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PET'S INCOME FROM CONTINUING OPERATIONS INCREASED 10 PERCENT IN THE THIRD QUARTER

 ST. LOUIS, April 21 /PRNewswire/ -- Pet Inc. (NYSE: PT) today announced that income from continuing operations for the fiscal third quarter ended March 31, 1993, increased 10.3 percent to $27.8 million, or $0.26 per share, from $25.2 million, or $0.23 per share, for the same quarter a year ago. Primarily responsible for the earnings improvement were Progresso soup sales gains, improved overall gross margins and lower interest expense.
 Sales in the March quarter were $447.4 million, compared with $454.7 million the prior year. Lower foreign currency exchange rates than a year ago reduced sales $9.6 million and discontinued products contributed $4.3 million to sales a year ago.
 As previously announced, during the March quarter the company sold certain assets and began the orderly liquidation of the remainder of the assets of the Whitman's Chocolates business. This resulted in a one-time after-tax charge to discontinued operations of $18.6 million, or $0.17 per share, in the March quarter. Taking into effect the one-time charge to discontinued operations, net income was $9.2 million, or $0.09 per share, compared to $24.0 million, or $0.22 per share, in the prior-year March quarter.
 Chairman and Chief Executive Officer Miles L. Marsh, commented "Double-digit earnings growth from continuing operations in the current competitive environment is encouraging, as is the successful repositioning of our Progresso soup product line. We expect positive operating earnings momentum to continue in the June quarter."
 Sales of Progresso soup in the quarter increased 34.4 percent over the same quarter a year ago, the result of buoyant category sales, higher volume through supermarket and warehouse club channels, new product introductions and higher prices. Progresso was, by a narrow margin, the leading individual brand of ready-to-serve soup in the March quarter. This was a first-time accomplishment for Progresso and does not include Healthy Classics. In late January, Progresso Healthy Classics was introduced in five varieties to compete in the healthy segment of the ready-to-serve soup category. Initial retail and consumer acceptance has been excellent.
 Sales of domestic retail Mexican foods in the quarter were 1.5 percent below the same quarter last year because of competitive activity in Mexican sauces. During March, the company introduced 20 new Mexican food products, under the Old El Paso and Las Palmas brands in order to build shelf presence and expand consumer usage. The new items include a second-generation improved Old El Paso Thick 'n Chunky salsa as well as six varieties of Old El Paso southwestern style soups. The company's outlook is for improved domestic retail Mexican foods sales in the June quarter.
 Reduced cost of fish improved operating income from Van de Kamp's frozen seafood despite 9.7 percent lower sales than the year-ago quarter.
 The company's gross profit improved to 49.2 percent, up 2.9 points from the comparable prior-year quarter. The improvement reflected permanent cost savings, improved sales mix and lower fish costs.
 Selling, general and administrative expenses were higher than the comparable prior-year period, primarily because of higher trade promotion spending supporting traditional Progresso soups and the launch of Progresso Healthy Classics soups. Improved gross profit more than offset higher selling, general and administrative expenses with the result that operating income improved to 13.3 percent of sales, up .6 points from the year-ago quarter.
 Total debt outstanding was $608.9 million at March 31, 1993, down $83.7 million from March 31, 1992. Lower debt and lower interest rates continued to reduce interest expense. Pet has reduced debt $217 million since becoming an independent company two years ago.
 For the nine months ended March 31, 1993, the company earned $87.4 million from continuing operations, or $0.81 per share, on sales of $1,342.8 million. This compares to prior-year results of $82.1 million, or $0.76 per share, on sales of $1,374.9 million. Including the results of discontinued operations and the one-time charge, net income for the nine months ended March 31, 1993, was $68.8 million, or $0.64 per share, compared to $84.9 million, or $0.79 per share, a year earlier.
 Pet is a leading producer of packaged convenience foods. Major brands include Old El Paso Mexican foods, Progresso soups and Italian foods, Van de Kamp's frozen seafood and Downyflake frozen waffles.
 PET INC. AND SUBSIDIARIES
 Consolidated Statements of Income
 (In Millions, Except Per-Share Data)
 (Unaudited)
 Quarter ended Nine months ended
 March 31, Percent March 31, Percent
 1993 1992 Change 1993 1992 Change
 Net sales $447.4 $454.7 (1.6) $1,342.8 $1,374.9 (2.3)
 Cost of goods
 sold 227.3 244.2 698.3 749.2
 Gross profit 220.1 210.5 644.5 625.7
 Selling,
 general, and
 administrative
 expenses 156.3 147.9 446.4 424.7
 Amortization of
 goodwill and
 other
 intangibles 4.5 4.7 13.6 14.6
 Operating income 59.3 57.9 2.4 184.5 186.4 (1.0)
 Interest expense,
 net 11.6 13.5 36.1 42.3
 Other expense,
 net .8 1.3 .5 2.8
 Income from
 continuing
 operations before
 income taxes 46.9 43.1 147.9 141.3
 Provision for
 income taxes 19.1 17.9 60.5 59.2
 Income from
 continuing
 operations 27.8 25.2 10.3 87.4 82.1 6.5
 Income (loss)
 from
 discontinued
 operation,
 net of
 income taxes (18.6) (1.2) (18.6) 2.8
 Net income $9.2 $24.0 $68.8 $84.9
 Average number
 of common
 shares
 outstanding 107.3 107.9 107.5 107.8
 Net income
 per common
 share:
 Income from
 continuing
 operations $.26 $.23 $.81 $.76
 Income (loss)
 from
 discontinued
 operation (.17) (.01) (.17) .03
 Net income $.09 $.22 $.64 $.79
 -0- 4/21/93
 /CONTACT: Beatrice E. Miller, director of communications, 314-622-6672, or Harry F. Estill, director of investor relations, 314-622-6136, both of Pet Inc./
 (PT)


CO: Pet Inc. ST: Missouri IN: FOD SU: ERN

JL-KJ -- LA006 -- 8446 04/21/93 07:34 EDT
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Publication:PR Newswire
Date:Apr 21, 1993
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