Del Monte Foods Company Reports Fiscal 2007 First Quarter Results.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 --Successfully closed 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. pet acquisitions during quarter. --Pet acquisitions, pricing actions and growth from new products drove Q1 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 growth of 9.3%. --Reported 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. 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. from 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 of $0.04 in Q1F07 (includes $0.05 for integration, transformation, and purchase accounting) compared to $0.06 in Q1F06; reflects impact from pet acquisitions, pricing actions, and inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. and other operational cost increases. --Expects F07 sales growth of 14% to 16% over F06 and diluted EPS from continuing operations of $0.48 to $0.53 (includes $0.06 for integration, $0.11-$0.14 for transformation, and $0.05 for purchase accounting); pet acquisition impact, pricing benefit, new product growth and cost reduction actions are expected to continue, along with increased inflationary and other operational costs. Del Monte Foods First Quarter Results Del Monte Foods today reported net sales for the first quarter of fiscal 2007 of $674.1 million compared to $616.6 million last year, an increase of 9.3%. Income from continuing operations was $7.4 million, or $0.04 EPS, compared to $12.8 million, or $0.06 EPS in the previous year. Results for first quarter fiscal 2007 included $0.03 of transformation-related expenses, $0.01 of integration expense, and $0.01 of purchase accounting impact. "We are pleased with the quarter's results and with the continued progress against our key initiatives and strategic objectives," 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
Sharpening is the process of creating or refining a sharp edge on a tool or implement. The term has a wide application but can be expressed as the creation of two intersecting planes which produce an edge that is sharp enough to cut through the target the orientation orientation, in architecture, the disposition of the parts of a building with reference to the points of the compass. From remote antiquity the traditional belief in the efficacy of religious ceremonials performed at dawn toward the rising sun has influenced the of our business around our leading brands. We successfully closed the Meow Mix and Milk-Bone acquisitions in the first quarter, driving 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. by expanding Del Monte's presence in higher margin businesses in fast growing categories. While faced with continued inflationary cost pressures, this quarter's financial performance reflects continued successful brand-driven pricing actions, new product introductions, and aggressive cost-reduction actions." The 9.3% increase in net sales was driven primarily by the acquisitions of Meow Mix (closed May 19, 2006) and Milk-Bone (effective close July July: see month. 2, 2006). Increased net pricing and growth from new products also contributed to the increase in net sales. These gains were partially offset by a volume decline, as discussed below. The decrease in EPS from continuing operations was driven primarily by the $0.05 for integration expense, transformation-related expenses and purchase accounting impact mentioned above. Pet acquisitions (net of related interest expense) and pricing actions were positive contributors during the quarter. These factors were offset by increased costs, including steel and other packaging costs, energy-related transportation costs, and raw product costs. SG&A expense (which included integration and transformation-related expenses) benefited in the first quarter by the forecasted $0.03 gain from the sale of a perpetual PERPETUAL. That which is to last without limitation as to time; as, a perpetual statute, which is one without limit as to time, although not expressed to be so. license for S&W beans See JavaBeans. . Reportable Segments - First Quarter Results Consumer Products For the first quarter, Consumer Products net sales were essentially flat; $420.6 million compared to net sales of $422.2 million in the prior year period. Lower volume driven primarily by the fourth quarter fiscal 2006 customer forward buying in Buying in has several meanings. In the securities market it refers to a process by which the buyer of securities, whose seller fails to deliver the securities contracted for, can 'buy in' the securities from a third party with the defaulting seller to make good. tomatoes in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of the first quarter fiscal 2007 price increase and by the continued impact of the Tuna reset strategy, combined with the volume loss associated with price increases ("elasticity"), was almost fully offset by higher net pricing. 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. decreased 14.0% from $30.0 million in first quarter fiscal 2006 to $25.8 million in first quarter fiscal 2007. The decrease primarily reflected higher costs, including steel and other packaging costs, energy-related transportation costs, and raw product costs (including tomatoes and fish). These factors were partially offset by net pricing actions, including pricing in tomatoes and 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. which are anticipated to be more fully realized in the second half of fiscal 2007, and lower SG&A expense, driven by the gain from the sale of the S&W beans license. Pet Products For the first quarter, Pet Products net sales were $253.5 million, an increase of 30.4% over net sales of $194.4 million in the prior year period. The increase was driven by the Meow Mix and Milk-Bone acquisitions. During the quarter, growth from new pet products and volume decline from a combination of several factors, including competitive 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. during the quarter, also impacted net sales. Pet Products operating income increased 60.5% from $22.8 million in first quarter fiscal 2006 to $36.6 million in first quarter fiscal 2007. The increase primarily reflected the positive impact of the Meow Mix and Milk-Bone acquisitions net of integration expense and purchase accounting impact. Marketing expense was also lower in first quarter fiscal 2007 compared to prior year driven by a shift in promotional timing associated with new pet product introductions. Outlook Second Quarter Fiscal 2007 For the fiscal 2007 second quarter, the Company expects to deliver sales growth of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 15% to 18% over net sales of $793.2 million in the second quarter of fiscal 2006. Diluted EPS from continuing operations is expected to be approximately $0.05 to $0.07, including $0.02 of integration expense, $0.04 of transformation-related expenses, and $0.01 of purchase accounting impact, as compared to $0.18 in the second quarter of fiscal 2006.
