quarter were down 11.1 percent from the fourth quarter of last year. This decrease was attributable primarily to the reductions in retail trade inventory levels at June year end and the competitive ketchup activity discussed above. Pro forma net income decreased in the quarter reflecting lower sales. The effect of the lower sales on net income was partially offset by lower cost of products sold due to continued cost savings as a result of capital spending initiatives and an improved product mix. For the fourth quarter of fiscal 2000, the Company reported actual net income of $89.7 million, or diluted earnings per common share of $1.70, compared with actual net income of $21.2 million, or net earnings of $0.40 per diluted common share, for the fourth quarter of 1999. Actual results for the fourth quarter of fiscal 2000 include the effect of the realization of a portion of the Company's net deferred tax assets, resulting in a credit to income tax expense of $67.7 million, or $1.28 per common share. Del Monte Foods Company, with net sales of $1.5 billion in fiscal 2000, is the largest producer and distributor of premium quality, branded processed fruit, vegetable and tomato products in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The Del Monte brand was introduced in 1892 and is one of the best known brands in the United States. Del Monte products are sold through national grocery chains, independent grocery stores, warehouse club stores, mass merchandisers, drug stores and convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. . The Company also sells its products to the U.S. military, certain export markets, the foodservice industry and food processors. The Company operates fourteen production facilities and six distribution centers in the U.S., has operations in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. and owns Del Monte brand marketing rights in South America. This press release 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. conveying management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve inherent risks and uncertainties and the Company cautions you that a number of important factors could cause actual results to differ materially from those contained in such statements. These factors include, among others: general economic and business conditions; competition; weather conditions; crop yields; raw material costs and availability; the loss of significant customers; changes in business strategy or development plans; changes in promotional activities by the Company or its competitors; availability, terms and deployment of capital; availability of qualified personnel; changes in, or failure or inability to comply with, governmental regulations, including, without limitation, environmental regulations; industry trends; production capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. and other factors. These factors are described in more detail in the Company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended June 30, 1999. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" .
Selected Balance Sheet Data
(In millions)
June 30,
2000
Cash and cash equivalents $ 5.1
Trade accounts receivable, net of allowance 109.2
Inventories 425.3
Total assets 1,040.7
Accounts payable and accrued expenses 238.9
Short-term borrowings 153.5
Long-term debt, including current portion 478.6
Stockholders' equity 10.6
Del Monte Foods Company
(In millions,
except share data)
For the Year Ended June 30,
Pro Forma (1) Historical
2000 1999 2000 1999
Net sales $ 1,462.1 $ 1,507.4 $ 1,462.1 $ 1,504.5
Cost of products
sold (2) 920.5 994.5 920.5 998.3
Selling,
administrative
and general
expenses (3) 386.5 376.9 384.2 375.3
Special charges
related to plant
consolidation (4) -- -- 10.9 17.2
Acquisition
expense -- -- -- 0.9
Operating income 155.1 136.0 146.5 112.8
Interest and other
expense (5) 67.1 67.3 67.1 79.6
Income before taxes
and extraordinary item 88.0 68.7 79.4 33.2
Provision (benefit)
for income taxes (6) 34.3 26.8 (53.6) 0.5
Income before
extraordinary item 53.7 41.9 133.0 32.7
Extraordinary item,
net of tax benefit (7) -- -- 4.3 19.2
Net income (loss) $ 53.7 $ 41.9 $ 128.7 $ 13.5
Preferred stock
dividends -- -- -- 3.6
Net income available
to common shares $ 53.7 $ 41.9 $ 128.7 $ 9.9
Diluted earnings
(loss) per common
share (8) $ 1.01 $ 0.79 $ 2.42 $ 0.23
Shares (8) 53,097,898 53,187,024 53,097,898 42,968,652
