Del Monte Foods Company Reports Fiscal 2006 Fourth Quarter and Full Year Results; Delivers Strong F06 Financial Performance; Announces Transformation Plan and Increases Long-Term Growth Rate Targets.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. ):
Announcement Highlights
-- Delivered strong full-year financial results
-- Reported EPS of $0.83 and net sales growth of 3.4%.
-- As-adjusted EPS of $0.77 (excludes $0.05 gain from sale of
divested private label soup and infant feeding businesses
and $0.01 of other discontinued operations) within
guidance range despite challenging cost environment. Net
sales growth and cash flow exceeded guidance.
-- Top-line driven primarily by successful pricing actions
and new product introductions.
-- Strategically positioned the Company for future growth
-- Took major steps to realign portfolio with agreements to
acquire Meow Mix and Milk-Bone and with divestiture of
soup and infant feeding businesses.
-- Successfully executed against each initiative outlined in
strategic operating plan, Project Brand.
-- Transformation plan announced today is expected to further
improve overall competitiveness, enhance performance and
continue to move the Company toward the goal of creating a
superior branded food company, focused on:
-- Streamlining the organization;
-- Strengthening systems and processes; and
-- Delivering scale efficiencies from the pet acquisitions.
-- Reflecting the above progress, the Company today is increasing
its long-term growth rate targets (excluding transformation
and integration expenses):
-- Net sales: 3%-5%
-- EPS: 7%-9%
Del Monte Foods Fourth Quarter Results Del Monte Foods today reported net income for the fourth quarter of fiscal 2006 of $57.9 million, or $0.29 earnings per 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. share ("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. "), compared to net income last year of $19.3 million, or $0.09 EPS. Results for fourth quarter fiscal 2006 included a $0.05 gain on the sale of the Company's private label soup, infant feeding and food service soup businesses and $0.01 of earnings from other discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a pet business sold in prior periods. Results for fourth quarter fiscal 2005 included $0.14 of refinancing Refinancing An extension and/or increase in amount of existing debt. , integration and Kal-Kan litigation-related expenses. Also included in the reported fourth quarter results for the fiscal 2006 and 2005 periods are earnings associated with the divested soup and infant feeding businesses of $0.02 and $0.01, respectively. "Our fiscal year and fourth quarter 2006 results reflect positive business performance as well as the achievement of significant strategic accomplishments," 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. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. and other operational costs in both the fourth quarter and the full year. These actions enabled the Company to meet bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. targets despite continued and significant inflationary cost pressures throughout the year." Mr. Wolford continued, "This financial performance was a direct result of the successful implementation of initiatives outlined in our strategic operating plan, Project Brand. These included execution of on-trend innovation, achievement of the $50 million cost reduction program, execution of a share buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program and initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of a quarterly dividend. Importantly however, we also accomplished a major strategic objective with our portfolio 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 announced acquisitions of Meow Mix and Milk-Bone Milk-Bone is a brand of dog treat. It was created in 1908 by the F. H. Bennett Biscuit Company, which operated a bakery on the Lower East Side of New York City. Originally named Maltoid, the biscuit was a bone-shaped treat made from minerals, meat products, and milk. and the sale of our soup and infant feeding businesses represent major steps in Del Monte's strategic commitment to expand its portfolio of higher margin businesses in fast growing categories and create a more value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: , branded consumer packaged food company." Fourth Quarter Results - Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the 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 $799.2 million compared to $774.4 million last year, an increase of 3.2%. Income from continuing operations, which excludes the soup and infant feeding businesses(1), was $41.7 million, or $0.21 EPS, compared to $17.6 million, or $0.08 EPS in the previous year. Results for fourth quarter fiscal 2005 included $0.14 of refinancing, integration and Kal-Kan litigation-related expenses. The Company is reporting the soup and infant feeding businesses as discontinued operations due to its sale of the businesses in April 2006. The increase in net sales was driven primarily by increased net pricing and growth from new and existing products. These gains were partially offset by volume loss associated with price increases ("elasticity") which was within the range anticipated by the Company. The increase in EPS from continuing operations was driven primarily by the absence of prior year expenses, specifically refinancing, integration and Kal-Kan litigation-related expenses. In the fourth quarter, pricing, cost reduction actions and a change in estimate related to transportation-related costs, fully offset higher steel and other packaging, energy, logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. and other transportation-related costs. However, the Company also experienced higher marketing and overhead expenses.