Factors Impacting Guidance
Q1A Q2E Q1+Q2E
----------------------------------------------
Fiscal 2007 $0.04 $0.05 - $0.07 $0.09 - $0.11
Includes:
F07 Integration
expense ($0.01) ($0.02) ($0.03)
F07 Transformation-
related expenses ($0.03) ($0.04) ($0.07)
F07 Purchase
accounting impact ($0.01) ($0.01) ($0.02)
Q1A Q2A Q1+Q2A
----------------------------------------------
Fiscal 2006 $0.06 $0.18 $0.24
Commented Mr. Wolford, "The first half of fiscal 2007 is tracking to expectations, despite increased inflationary cost pressures. This is driven by both the solid first quarter and timing of marketing programs. Our focus is successful execution in both the second quarter and the full fiscal year." Fiscal 2007 For fiscal 2007, the Company reiterated that it 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 Meow Mix and Milk-Bone acquisitions as well as from growth in the Company's legacy businesses consistent with prior years. The Company anticipates diluted EPS from continuing operations to be $0.48 to $0.53 in fiscal 2007, which includes approximately $0.06 of integration expense, $0.11 to $0.14 of transformation-related expenses, and $0.05 of purchase accounting impact. As the Company committed when it first provided guidance for fiscal 2007 in connection with its fourth quarter fiscal 2006 earnings release, the guidance now being provided includes an estimated impact from purchase accounting. The Company reported $0.67 diluted EPS from continuing operations in fiscal 2006. The Company reiterated that it expects cash provided by operating activities, less cash used in investing activities, to be approximately $150 to $170 million.
Factors Impacting Guidance
Full Year
--------------------------------
F07E F06A
--------------------------------
F07 diluted EPS Guidance $0.48 - $0.53 $0.67
Includes:
F07 Integration expense ($0.06)
F07 Transformation-related expenses ($0.11) - ($0.14)
F07 Purchase accounting impact(1) ($0.05)
_________________________________________________
(1) As noted when the Company first provided fiscal 2007 guidance, the
Company is now providing an estimate for purchase accounting
impact.
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 2007 first quarter results and outlook at 7:00 a.m. PT (10:00 a.m. ET) today. The webcast slide presentation and historical, quarterly results 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: 1-888-788-9432 (1-210-795-9068 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 Monte (Italian, Portuguese and Spanish meaning mount) may refer to various things: Monte is the name of several places: In Brazil
In 1995, the brand was acquired by Del Monte. (R), 9Lives(R), Milk-Bone(R), Pup-Peroni(R), Meaty Bone(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 Pounce(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. 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, including the expected costs of the transformation plan, the integration of the Meow Mix and Milk-Bone acquisitions and purchase accounting, as well as to the Company's strategic plan. Factors that could cause actual results to differ materially from those described in this press release include, among others: general economic and business conditions; 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 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; 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; changes in U.S., foreign or local tax laws and effective rates; 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 businesses; product liability claims; weather conditions; crop yields; 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, including environmental regulations and import/export duties; 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 by our Board of Directors each quarter after its review of our then-current strategy, applicable debt covenants, and financial performance and position, among other things.
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in millions, except share and per share data)
Three Months Ended
----------------------------
July 30, July 31,
2006 2005
------------ ------------
(Unaudited)
Net sales $ 674.1 $ 616.6
Cost of products sold 509.7 466.7
------------ ------------
Gross profit 164.4 149.9
Selling, general and administrative
expense 123.5 108.1
------------ ------------
Operating income 40.9 41.8
Interest expense 30.5 21.2
Other expense 0.3 -
------------ ------------
Income from continuing operations before
income taxes 10.1 20.6
Provision for income taxes 2.7 7.8
------------ ------------
Income from continuing operations 7.4 12.8
Income (loss) from discontinued
operations before income taxes (1.9) 5.4
Provision (benefit) for income taxes (0.7) 2.0
------------ ------------
Income (loss) from discontinued
operations (1.2) 3.4
------------ ------------
Net income $ 6.2 $ 16.2
============ ============
Earnings per common share (EPS)
Basic:
Basic Average Shares 200,427,784 207,800,806
EPS - Continuing Operations $ 0.04 $ 0.06
EPS - Discontinued Operations(1) (0.01) 0.02
------------ ------------
EPS - Total $ 0.03 $ 0.08
============ ============
Diluted:
Diluted Average Shares 203,987,524 210,546,752
EPS - Continuing Operations $ 0.04 $ 0.06
EPS - Discontinued Operations(1) (0.01) 0.02
------------ ------------
EPS - Total $ 0.03 $ 0.08
============ ============
(1) The $0.01 loss from discontinued operations for the three
months ended July 30, 2006 represents a pre-tax loss of $1.9
which is comprised of $0.8 related to a reduction in the
sales price of the Soup and Infant Feeding Businesses for
working capital adjustments and $1.1 related to changes in
estimates related to the Soup and Infant Feeding Businesses.
