Del Monte Foods Company Reports Fiscal 2004 First Quarter Results; Announces Organizational Realignment.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--Sept. 4, 2003 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 announced 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 $631.3 million and net income of $14.3 million, or $0.07 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 first quarter ended July July: see month. 27, 2003, compared to reported net sales of $364.3 million and net income of $33.2 million, or $0.21 diluted earnings per share in the prior year period. Adjusting both quarters for the factors detailed in the charts below, adjusted diluted earnings per share for the fiscal 2004 first quarter is $0.09, compared to 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 as adjusted diluted earnings per share of $0.18 for the fiscal 2003 first quarter. "This quarter's overall performance was as expected and our earnings came in at the high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of the forecasted range we provided last quarter," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a G. Wolford Wolford, located in Austria, is a marketer and manufacturer of hosiery and lingerie. In the late 1990s, it ran a famous campaign featuring the work of Helmut Newton. External links
adj. Spoken, occurring, or used during broadcasting: an on-air gaffe; changed his on-air name. advertising campaigns and introducing new products. We believe these initiatives will drive increased awareness, market share and sales going forward. In the first quarter alone we saw meaningful sales and share increases behind the ongoing rollout of our Fruit Naturals fruit cups, the nationwide launch of the StarKist Tuna Creations pouch pouch (pouch) a pocket or sac. abdominovesical pouch one formed by reflection of the peritoneum from the abdominal wall to the anterior surface of the bladder. product line and new advertising and product introductions from key pet brands like 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. and Pup-Peroni. On the integration front, where we remain ahead of plan, we made substantial progress toward providing 'one face' to the customer, identifying and capturing synergies and improving our operational structure by realigning the organization." Organizational Realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. The Company also announced that during the first quarter it simplified its business structure by realigning its administrative support functions and consolidating its operations by merging its Infant Feeding and College Inn businesses into the Del Monte Monte (Italian, Portuguese and Spanish meaning mount) may refer to various things: Monte is the name of several places: In Brazil
Mr. Wolford continued, "This realignment allows these businesses to benefit from greater organizational support while effectively consolidating senior management resources against our entire portfolio. It allows Infant Feeding and College Inn to benefit from the overall branded infrastructure of the Del Monte Brands business unit and the private label soup business to benefit from the Seafood business unit's extensive retail distribution base and strong working relationship with our trade partners." Additionally, the Company has begun the process of combining its 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 and Pittsburgh Pittsburgh (pĭts`bərg), city (1990 pop. 369,879), seat of Allegheny co., SW Pa., at the confluence of the Allegheny and the Monongahela rivers, which there form the Ohio River; inc. 1816. based administrative functions. As part of this integration initiative, the Company announced that approximately 15% of its San Francisco-based positions will be phased-out and the work associated with those positions will be largely integrated into the existing staff at the Company's Pittsburgh operations center The facility or location on an installation, base, or facility used by the commander to command, control, and coordinate all crisis activities. See also base defense operations center; command center. . First Quarter Financial Results The increase in reported net sales for the quarter, when compared to reported net sales for the first quarter of fiscal 2003, was due primarily to the inclusion of Del Monte Brands sales after the completion of the merger on December December: see month. 20, 2002.(1) Net sales of $631.3 million for the first quarter ended July 27, 2003 compares to pro forma as adjusted net sales of $663.1 million for the first quarter of fiscal 2003, which reflects adjustments for the factors detailed in the charts below. The decrease in year over year revenues is due primarily to the impact of our reduction of merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. levels in Del Monte Brands due to low inventories caused by a strong fiscal 2003 performance, and a planned reduction in sales of the non-core portions of the Pet Products portfolio. These declines were partially offset by increased tuna pouch volumes, increased core pet products volumes, due to strong marketing and new products, and increased veterinary veterinary /vet·er·i·nary/ (vet´er-i-nar?e) 1. pertaining to domestic animals and their diseases. 2. veterinarian. vet·er·i·nar·y adj. products sales. Reported diluted earnings per share were $0.07 for the quarter, compared to $0.21 for the first quarter of fiscal 2003. Adjusting both quarters for the factors detailed in the charts below, as adjusted diluted earnings per share for the fiscal 2004 first quarter is $0.09, compared to pro forma as adjusted diluted earnings per share of $0.18 in fiscal 2003. This decrease is due primarily to the impact of lower sales and increased marketing and SG&A expenses, partially offset by lower costs in the seafood business and lower interest expense. (1) Del Monte acquired through merger, the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. StarKist seafood, North American pet food and pet snacks, U.S. private label soup, College Inn broth broth liquid media for culturing microorganisms. cooked meat broth a medium useful for culturing anaerobic bacteria. enrichment broth one modified to permit growth by selected bacteria. and U.S. infant feeding businesses (the "Acquired Businesses") of the H. J. Heinz Company H. J. Heinz Company (NYSE: HNZ), commonly known as Heinz, famous for its "57 Varieties" slogan, is a processed food product company with its headquarters in Pittsburgh, Pennsylvania, in the United States of America. (NYSE: HNZ HNZ HJ Heinz Co (stock symbol) ) on December 20, 2002. For accounting purposes, however, the Acquired Businesses are considered the surviving entity and the historical financial statements of the Acquired Businesses now constitute the historical financial statements of the Company. Therefore, fiscal 2003 reported results include the results of operations of Del Monte's fruit, vegetable vegetable, term originally used for any plant, now the name for many food plants, most of them annuals, and for their edible parts. There is no clear botanical distinction between vegetables and fruits. and tomato businesses ("Del Monte Brands") only for the period after the December 20, 2002 merger. Reported financial results for periods prior to the merger reflect only the financial results of the Acquired Businesses. Reported results also include certain merger-related expenses and other income, the detail of which is shown in the Company's Consolidated Statements of Income. Outlook The Company also reiterated the financial guidance it provided in its June June: see month. 