Impact of Identified Items on Diluted Earnings Per Share
Fourth Quarter
----------------
2006
----------------
======================================================================
Diluted earnings per share, as reported (GAAP) $ 0.29
======================================================================
Including:
Gain on the sale of the soup and infant feeding
businesses $ 0.05
Other discontinued operations relating to a pet
business sold in prior periods $ 0.01
----------------
Total impact of identified items - income/(expense) $ 0.06
Diluted earnings per share, as-adjusted(2) $ 0.23
Earnings associated with the soup and infant feeding
businesses $ 0.02
======================================================================
Diluted earnings per share - continuing operations,
as reported (GAAP) $ 0.21
======================================================================
Reportable Segments - Fourth Quarter Results Consumer Products For the fourth quarter, Consumer Products net sales were $573.4 million, an increase of 3.5% over net sales of $554.0 million in the prior year period. The increase was driven primarily by higher net pricing, as well as growth from new products, including Del Monte Monte (Italian, Portuguese and Spanish meaning mount) may refer to various things: Monte is the name of several places: In Brazil
["Reference Guide to Symbolics-Lisp", Symbolics, March 1985]. ) and StarKist Tuna Fillets. Consumer Products 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. increased 12.6% from $52.5 million in fourth quarter fiscal 2005 to $59.1 million in fourth quarter fiscal 2006. The increase reflected positive topline performance combined with cost reduction actions, offset in part by higher costs, including bonus accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. expenses and other G&A, steel and other packaging, energy, logistics and other transportation-related costs as well as fish costs. The quarter also benefited from the absence of prior year integration expense. Pet Products For the fourth quarter, Pet Products net sales were $225.8 million, an increase of 2.5% over net sales of $220.4 million in the prior year period. The increase was driven primarily by increased sales from new products in the dry dog and pet snacks categories. Pet Products operating income decreased 4.2% from $42.9 million in fourth quarter fiscal 2005 to $41.1 million in fourth quarter fiscal 2006. Positive volume/mix from the topline combined with cost reduction actions were offset by increased inflationary and other operational cost increases, driven primarily by higher customer delivery costs. Operating income was further reduced by net unfavorable year-over-year comparison factors. Bonus accrual expenses and a timing shift in trade spending, combined with higher other G&A expenses in fiscal 2006, more than offset the positive impact of the absence of fiscal 2005 integration and Kal-Kan litigation-related expenses. Del Monte Foods Fiscal 2006 Results For fiscal 2006, the Company reported net income of $169.9 million, or $0.83 EPS compared to net income last year of $117.9 million, or $0.56 EPS. Results for fiscal 2006 included a $0.05 gain on the sale of the soup and infant feeding businesses and $0.01 of other discontinued operations. Results for fiscal 2005 included $0.19 of refinancing, integration and Kal-Kan litigation-related expenses. Also included in the reported results for fiscal 2006 and 2005 are earnings associated with the divested soup and infant feeding businesses of $0.10 and $0.08, respectively. Full-Year Results - Continuing Operations Net sales of $2,998.6 million compared to $2,899.3 million last year, an increase of 3.4%. Income from continuing operations, which excludes the soup and infant feeding businesses, was $137.0 million, or $0.67 EPS, compared to $100.6 million or $0.48 EPS in the previous year. Results for fiscal 2005 included $0.19 of refinancing, integration and Kal-Kan litigation-related expenses. The increase in net sales was driven primarily by increased net pricing and growth from new products, partially offset by elasticity. The increase in EPS from continuing operations was driven primarily by solid top-line performance, the absence of certain prior year expenses, specifically refinancing, integration and Kal-Kan litigation-related expenses, the benefits of the share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program and lower interest expense, partially offset by higher costs, including steel and other packaging, energy, logistics and other transportation-related costs and SG&A.