The Soup and Infant Feeding Businesses were divested in the
fourth quarter of fiscal 2006.
Del Monte Foods Company - Selected Financial Information
Net Sales by Segment
(in millions)
Three Months Ended
---------------------------
July 30, July 31,
Net Sales: 2006 2005
----------- -----------
(Unaudited)
Consumer Products $ 420.6 $ 422.2
Pet Products 253.5 194.4
----------- -----------
Total company $ 674.1 $ 616.6
=========== ===========
Operating Income by Segment
(in millions)
Three Months Ended
---------------------------
July 30, July 31,
Operating Income: 2006 2005
----------- -----------
(Unaudited)
Consumer Products $ 25.8 $ 30.0
Pet Products 36.6 22.8
Corporate (a) (21.5) (11.0)
----------- -----------
Total company $ 40.9 $ 41.8
=========== ===========
(a) Corporate represents expenses not directly attributable to
reportable segments. For the three months ended July 30, 2006,
Corporate includes all severance-related restructuring costs
related to the Company's transformation plan.
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in millions)
July 30, April 30,
2006 2006
---------------- ----------------
(derived from
audited financial
(Unaudited) statements)
ASSETS
Cash and cash equivalents $ 12.1 $ 459.9
Restricted cash - 43.3
Trade accounts receivable, net of
allowance 189.2 237.8
Inventories 924.8 764.2
Prepaid expenses and other
current assets 106.3 111.9
---------------- ----------------
TOTAL CURRENT ASSETS 1,232.4 1,617.1
Property, plant and equipment,
net 717.3 641.4
Goodwill 1,744.9 758.7
Intangible assets, net 883.8 572.5
Other assets, net 39.9 33.2
---------------- ----------------
TOTAL ASSETS $ 4,618.3 $ 3,622.9
================ ================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable and accrued
expenses $ 482.2 $ 450.9
Short-term borrowings 241.5 1.7
Current portion of long-term debt 20.7 58.6
---------------- ----------------
TOTAL CURRENT LIABILITIES 744.4 511.2
Long-term debt 1,875.0 1,242.5
Deferred tax liabilities 344.8 228.1
Other non-current liabilities 335.7 327.1
---------------- ----------------
TOTAL LIABILITIES 3,299.9 2,308.9
---------------- ----------------
Stockholders' equity:
Common stock $ 2.1 $ 2.1
Additional paid-in capital 996.0 989.5
Treasury stock, at cost (126.5) (126.5)
Accumulated other comprehensive
loss (8.2) (7.9)
Retained earnings 455.0 456.8
---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 1,318.4 1,314.0
----------------- -----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,618.3 $ 3,622.9
================ ================
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in millions)
Three Months Ended
------------------------
July 30, July 31,
2006 2005
---------- ----------
(Unaudited)
OPERATING ACTIVITIES:
Net income $ 6.2 $ 16.2
Adjustments to reconcile net income to net
cash provided by (used in)
operating activities:
Depreciation and amortization 23.5 23.6
Deferred taxes 3.1 (3.2)
Loss on asset disposals (7.3) 0.1
Stock compensation expense 3.3 2.2
Other non-cash items, net 1.0 (0.2)
Changes in operating assets and
liabilities (31.8) (32.0)
---------- ----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (2.0) 6.7
---------- ----------
INVESTING ACTIVITIES:
Capital expenditures (15.7) (9.4)
Net proceeds from disposal of assets 9.8 23.4
Net cash used in business acquisitions (1,303.9) -
Decrease in restricted cash 43.3 -
---------- ----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (1,266.5) 14.0
---------- ----------
FINANCING ACTIVITIES:
Proceeds from short-term borrowings 337.8 0.2
Payments on short-term borrowings (98.0) -
Proceeds from long-term debt 645.0 -
Principal payments on long-term debt (50.4) (0.4)
Payments of debt-related costs (9.0) -
Dividends paid (8.0) -
Issuance of common stock 3.1 0.6
Purchase of treasury stock - (125.4)
---------- ----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 820.5 (125.0)
---------- ----------
Effect of exchange rate changes on cash and
cash equivalents 0.2 0.1
NET CHANGE IN CASH AND CASH EQUIVALENTS (447.8) (104.2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 459.9 145.9
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12.1 $ 41.7
========== ==========
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