26, 2003 press release. It expects fiscal 2004 revenue growth of 2 to 4% over pro forma fiscal 2003. The Company also expects reported diluted earnings per share of approximately $0.80 to $0.84 for its fiscal year ending May 2, 2004. When adjusted for expected integration and 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). expenses of $0.08 per share, the Company expects fiscal 2004 adjusted diluted earnings per share growth of 6 to 9%, to approximately $0.88 to $0.92. The Company also expects free cash flow(2), before integration and restructuring expenses, to be consistent with prior guidance. Integration and restructuring expenses for 2004 are expected to be approximately $26 million, approximately $17 million net of taxes. The Company expects to pay down debt by approximately $175 million in fiscal 2004. (2) Cash flow from operating activities less cash flow from investing activities. Del Monte Foods Del Monte Foods Company is one of the country's largest and most well known producers, distributors and marketers of premium quality, branded and private label food and pet products for the U.S. retail market, generating over $3 billion in pro forma net sales in fiscal 2003. With a powerful portfolio of brands including Del Monte(R), Contadina(R), StarKist(R), S&W(R), Nature's Goodness(TM), College Inn(R), 9Lives(R), Kibbles'n Bits(R), Pup-Peroni(R), Snausages Snausages are a dog treat of small pieces that resemble miniature "pigs in blankets" (in the American sense of sausages wrapped in dough). They come in several different flavors, including "bacon and cheese" and "beef and cheese". (R), and NawSomes!(R), Del Monte products are found in 9 out of 10 American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of households. For more information on Del Monte Foods Company (NYSE:DLM), visit the Company's website at www.delmonte.com. Del Monte Foods will host a live audio webcast, accompanied ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. by a slide presentation, to discuss its results at 8:00 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT (11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) today. The webcast, slide presentation, related reconciliations of non-GAAP financial measures and historical, quarterly pro forma as adjusted results for fiscal 2002 and 2003 can be accessed at www.delmonte.com/company/investors under "Additional Financial Information." The webcast and slide presentation will be available online through September September: see month. 18, 2003. The Company is providing the non-GAAP financial measures because the Company believes these financial measures allow for a more consistent period-to-period comparison. This is due, in part, to the fact that on December 20, 2002, the Company merged with certain businesses of H. J. Heinz Company (NYSE: HNZ). For accounting purposes, fiscal 2003 reported results include the results of operations of the Del Monte Brands business only for the period after the December 20, 2002 merger. Reported financial results for periods prior to the merger reflect only the financial results of the Acquired Businesses. Reported results also include expenses and charges that relate to the merger and other events rather than to the routine operation of the Company's businesses. The Company's adjustments to its GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and GAAP pro forma results include expenses, gains and losses related to integration and merger-related items, restructuring and debt refinancing Refinancing An extension and/or increase in amount of existing debt. . The Company uses the presented non-GAAP financial measures internally to focus management on period-to-period changes in the Company's businesses and believes this information is also helpful to investors. 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. The forward-looking statements contained in this press release include statements related to the merger of certain businesses and to future financial operating results, and in some cases can be identified by the use of forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. terms such as "will", "expect" or other comparable terms. 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. These factors include, among others: the success of the integration of the businesses we acquired from H.J. Heinz Company ("Heinz") in a timely and cost effective manner; the risk that we may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. liabilities as a result of the acquisition of these businesses that are currently unknown; costs related to the acquisition and integration of these businesses; the actions of the U.S., foreign and local governments; general economic and business conditions; weather conditions; energy costs and availability; crop yields; competition, including pricing and promotional spending levels by competitors; raw material costs and availability; fish availability and pricing; high leverage; product liability claims; changes in or the failure or inability to comply with, governmental regulations, including environmental regulations; foreign currency exchange and interest rate fluctuations; the loss of significant customers or a substantial reduction in orders from these customers; the timely introduction and market acceptance of new products; changes in business strategy or development plans; availability, terms and deployment of capital; ability to increase prices; disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in relationships with our employees; industry trends, including changes in buying and inventory practices by customers; 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 economic, business, competitive and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. factors affecting our operations. 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. for the fiscal year ended April 27, 2003. 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" . The Company does not undertake to update any of these statements in light of new information or future events.