Impact of Identified Items on Diluted Earnings Per Share
Full Year
----------------
2006
----------------
======================================================================
Diluted earnings per share, as reported (GAAP) $ 0.83
======================================================================
Including:
Gain on the sale of the soup and infant feeding
businesses $ 0.05
Other discontinued operations relating to a pet
business sold in prior periods $ 0.01
----------------
Total impact of identified items - income/(expense) $ 0.06
Diluted earnings per share, as-adjusted(3) $ 0.77
Earnings associated with the soup and infant feeding
businesses $ 0.10
======================================================================
Diluted earnings per share - continuing operations,
as reported (GAAP) $ 0.67
======================================================================
Project Brand Update One year ago, Del Monte announced Project Brand, its strategic plan to enhance shareholder value by increasing the branded focus of its product portfolio and accelerating innovation-driven growth in higher margin categories. In fiscal 2006, the Company executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. against each of the five key tenets of Project Brand, including: --M&A: In fiscal 2006, Del Monte made significant progress realigning its portfolio, and announced agreements to acquire Meow Mix and Milk-Bone and divested its off-strategy, lower margin soup and infant feeding businesses. --Portfolio Optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. : In addition to the acquisitions and 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). , the Company improved its overall portfolio mix by expanding sales of its targeted higher margin, higher growth businesses by more than 10%. Including the divestiture, it also reduced SKUs by 39%, exceeding the Company's Project Brand goal of 20% SKU (StockKeeping Unit) The number of one specific product available for sale. If a hardware device or software package comes in different versions, there is an SKU for each one. SKU - stock-keeping unit reduction by fiscal 2008. --Innovation: Del Monte's new product introductions were aligned with key consumer and pet trends in fiscal 2006. In Consumer Products, this included higher margin Del Monte Fruit Naturals and StarKist Tuna Fillets. In Pet Products, new product introductions included 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. Homestyle Beef and Meaty Bone Denta-Delicious. --Cost Management: Del Monte delivered the $50 million in cost savings targeted for fiscal 2006 and remains on track to deliver $100 million total cost savings by the end of fiscal 2008. --Financial Flexibility: The Company executed a $125 million share repurchase and initiated its first dividend payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. since the Company went public in 1999. Del Monte generated full year fiscal 2006 cash flow(4) of $444 million, which includes $222 million of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). related to the sale of the soup and infant feeding businesses (representing net proceeds of $265.7 million less $43.3 million of restricted cash related to mandatory Peremptory; obligatory; required; that which must be subscribed to or obeyed. Mandatory statutes are those that require, as opposed to permit, a particular course of action. debt repayments). The Company's ongoing debt management strategy resulted in fiscal 2006 financial flexibility that enabled the acquisitions. Transformation Plan In addition, Del Monte today announced a transformation plan to further the Company's progress against its strategic goal of becoming a more value-added, consumer packaged food company. The plan's initiatives, which are focused on strengthening systems and processes, streamlining the organization and leveraging the scale efficiencies expected from the pet acquisitions, are anticipated to improve the competitiveness of the Company and enhance its overall performance. As part of its plan, Del Monte will be focusing on the following initiatives: --Implementing supply chain efficiencies to improve order management, supply chain planning, execution and inventory reduction capabilities. --Optimizing the Company's dry pet manufacturing matrix to fully leverage its larger, post-acquisition scale to significantly lower delivered costs. --Streamlining the organization by eliminating management layers in order to shorten (audio, compression) Shorten - A form of lossless audio compression. lines of communication "Lines of Communication" is an episode from the fourth season of the science-fiction television series Babylon 5. Synopsis Franklin and Marcus attempt to persuade the Mars resistance to assist Sheridan in opposing President Clark. and accelerate decision-making decision-making, n the process of coming to a conclusion or making a judgment. decision-making, evidence-based, n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from , as well as to broaden responsibilities and expand opportunities so the Company can retain and attract top talent. Del Monte plans to reduce its SG&A headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. by more than 7%, with reductions in both 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. and San Francisco. --Implementing enhanced trade fund management capabilities by increasing and upgrading systems and processes used to fund and track promotions. --Enhancing systems and processes in the areas of marketing planning and budgeting, new product launch and consumer knowledge capture, thus improving the quality and speed-to-market of our marketing and new product innovation. "This program continues our progress and strategic commitment towards the goal of transforming Del Monte into a superior U.S. retail branded food company," said Mr. Wolford. "Streamlining our business and improving our systems and processes will make us more nimble nim·ble adj. nim·bler, nim·blest 1. Quick, light, or agile in movement or action; deft: nimble fingers. See Synonyms at dexterous. 