Del Monte Foods Company Reports Fiscal 2004 Second Quarter Results.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--Dec. 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 $811.6 million and net income of $40.2 million, or $0.19 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 second quarter ended October October: see month. 26, 2003, compared to reported net sales of $471.7 million and net income of $52.4 million, or $0.33 diluted earnings per share, for the prior year period. Adjusting both quarters for the factors detailed in the charts below, adjusted diluted earnings per share for the fiscal 2004 second quarter were $0.21, 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 $0.21 for the fiscal 2003 second quarter. "This quarter's performance was in line with prior year and, importantly, we continued our progress to build a unified company that will deliver superior on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" performance," 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
Monte is the name of several places: In Brazil
tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. capture of expected synergies. Our ability to leverage our center-store scale and robust brand portfolio was demonstrated by the strong results generated from several successful cross product-line promotions we launched during the quarter. On-air on-air adj. Spoken, occurring, or used during broadcasting: an on-air gaffe; changed his on-air name. advertising supporting 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 StarKist Tuna Creations was fielded and these businesses continue to show increased sales and market share gains." The increase in reported net sales for the quarter, when compared to reported net sales for the second quarter of fiscal 2003, was due primarily to the inclusion of legacy Del Monte Brands sales after the completion of the merger on December December: see month. 20, 2002.(1) Net sales of $811.6 million for the second quarter ended October 26, 2003 compares to pro forma as adjusted net sales of $801.8 million for the second quarter of fiscal 2003, which reflects adjustments for the factors detailed in the charts below. The increase in year over year revenues is due primarily to the strong performance of the Del Monte Brands business, particularly in solid tomatoes, single-serve fruit and produce fruit, as well as continued growth in the tuna 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. , behind the successful launch of Tuna Creations. These increases were partially offset by lower Pet Products sales reflecting the continued anticipated reduction in sales of the non-core portions of the Pet Products portfolio and the impact of a price increase on 9Lives cat food. Reported diluted earnings per share were $0.19 for the quarter, compared to $0.33 for the second 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 second quarter were $0.21, compared to pro forma as adjusted diluted earnings per share of $0.21 in fiscal 2003. These results are due primarily to the impact of increased volume offset by higher SG&A expenses and other higher costs. Six Months Ended October 26, 2003 The Company announced reported net sales of $1,442.9 million and net income of $54.5 million, or $0.26 diluted earnings per share, for the first half of fiscal 2004, compared to reported net sales of $836.0 million and net income of $85.6 million, or $0.54 diluted earnings per share, for the first half of fiscal 2003. Adjusting both periods for the factors detailed in the charts below, as adjusted diluted earnings per share for the first half of fiscal 2004 were $0.30, compared to pro forma as adjusted diluted earnings per share of $0.38 in the fiscal 2003 period. The increase in reported net sales for the first half of fiscal 2004, when compared to reported net sales for the fiscal 2003 first half, was due primarily to the inclusion of legacy Del Monte Brands after the completion of the merger. Net sales of $1,442.9 million for the fiscal 2004 first half, compared to pro forma as adjusted net sales of $1,464.9 million in the comparable fiscal 2003 period, which reflects adjustments for the factors detailed in the charts below. The decrease in year over year revenues is due primarily to an anticipated reduction in sales of the private label and other non-core portions of the pet products portfolio, and lower sales of canned seafood seafood Edible aquatic animals excluding mammals, but including both freshwater and ocean creatures. Seafood includes bony and cartilaginous fishes, crustaceans, mollusks, edible jellyfish, sea turtles, frogs, sea urchins, and sea cucumbers. . These decreases were partially offset by growth in the Del Monte Brands business and increased tuna pouch sales. Reported diluted earnings per share were $0.26 for the first half of fiscal 2004, compared to $0.54 for the first six months of fiscal 2003. Adjusting both periods for the factors detailed in the charts below, as adjusted diluted earnings per share for the fiscal 2004 first half were $0.30, compared to pro forma as adjusted diluted earnings per share of $0.38 in fiscal 2003. The decrease is due primarily to the impact of increased SG&A expenses and other higher costs, partially offset by favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. sales mix sales mix See product mix. and lower interest expense. Outlook The Company also announced that it expects reported diluted earnings per share of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.74 to $0.78 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 approximately $0.14 per share, the Company reiterated that it continues to expect fiscal 2004 adjusted diluted earnings per share growth of 6 to 9%, to approximately $0.88 to $0.92. The Company also continues to expect fiscal 2004 revenue growth of 2 to 4% over pro forma fiscal 2003. The Company continues to expect total integration expense of $75 million in fiscal 2003 through fiscal 2005. However, due to its ability to achieve integration objectives more quickly than originally anticipated, it is increasing its projected integration expense in fiscal 2004 from the $26 million previously estimated to $45 million, or approximately $28 million net of taxes. The Company intends to make a corresponding reduction in expected expenses in fiscal 2005. 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. PST PST Paroxysmal supraventricular tachycardia, see there (11:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy ) today. The webcast, slide presentation, related reconciliations of non-GAAP financial measures and historical, quarterly pro forma as adjusted results for fiscal 2002, 2003 and 2004 can be accessed at www.delmonte.com/company/investors under "Additional Financial Information." The webcast and slide presentation will be available online following the presentation. 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 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) ). 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 con·vey tr.v. con·veyed, con·vey·ing, con·veys 1. To take or carry from one place to another; transport. 2. 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 COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; 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 Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. 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. (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 (NYSE: HNZ) 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 ("legacy 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 con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Income.