Del Monte Foods Company
Selected Balance Sheet Data (Unaudited) July 27, 2003
(In millions) -------------
Cash and cash equivalents $ 12.0
Trade accounts receivable, net of allowance 193.4
Inventories 899.2
Total assets 3,634.0
Accounts payable and accrued expenses 467.2
Short-term borrowings 35.5
Long-term debt, including current portion 1,646.8
Stockholders' equity 968.2
DEL MONTE FOODS COMPANY
Combined Statements of Income
For the Three Months Ended July 27, 2003
(In Millions)
GAAP Non-GAAP Non-GAAP
Reported Adjustments(1) As Adjusted
------------ -------------- ------------
Net sales $ 631.3 $ - $ 631.3
Cost of products sold 467.6 (1.1) 466.5
Selling, general and
administrative 110.4 (5.9) 104.5
------------ -------------- ------------
Operating income 53.3 7.0 60.3
Interest expense 30.0 - 30.0
Other expense 0.8 - 0.8
------------ -------------- ------------
Income before income taxes 22.5 7.0 29.5
Provision for income taxes 8.2 2.6 10.8
------------ -------------- ------------
Net income $ 14.3 $ 4.4 $ 18.7
============ ============== ============
Basic Average Shares 209,367,865 209,367,865
EPS $ 0.07 $ 0.09
Fully Diluted Shares
Outstanding 210,574,944 210,574,944
EPS $ 0.07 $ 0.09
(1) Non-GAAP adjustments represent integration and restructuring
expenses related to the expansion of soup production in our
Mendota facility ($1.6), employee termination benefits and
retention bonuses ($2.8), and various other integration costs
($2.6).
DEL MONTE FOODS COMPANY
Combined Statements of Income
For the Three Months Ended July 31, 2002
(In Millions)
GAAP
GAAP Pro Forma
Reported Adjustments(1)
------------ --------------
Net sales $ 364.3 $ 291.8
Cost of products sold 265.3 217.3
Selling, general and administrative 51.5 43.0
------------ --------------
Operating income 47.5 31.5
Interest expense (0.2) 32.1
Other expense/(income) 1.5 (0.1)
------------ --------------
Income before income taxes 49.2 (0.7)
Provision for income taxes 16.0 1.6
------------ --------------
Net income $ 33.2 $ (2.3)
============ ==============
Basic Average Shares 156,921,228 52,306,904
EPS $ 0.21
Fully Diluted Shares Outstanding 156,993,712 53,246,674
EPS $ 0.21
GAAP
Total Non-GAAP
Pro Forma Adjustments
---------------- -----------
Net sales $ 656.1 $ 7.0 ( 2 )
Cost of products sold 482.6 (1.5)( 3 )
Selling, general and administrative 94.5 (0.5)( 4 )
---------------- -----------
Operating income 79.0 9.0
Interest expense 31.9 0.6 ( 5 )
Other expense/(income) 1.4 0.1
---------------- -----------
Income before income taxes 48.5 8.5
Provision for income taxes 17.6 2.6 ( 6 )
---------------- -----------
Net income $ 30.9 $ 5.9
================ ===========
Basic Average Shares 209,228,132
EPS $ 0.15
Fully Diluted Shares Outstanding 210,240,386
EPS $ 0.15
Non-GAAP
Pro Forma
As Adjusted
------------------
Net sales $ 663.1
Cost of products sold 481.1
Selling, general and administrative 94.0
------------------
Operating income 88.0
Interest expense 32.5
Other expense/(income) 1.5
------------------
Income before income taxes 57.0
Provision for income taxes 20.2
------------------
Net income $ 36.8
==================
Basic Average Shares 209,228,132
EPS $ 0.18
Fully Diluted Shares Outstanding 210,240,386
EPS $ 0.18
(1) The historical GAAP Reported consolidated statements of income
include only the results of operations for the Acquired
Businesses. For comparability, the GAAP Total Pro Forma
consolidated statements of income include a pro forma adjustment
to include the results of Del Monte Brands. Cost of products sold
includes $0.5 million of pro forma depreciation expense to
recognize the unwinding of Acquired Businesses assets held under
synthetic lease obligations. SG&A includes the addition of $0.7
million of pro forma incentive and retention compensation for the
Acquired Businesses. SG&A excludes $7.3 million of Del Monte
Brands merger-related expenses incurred prior to the December 20,
2002 merger date. Interest expense includes $19.6 million of
additional pro forma expense as if the merger and related
financing occurred on the first day of the fiscal year.
(2) Net Sales excludes $7.0 million related to a change in estimates
for Acquired Businesses trade promotion expenses related to prior
periods.
(3) In accordance with purchase accounting rules applied to the
merger, Del Monte Brands fixed assets were increased to fair
market value. These results exclude $1.5 million resulting from
incremental depreciation expense.
(4) SG&A excludes incentive and retention compensation for the
Acquired Businesses.
(5) Interest expense excludes $1.6 million of previously capitalized
debt issuance costs resulting from the amortization of a loss from
interest rate swap agreements and $1.0 million of previously
capitalized debt issuance costs resulting from the early repayment
of debt.
(6) Income taxes are presented to reflect the impact of the
adjustments noted, and the tax rate for the combined Company.
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