2. , giving us the flexibility and speed we need to meet the needs of our customers and consumers. We also expect to significantly improve our dry pet manufacturing and distribution infrastructures, improving our margins. By continuing to improve our competitive capabilities through improved organizational effectiveness Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce. The idea of organizational effectiveness is especially important for non-profit organizations as most people who donate money to non-profit and speed of decision-making, as well as a reduction in operating costs operating costs npl → gastos mpl operacionales , this transformation plan will significantly enhance our growth potential." Del Monte expects to 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. costs associated with these initiatives over the next two years of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $110 million in pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta costs, including $60 million in anticipated capital expenditures and $10 million of non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) . In fiscal 2007, Del Monte is expected to incur transformation-related costs of $75 to $85 million in pre-tax costs, including $40 to $45 million in capital expenditures and $8 million of non-cash expenses. The plan is expected to result in pre-tax transformation-related expenses of $35 to $45 million (including the non-cash expenses mentioned above), or approximately $0.11 to $0.14 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. in fiscal 2007. These initiatives are expected to result in approximately $40 million in working capital improvements in fiscal 2007. The Company expects to achieve a two year payback Payback The length of time it takes to recover the initial cost of a project, without regard to the time value of money. on its investment with an estimated after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. rate-of-return of over 50%. The Company expects to start generating savings in fiscal 2007, and capture approximately $40 million of pre-tax savings in fiscal 2008 and approximately $50 million in fiscal 2009. Savings are incorporated in the fiscal 2007 guidance and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook, as outlined below. Outlook Long-Term Outlook (beyond fiscal 2007) Based on the Company's portfolio realignment, the strategic progress on its base business and the transformation plan announced today, Del Monte increased its long-term net sales growth rate target to 3% to 5% and its long-term EPS growth rate target to 7% to 9% (excluding transformation and integration expenses). Mr. Wolford concluded, "The progress we achieved in fiscal 2006, including the announcements of Meow Mix and Milk-Bone, combined with our transformation program, are improving the overall financial and strategic outlook for Del Monte. Today, our leading brands are well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the primary consumer and pet trends driving the food industry. We are anticipating increased top and bottom-line momentum as a result. In fiscal 2008, the first year we realize the full impact of the acquisitions and the related synergies, we expect to be 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 this increased range." Fiscal 2007 For fiscal 2007, the Company expects sales growth of 14% to 16% over fiscal 2006 net sales of $2,998.6 million. Net sales growth is expected to be driven primarily by the acquisitions of Meow Mix and Milk-Bone as well as from growth of the Company's existing businesses consistent with prior years. During the fourth quarter, the Company announced additional pricing actions effective May 1, 2006 in both Consumer Products and Pet Products to combat the effect of continued higher inflationary costs. Diluted EPS from continuing operations is expected to be $0.53 to $0.58 in fiscal 2007, including approximately $0.06 of integration expense and approximately $0.11 to $0.14 of transformation-related expenses. The Company reported $0.67 diluted EPS from continuing operations in fiscal 2006. The Company expects cash provided by operating activities, less cash used in investing activities, to be approximately $150 to $170 million. This compares to $444 million in fiscal 2006, which included $222 million of net proceeds related to the sale of the soup and infant feeding businesses. First Quarter Fiscal 2007 For the fiscal 2007 first quarter, the Company expects to deliver sales growth of approximately 2% to 4% over net sales of $617 million in the first quarter of fiscal 2006. Diluted EPS from continuing operations is expected to be approximately $(0.04) to $0.00, including $0.04 to $0.06 of transformation-related expenses, as compared to $0.06 in the first quarter of fiscal 2006. Guidance for the first quarter fiscal 2007 financial results includes approximately two months of earnings related to the acquisition of Meow Mix, which closed on May 19, 2006.