Del Monte Foods Company
Selected Balance Sheet Data (Unaudited)
(In Millions)
October 26, 2003
------------------
Cash and cash equivalents $13.6
Trade accounts receivable, net of allowance 245.3
Inventories 1,142.2
Total assets 3,917.1
Accounts payable and accrued expenses 607.0
Short-term borrowings 129.1
Long-term debt, including current portion 1,646.1
Stockholders' equity 1,016.8
DEL MONTE FOODS COMPANY Combined Statements of Income For the Three Months Ended October 26, 2003 (In Millions)
GAAP Non-GAAP Non-GAAP
Reported Adjustments(1) As Adjusted
----------------------------------------
Net sales $811.6 $- $811.6
Cost of products sold 592.3 (0.5) 591.8
Selling, general and
administrative 128.1 (7.2) 120.9
----------------------------------------
Operating income 91.2 7.7 98.9
Interest expense 30.9 - 30.9
Other expense (2.4) - (2.4)
----------------------------------------
Income before income
taxes 62.7 7.7 70.4
Provision for income taxes 22.5 3.4 25.9
----------------------------------------
Net income $40.2 $4.3 $44.5
========================================
Basic Average Shares 209,458,920 209,458,920
EPS $0.19 $0.21
Fully Diluted Shares
Outstanding 210,630,911 210,630,911
EPS $0.19 $0.21
(1) Non-GAAP adjustments represent integration and restructuring expenses related to the expansion of soup production in our Mendota Mendota can refer to any of the following places in the United States:
retention bonuses ($1.7), and various other integration costs ($4.8). DEL MONTE FOODS COMPANY Combined Statements of Income For the Three Months Ended October 30, 2002 (In Millions)
GAAP GAAP Non-GAAP
GAAP Pro Forma Total Non- Pro
GAAP Forma
Reported Adjust- Pro Adjust- As
ments(1) Forma ments Adjusted
------------------------------------- --------
Net sales $471.7 $330.1 $801.8 $- $801.8
Cost of products sold 331.3 261.2 592.5 (1.5)(2) 591.0
Selling, general and
administrative 63.7 54.6 118.3 (5.7)(3) 112.6
------------------------------------- --------
Operating income 76.7 14.3 91.0 7.2 98.2
Interest expense (0.2) 31.1 30.9 1.2 (4) 32.1
Other
income/(expense) 0.3 0.4 0.7 (0.1) 0.6
------------------------------------- --------
Income before
income taxes 77.2 (16.4) 60.8 5.9 66.7
Provision for income
taxes 24.8 (8.2) 16.6 7.1 (5) 23.7
------------------------------------ --------
Net income $52.4 $(8.2) $44.2 $(1.2) $43.0
==================================== ========
Basic Average
Shares 156,921,228 52,306,904 209,228,132 209,228,132
EPS $0.33 $0.21 $0.21
Fully Diluted Shares
Outstanding 157,164,302 53,076,084 210,240,386 210,240,386
EPS $0.33 $0.21 $0.21
(1) The historical GAAP consolidated reported statements of income include 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 legacy Del Monte Brands. Cost of products sold includes $0.5 of pro forma depreciation expense to recognize the unwinding of Acquired Businesses assets held under synthetic lease Synthetic Lease An operating lease that is structured in a way so that it is not recorded as a liability on the balance sheet. Instead, it is considered to be an expense on the income statement. obligations. SG&A includes the addition of $0.7 of pro forma incentive and retention compensation for the Acquired Businesses. SG&A excludes $2.6 of legacy Del Monte Brands merger-related expenses incurred prior to the December 20, 2002 merger date. Interest expense includes $18.9 of additional pro forma expense as if the merger and related financing occurred on the first day of the fiscal year. (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 merger, legacy Del Monte Brands fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → were increased to fair market value. These results exclude $1.5 resulting from incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. depreciation expense. (3) SG&A excludes $4.9 of integration expenses, and $0.7 of incentive and retention compensation for the Acquired Businesses. (4) Interest expense excludes $1.2 of interest income resulting from the amortization of a loss from interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. agreements. (5) Income taxes are presented to reflect the impact of the adjustments noted, and the tax rate for the combined Company.
