Del Monte Foods Company Completes Sale of Seafood Business, Including StarKist, to Dongwon.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 -- 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. ) ("Del Monte") announced today that Del Monte Corporation, its wholly-owned subsidiary, has completed the sale of its seafood business, including StarKist, to Dongwon Industries Co., Ltd. ("Dongwon Industries") and its subsidiaries (collectively, "Dongwon") for approximately $359 million, including an adjustment for the preliminary estimate of working capital which will be updated once the final working capital is determined. The sale was completed pursuant to the previously announced Purchase Agreement among Del Monte Corporation, Dongwon Enterprise Co., Ltd., Dongwon Industries, Dongwon F&B Co., Ltd., and certain direct and indirect subsidiaries of Dongwon Industries. "The divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of StarKist improves Del Monte's margin structure, eliminates a source of earnings volatility and reduces debt leverage," stated Rick Wolford, 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 Del Monte Foods. "This sale also increases Del Monte's focus on faster growing, value-added, higher margin branded businesses, a key component of our accelerated growth plan." "We are very pleased to have successfully closed this transaction and to welcome the StarKist family to our portfolio of products," remarked Mr. Ingu Park, Vice Chairman of Dongwon Enterprise. "Starkist, a 65-year old brand and top household name, represents a great opportunity for us to initiate operations 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. . We will continue to leverage the value this brings as we build upon its 37% market share and number one position in the shelf stable tuna tuna or tunny, game and food fishes, the largest members of the family Scombridae (mackerel family) and closely related to the albacore and bonito. They have streamlined bodies with two fins, and five or more finlets on the back. category in the United States." The divestiture, announced June 29, 2008, included the sale of Del Monte's manufacturing capabilities in American Samoa American Samoa, officially Territory of American Samoa, unincorporated territory of the United States (2000 pop. 57,291), comprising the eastern half of the Samoa island chain in the South Pacific. and Manta, Ecuador; and certain manufacturing assets associated with StarKist seafood located in Terminal Island, California and Guayaquil, Ecuador. All of Del Monte's direct plant personnel related to the seafood business joined Dongwon as a result of the divestiture. In addition, as a result of the transaction, Del Monte transferred to Dongwon or eliminated a total of 33 salaried positions, consistent with expectations. Del Monte has also entered into a two-year Operating Services Agreement with Dongwon where Del Monte will provide various operational services, such as warehousing, distribution, transportation, sales, IT and administration to the transferred business. This agreement is expected to offset the majority of fixed infrastructure costs retained by Del Monte in fiscal 2010. The benefit from the Operating Services Agreement coupled with the interest savings from planned debt reduction should cause the transaction to be essentially neutral to Del Monte's 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. in fiscal 2010. The transaction generates net after-tax cash proceeds of approximately $300 million, which will be applied toward debt reduction in accordance with the Company's Credit Agreement dated as of February 8, 2005, as amended through April 25, 2008. The Company's projected Debt to 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 ratio for year-end fiscal 2009 is expected to improve to approximately 3.6x from approximately 4.0x due to the deleveraging impact of this transaction. About Del Monte Foods Del Monte Foods is one of the country's largest and most well-known producers, distributors and marketers of premium quality, branded food and pet products for the U.S. retail market, generating approximately $3.2 billion in 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 in fiscal 2008. With a powerful portfolio of brands including Del Monte([R]), S&W([R]), Contadina([R]), College Inn([R]), Meow Mix([R]), Kibbles 'n Bits Kibbles 'n Bits is a brand name of dog food manufactured and marketed by Del Monte Foods. It was originally created in 1981 as the first dual textured dog food, having soft chewy pieces as well as hard crunchy ones. In 1995, the brand was acquired by Del Monte. ([R]), 9Lives([R]), Milk-Bone([R]), Pup-Peroni([R]), Meaty Bone([R]), Snausages([R]) and Pounce([R]), Del Monte products are found in eight out of ten U.S. households. The Company also produces, distributes and markets private label food and pet products. For more information on Del Monte Foods Company (NYSE: DLM) visit the Company's website at www.delmonte.com. About Dongwon Dongwon Industries mainly engages in fishery business and has 28% of market share in Korea among fish suppliers. More information about Dongwon Industries is available at www.dwml.co.kr. 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. This press release contains forward-looking statements 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 any such forward-looking statement. The forward-looking statements contained in this press release include statements related to: the expected impact of the sale; the expected impact of the proceeds from such sale; the expected impact of the operating services to be provided to the buyer; expected future G&A costs; the expected impact of the sale on the Company's fiscal 2009 results (including leverage) and fiscal 2010 results (including EPS); and future growth, financial operating results and related matters. Factors that could cause actual results to differ materially from those described in this press release include, among others: issues affecting the consequences of the sale, including indemnification Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from and other ongoing obligations under the sale and ancillary agreements (including the Operating Services Agreement); liabilities retained in connection with the planned sale; the book and tax basis of the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. to be divested; the actual working capital of the seafood business upon closing and the related post-closing working capital adjustment; and the costs associated with the planned sale. Additional factors that could cause actual results (particularly the Company's future operating results, leverage and related matters) to differ materially from those described in this press release include, among others: general economic and business conditions; cost and availability of inputs, commodities, ingredients and other raw materials, including without limitation, energy (including natural gas), fuel, packaging, grains (including corn), and meat by-products Meat by-products are ground and cleaned slaughtered meat carcass parts such as necks, feet, undeveloped eggs, bones, heads, and intestines (and a small amount of feathers in the case of chicken meat). (including fats and oils); the accuracy of our assumptions regarding costs and other matters; our ability to increase prices and manage the price gap between our products and competing private label products; our ability to reduce costs; logistics and other transportation-related costs; our pet food and pet snacks recall which began in March 2007 or other product recalls; our debt levels and ability to service and reduce our debt; use of cash; reduced sales, disruptions, costs or other charges to earnings or expenses that may be generated by our strategic plan and transformation plan efforts; timely launch and market acceptance of new products; competition, including pricing and promotional spending levels by competitors; efforts to improve the performance and market share of our businesses; changes in U.S., foreign or local tax laws and effective rates; effectiveness of marketing and trade promotion programs; changing consumer and pet preferences; the loss of significant customers or a substantial reduction in orders from these customers or the bankruptcy of any such customer; availability, terms and deployment of capital; interest rate fluctuations; product liability claims and other litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; reliance on certain third-parties, including co-packers, our broker and third-party distribution centers or managers; acquisitions, if any, including identification of appropriate targets and successful integration of any acquired businesses; weather conditions; crop yields; any acceleration of our departure from Terminal Island, CA; changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including environmental regulations and import/export regulations or duties; wage rates; industry trends, including changes in buying, inventory and other business practices by customers; public safety and health issues; and other factors. These factors and other risks and uncertainties are described in more detail, from time to time, 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. . Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake to update any of these statements in light of new information or future events. Del Monte. Nourishing nour·ish tr.v. nour·ished, nour·ish·ing, nour·ish·es 1. To provide with food or other substances necessary for life and growth; feed. 2. Families. Enriching Lives. Every Day.[TM] |
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