Factors Impacting Guidance
Fiscal 2007
-----------------------------------
Full Year First Quarter
-----------------------------------
F07 diluted EPS Guidance $0.53 - $0.58 $(0.04) - $0.00
Includes:
F07 Integration expense ($0.06) -
F07 Transformation-related
expenses ($0.11) - ($0.14) ($0.04) - ($0.06)
Does not include:
F07 Purchase accounting impact To be provided on To be provided on
Q1 F07 call Q1 F07 call
Guidance does not reflect the impact from purchase accounting related to the announced acquisitions. Webcast Information 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 fiscal 2006 fourth quarter and year at 8:00 a.m. PT (11:00 a.m. ET) today. The webcast slide presentation and historical, quarterly and full year results as well as reconciliations of non-GAAP financial measures can be accessed at www.delmonte.com/Company/investors. The audio portion of the webcast may also be accessed during the call (listen-only mode) as follows: 1- 888-730-9136 (1-773-681-5870 outside the U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ), verbal VERBAL. Parol; by word of mouth; as verbal agreement; verbal evidence. Not in writing. code: Del Monte Foods. The webcast and slide presentation will be available online following the presentation. 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 billion in net sales in fiscal 2006. With a powerful portfolio of brands including Del Monte(R), Contadina(R), StarKist(R), S&W(R), College Inn(R), 9Lives(R), Kibbles 'n Bits(R), Meow Mix(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), Pounce(R) and Meaty Bone(R), Del Monte products are found in nine out of ten 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. 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. Non-GAAP Financial Measures Del Monte Foods Company reports its financial results 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 generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting 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. (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). In this press release and the accompanying 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. webcast, Del Monte is also providing certain non-GAAP financial measures. The non-GAAP EPS measures that the Company is using to compare fiscal 2006 results to its fiscal 2006 guidance (Q4 and full year) include earnings from the divested soup and infant feeding businesses, but exclude the gain recognized in connection with the sale of such businesses and the impact of other discontinued operations relating to a pet business sold in prior periods. Del Monte uses these presented non-GAAP financial measures internally to benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. its performance against the guidance it provided for fiscal 2006, which had not assumed the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of the soup and infant feeding businesses, and believes this information is also helpful to investors. The Company cautions investors that the non-GAAP financial measures presented are intended to supplement the Company's GAAP results and are not a substitute for such results. Additionally, the non-GAAP financial measures used by Del Monte may differ from non-GAAP measures used by other companies. (1) Reported 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 includes both continuing operations and discontinued operations. In connection with the April 24, 2006 divestiture of the soup and infant feeding businesses, the operating results and the assets and liabilities related to such businesses have been classified as discontinued operations. Accordingly, income from continuing operations for all periods presented does not include the operating results of the divested soup and infant feeding businesses. The Company's guidance for the quarter and the year had not assumed the divestiture of the soup and infant feeding businesses. (2) Company EPS guidance for Q4 F06 was $0.18-$0.23. (3) Company EPS guidance for F06 was $0.75-$0.80. (4) Cash provided by operating activities, plus cash provided by investing activities. Company cash flow guidance for fiscal 2006 was $190 to $200 million, and did not assume proceeds from the sale of the soup and infant feeding businesses. 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 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. 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 future financial operating results, the expected benefits and costs of the transformation plan, and future business plans, as well as the expected completion of the Milk-Bone acquisition. Factors that could cause actual results to differ materially from those described in this press release include, among others: general economic and business conditions; failure to complete the Milk-Bone acquisition by the expected date, if at all; integration of the Meow Mix and Milk-Bone businesses; cost and availability of inputs, commodities, ingredients and other raw materials, including without limitation, energy, fuel, packaging, grains, 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). and tuna; logistics and other transportation-related costs; our debt levels and ability to service and reduce our debt; efforts and ability to increase prices and reduce costs; costs and results of efforts to improve the performance and market share of our businesses; reduced sales, disruptions, costs or other charges to earnings that may be generated by our strategic plan and transformation plan efforts; effectiveness of marketing, pricing and trade promotion programs; changing consumer and pet preferences; timely launch and market acceptance of new products; 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. ; acquisitions, if any, including identification of appropriate targets and successful integration of any acquired business; product liability claims; weather conditions; crop yields; changes in U.S., foreign or local tax laws and effective rates; interest rate fluctuations; the loss of significant customers or a substantial reduction in orders from these customers or the bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most of any such customer; 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; dependence on co-packers, some of whom may be competitors or sole-source suppliers; changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations; 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. ; 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 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. Our declaration of future dividends, if any, is subject to final determination of our Board of Directors each quarter after its review of our then-current strategy, applicable debt covenants, and financial performance and position.
Del Monte Foods Company - Selected Financial Information
Net Sales by Segment
(In millions)
Three Months Ended Fiscal Year Ended
-------------------- -------------------
April 30, May 1, April 30, May 1,
Net Sales: 2006 2005 2006 2005
---------- --------- --------- ---------
Consumer Products $ 573.4 $ 554.0 $2,142.3 $2,059.4
Pet Products 225.8 220.4 856.3 839.9
---------- --------- --------- ---------
Total company $ 799.2 $ 774.4 $2,998.6 $2,899.3
========== ========= ========= =========
Operating Income by Segment
(In millions)
Three Months Ended Fiscal Year Ended
-------------------- -------------------
April 30, May 1, April 30, May 1,
Operating Income: 2006 2005 2006 2005
---------- --------- --------- ---------
Consumer Products $ 59.1 $ 52.5 $ 212.4 $ 212.1
Pet Products 41.1 42.9 141.8 126.4
Corporate (a) (13.3) (13.4) (49.4) (44.2)
---------- --------- --------- ---------
Total company $ 86.9 $ 82.0 $ 304.8 $ 294.3
========== ========= ========= =========
----------
(a) Corporate represents expenses not directly attributable to
reportable segments.