DEL MONTE FOODS COMPANY
Combined Statements of Income
For the Six Months Ended October 26, 2003
(In Millions)
GAAP Non-GAAP Non-GAAP
Reported Adjustments(1) As Adjusted
--------------------------------------
Net sales $1,442.9 $- $1,442.9
Cost of products sold 1,059.9 (1.6) 1,058.3
Selling, general and
administrative 238.5 (13.1) 225.4
--------------------------------------
Operating income 144.5 14.7 159.2
Interest expense 60.9 - 60.9
Other expense (1.6) - (1.6)
--------------------------------------
Income before income taxes 85.2 14.7 99.9
Provision for income taxes 30.7 6.0 36.7
--------------------------------------
Net income $54.5 $8.7 $63.2
======================================
Basic Average Shares 209,412,640 209,412,640
EPS $0.26 $0.30
Fully Diluted Shares
Outstanding 210,541,998 210,541,998
EPS $0.26 $0.30
(1) Non-GAAP adjustments represent integration and restructuring expenses related to the expansion of soup production in our Mendota facility ($2.8), employee termination benefits and retention bonuses ($3.9), and various other integration costs ($8.0). DEL MONTE FOODS COMPANY Combined Statements of Income For the Six Months Ended October 30, 2002 (In Millions)
GAAP GAAP
GAAP Pro Forma Total
Reported Adjustments(1) Pro Forma
--------------------------------------
Net sales $836.0 $621.9 $1,457.9
Cost of products sold 596.6 478.5 1,075.1
Selling, general and
administrative 115.2 97.6 212.8
--------------------------------------
Operating income 124.2 45.8 170.0
Interest
expense (0.4) 63.2 62.8
Other income/(expense) 1.8 0.3 2.1
--------------------------------------
Income before income taxes 126.4 (17.1) 109.3
Provision for income taxes 40.8 (6.6) 34.2
--------------------------------------
Net income $85.6 $(10.5) $75.1
======================================
Basic Average
Shares 156,921,228 52,306,904 209,228,132
EPS $0.55 $0.36
Fully Diluted Shares
Outstanding 157,079,417 53,160,969 210,240,386
EPS $0.54 $0.36
Non-GAAP
Non-GAAP Pro Forma
Adjustments As Adjusted
--------------- -------------
Net sales $7.0 (2) $1,464.9
Cost of products sold (3.0) (3) 1,072.1
Selling, general and administrative (6.2) (4) 206.6
--------------- -------------
Operating income 16.2 186.2
Interest
expense 1.8 (5) 64.6
Other income/(expense) - 2.1
--------------- -------------
Income before income taxes 14.4 123.7
Provision for income taxes 9.7 (6) 43.9
--------------- -------------
Net income $4.7 $79.8
=============== =============
Basic Average Shares 209,228,132
EPS $0.38
Fully Diluted Shares Outstanding 210,240,386
EPS $0.38
(1) The historical GAAP consolidated statements of income include 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 legacy Del Monte Brands. Cost of products sold includes $1.0 of pro forma depreciation expense to recognize the unwinding of the Acquired Businesses' assets held under synthetic lease obligations. SG&A includes the addition of $1.4 of pro forma incentive and retention compensation for the Acquired Businesses. SG&A excludes $9.9 of legacy Del Monte Brands merger-related expenses incurred prior to the December 20, 2002 merger date. Interest expense includes $38.5 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 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, legacy Del Monte Brands fixed assets were increased to fair market value. These results exclude $3.0 resulting from incremental depreciation expense. (4) SG&A excludes $4.9 of integration expenses, and $1.2 of incentive and retention compensation for the Acquired Businesses. (5) Interest expense excludes $2.8 of interest income resulting from the amortization of a loss from interest rate swap agreements and $1.0 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 issuance costs resulting from the early repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan 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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