(1) Pro forma amounts for fiscal 1999 include the operating results of the Company's South American business as if that business had been acquired on the first day of fiscal 1999. (2) In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with purchase accounting rules applied to the acquisition of the South America business and Contadina, inventory was increased to market value. This inventory step-up step-up A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock. resulted in one-time charges to cost of products sold as the inventory on hand at the acquisition date was sold. Pro forma forma, adj/n minor elements between the members of a botanical species. results for fiscal 1999 excluded this step-up. (3) During the fourth quarter of fiscal 2000, the Company entered into a joint venture to develop the site of a former dried fruit plant in San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. . The value assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to this property in the joint venture resulted in the recapture recapture n. in income tax, the requirement that the taxpayer pay the amount of tax savings from past years due to accelerated depreciation or deferred capital gains upon sale of property. (See: income tax) RECAPTURE, war. of $2.3 million of asset cost previously written-down due to impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. . This impairment was originally determined upon the Company's adoption of Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of" in fiscal 1996. (4) For fiscal 2000 and 1999, special charges related to plant consolidation included accelerated depreciation Accelerated Depreciation Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. Notes: The straight-line depreciation method spreads the cost evenly over the life of an asset. and other restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs related to the consolidation of certain processing plants. (5) Pro forma interest for fiscal 1999 was calculated by taking the post-IPO capital structure at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 1999 and recalculating interest expense for the year. (6) Pro forma income taxes included the impact of using a 39% effective tax rate. The Company's historical taxes included the benefit of net operating losses and other tax adjustments and the effect of the release of the majority of the Company's valuation allowance. (7) The extraordinary loss from early debt retirement in fiscal 2000 consisted of prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. premiums on the early retirement of debt and the related write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of previously capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. debt issue costs. The extraordinary loss from early debt retirement in fiscal 1999 consisted of premiums paid due to the redemption of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and the early retirement of debt, as well as charges representing previously capitalized debt issuance costs written-off in connection with debt retirement. (8) Pro forma earnings per share for fiscal 1999 were calculated based on the fully diluted shares outstanding from the date of the public equity offering through June 30, 1999. Pro forma earnings per share for fiscal 2000 and historical earnings per share were calculated based on the diluted weighted average shares outstanding for the year.
Del Monte Foods Company
(In millions,
except share data)
For the Three Months Ended June 30,
Pro Forma Historical
2000 1999 2000 1999
Net sales $ 319.7 $ 369.9 $ 319.7 $ 369.9
Cost of products sold 200.2 243.1 200.2 243.1
Selling,
administrative and
general expenses (1) 82.1 87.4 79.8 87.9
Special charges
related to plant
consolidation (2) -- -- 1.1 2.4
Acquisition expense -- -- -- --
Operating income 37.4 39.4 38.6 36.5
Interest and other
expense 15.7 15.0 15.7 15.0
Income before taxes and
extraordinary item 21.7 24.4 22.9 21.5
Provision (benefit)
for income taxes (3) 8.5 9.5 (67.2) 0.3
Income before
extraordinary item 13.2 14.9 90.1 21.2
Extraordinary item, net
of tax benefit -- -- 0.4 --
Net income (loss) $ 13.2 $ 14.9 $ 89.7 $ 21.2
Preferred stock
dividends -- -- -- --
Net income
available to
common shares $ 13.2 $ 14.9 $ 89.7 $ 21.2
Diluted earnings
(loss) per common
share (4) $ 0.25 $ 0.28 $ 1.70 $ 0.40
Shares (4) 52,876,217 53,170,735 52,876,217 53,170,735
(1) During the fourth quarter of fiscal 2000, the Company entered into a joint venture to develop the site of a former dried fruit plant in San Jose. The value assigned to this property in the joint venture resulted in the recapture of $2.3 million of asset cost previously written-down due to impairment. This impairment was originally determined upon the Company's adoption of Financial Accounting Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of" in fiscal 1996. (2) For the three months ended June 30, 2000 and 1999, special charges related to plant consolidation included accelerated depreciation and other restructuring costs related to the consolidation of certain processing plants. (3) Pro forma income taxes included the impact of using a 39% effective tax rate. The Company's historical taxes included the benefit of net operating losses and other tax adjustments and the effect of the release of a majority of the Company's valuation allowance. (4) Pro forma and historical earnings per share for the three months ended June 30, 2000 and 1999 were calculated based on the diluted weighted average shares outstanding for the period. |
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