Selected Balance Sheet Data
(In millions) As of
----------------------
April 30, May 1,
2006 2005
--------- ---------
Cash and cash equivalents $ 459.9 $ 145.9
Restricted cash 43.3 -
Trade accounts receivable, net of allowance 237.8 212.6
Inventories 764.2 760.0
Assets of discontinued operations - 254.7
Total assets 3,622.9 3,530.6
Accounts payable and accrued expenses 450.9 384.5
Liabilities of discontinued operations - 39.2
Short-term borrowings 1.7 1.0
Long-term debt, including current portion 1,301.1 1,302.7
Stockholders' equity 1,314.0 1,260.6
Selected Cash Flow Data
(In millions) Fiscal Year Ended
----------------------
April 30, May 1,
2006 2005
--------- ---------
Net cash provided by operating activities $ 261.2 $ 273.3
Net cash provided by (used in) investing
activities 182.4 (1) (71.8)
--------- ---------
Total 443.6 201.5
Net cash used in financing activities (129.0) (92.6)
Depreciation and amortization (2) 92.0 91.0
(1) Includes cash flows from the sale of the soup and infant feeding
businesses representing net proceeds of $265.7 million less $43.3
million related to mandatory debt prepayments.
(2) Includes approximately $10 million and $12 million of depreciation
expense related to the soup and infant feeding businesses for
fiscal 2006 and fiscal 2005, respectively.
Other Financial Data
(In millions, except per share data) As of
----------------------
April 30, May 1,
2006 2005
--------- ---------
Short-term borrowings $ 1.7 $ 1.0
Current portion of long-term debt 58.6 1.7
Long-term debt (excluding current portion) 1,242.5 1,301.0
--------- ---------
Total Debt 1,302.8 1,303.7
--------- ---------
Cash, cash equivalents and restricted cash 503.2 145.9
--------- ---------
Total Debt Net of Cash and Restricted Cash $ 799.6 $1,157.8
========= =========
DEL MONTE FOODS COMPANY
Consolidated Statements of Income
(In millions, except share and per share data)
Three Months Ended Fiscal Year Ended
--------------------------- ---------------------------
April 30, May 1, April 30, May 1,
2006 2005 2006 2005
------------- ------------- ------------- -------------
Net sales $ 799.2 $ 774.4 $ 2,998.6 $ 2,899.3
Cost of
products sold 595.3 583.1 2,213.9 2,155.5
------------- ------------- ------------- -------------
Gross profit 203.9 191.3 784.7 743.8
Selling,
general and
administrative
expense 117.0 109.3 479.9 449.5
------------- ------------- ------------- -------------
Operating
income 86.9 82.0 304.8 294.3
Interest
expense 21.4 54.4 88.2 130.8
Other expense 0.1 0.2 1.1 2.8
------------- ------------- ------------- -------------
Income from
continuing
operations
before
income taxes 65.4 27.4 215.5 160.7
Provision for
income taxes 23.7 9.8 78.5 60.1
------------- ------------- ------------- -------------
Income from
continuing
operations 41.7 17.6 137.0 100.6
Income from
discontinued
operations
before
income taxes 23.9 2.8 51.0 28.4
Provision
for
income
taxes 7.7 1.1 18.1 11.1
------------- ------------- ------------- -------------
Income from
discontinued
operations 16.2 1.7 32.9 17.3
------------- ------------- ------------- -------------
Net income $ 57.9 $ 19.3 $ 169.9 $ 117.9
============= ============= ============= =============
Earnings per
common share
(EPS)
Basic:
Basic Average
Shares 199,953,333 211,231,379 201,747,249 210,554,838
EPS -
Continuing
Operations $ 0.21 $ 0.08 $ 0.68 $ 0.48
EPS -
Discontinued
Operations 0.08 0.01 0.16 0.08
------------- ------------- ------------- -------------
EPS - Total $ 0.29 $ 0.09 $ 0.84 $ 0.56
============= ============= ============= =============
Diluted:
Diluted
Average
Shares 202,901,190 212,948,929 204,192,309 212,355,623
EPS -
Continuing
Operations $ 0.21 $ 0.08 $ 0.67 $ 0.48
EPS -
Discontinued
Operations 0.08 0.01 0.16 0.08
------------- ------------- ------------- -------------
EPS - Total $ 0.29 $ 0.09 $ 0.83 $ 0.56
============= ============= ============= =============
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