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 ST. LOUIS, July 29 /PRNewswire/ -- Pet Inc. (NYSE: PT) announced today that income from continuing operations for the fiscal fourth quarter ended June 30, 1993 increased 20.0 percent to $25.2 million, or 24 cents per share. This compares to $21.0 million, or 19 cents per share, for the like quarter a year ago. Lower product costs and favorable pricing were primarily responsible for the earnings improvement.
 For the fiscal year ended June 30, 1993, earnings from continuing operations were $113.6 million, or $1.06 per share. This was an increase of 7.4 percent from $105.8 million, or 98 cents per share, in fiscal 1992.
 Chairman and Chief Executive Officer Miles L. Marsh commented, "The results for the quarter were encouraging and the restructuring program announced in May is progressing on plan, with the sale of Estrella and our refinancing completed on favorable terms."
 During the June 1993 quarter, the company initiated a restructuring plan that includes divestiture of several non-core businesses and refinancing senior debt. The announced divestitures resulted in a one-time after-tax loss on disposal of discontinued operations in the quarter of $165.8 million, or $1.55 per share.
 The refinancing resulted in an extraordinary after-tax charge for early debt extinguishment of $31.9 million. Including the one-time charges and the results of continuing and discontinued operations, the net loss for the June quarter was $173.3 million, or $1.62 per share.
 Sales in the June quarter were $357.1 million, an increase of 2.1 percent, compared to $349.8 million in the like quarter a year ago. This increase was primarily the result of sales gains in Progresso soups and Mexican foods and the acquisition of Sutherland's brand spreads in the United Kingdom. Unfavorable foreign currency exchange rates compared to a year ago reduced sales $8.0 million.
 The combined sales of traditional Progresso soups and Progresso Healthy Classics increased 42.9 percent in the quarter over the like quarter a year ago, with heavy consumer and trade support. Primary reasons for the sales increase were new products, higher prices and market growth. The introduction of Progresso Healthy Classics, which compete in the healthy segment of the ready-to-serve soup category, continued during the quarter with growing retail and consumer acceptance and sales above expectations.
 Sales of domestic retail Mexican foods in the quarter increased 3.9 percent over an unusually strong quarter a year ago. The sales increase resulted from continued market growth and the introduction in the March quarter of 20 new products that boosted June quarter sales.
 Domestic retail Mexican foods results were achieved despite expanded distribution drives by existing competitors and new entries. Increased competition in domestic retail Mexican foods is anticipated to continue and the company has intensified its marketing and sales programs.
 Sales of Progresso Italian Specialty foods increased 8.2 percent over the like quarter a year ago. Primary reasons were expansion of distribution into new geographic areas and expansion of the number of products carried by many retailers.
 Van de Kamp's frozen seafood sales were 34.8 percent lower than the year ago quarter due to retailer inventory reductions and increased competitive activity. However, reduced cost of fish improved Van de Kamp's operating income over the prior year.
 Sales of the International Group increased primarily because of the recent acquisition of Sutherland's brand spreads in the United Kingdom, which contributed sales of $4.3 million in the quarter.
 The company's gross profit margin for the June quarter improved to 50.7 percent, up 1.8 points from the comparable prior year quarter. The improvement reflects permanent cost savings, improved sales mix and lower fish costs.
 Selling, general and administrative expenses for the June quarter were higher than the comparable prior year period, primarily due to higher trade promotion spending supporting traditional Progresso soups and the launch of Progresso Healthy Classics soups. However, improved gross profit more than offset higher selling, general and administrative expenses. As a result, operating income for the quarter was up 18.4 percent over the like quarter a year ago and improved to 13.9 percent of sales, up 1.9 points.
 For the fiscal year ended June 30, 1993, sales were $1,520.2 million, virtually unchanged from fiscal 1992. Unfavorable foreign currency exchange rates reduced fiscal 1993 sales $20.9 million. Gross profit margin for the fiscal year was 50.5 percent, up 2.5 points from the prior year as a result of permanent cost savings, improved sales mix and lower fish costs. The improved gross margin more than offset higher selling, general and administrative
expenses. Operating income for the year improved to 15.0 percent of sales, from 14.7 percent last year.
 Results of continuing operations exclude the operations being divested. As previously announced, these include refrigerated, snack and health foods businesses as well as Whitman's Chocolates, which has been reported as discontinued since June 1992. Whitman's accounted for a substantial portion of the loss from discontinued operations in fiscal 1993. Including one-time charges for loss on disposal of discontinued operations, loss on early extinguishment of debt, and change in accounting for postretirement benefits along with results of continuing and discontinued operations, the company posted a net loss for fiscal 1993 of $123.0 million, or $1.15 per share.
 Total debt outstanding was $628.5 million at June 30, 1993, down $57.8 million from June 30, 1992. Lower debt and lower interest rates continued to reduce interest expense. In addition, the company repurchased 2.6 million shares during the June quarter, bringing the total number of shares repurchased for the fiscal year to 2.9 million. Shares outstanding at June 30, 1993 are 104.6 million.
 On June 28, 1993, the company retired its $325.0 million, 9.35 percent senior notes. This was temporarily financed with divestiture proceeds and short-term debt. On July 28, 1993, the company issued $100 million of its 5 3/4 percent notes due 1998 and $100 million of its 6 1/2 percent notes due 2003 to refinance a portion of the notes retired in June 1993. The refinancing will allow the company to realize annual after-tax interest savings of approximately $8.0 million, which will be used to increase marketing support for core brands.
 Pet is a leading producer of packaged convenience foods. Major brands include Old El Paso Mexican foods, Progresso soups and Italian foods, Downyflake frozen waffles and Van de Kamp's frozen seafood.
 Consolidated Statements of Income
 (In Millions, Except Per Share Data)
 Quarter Year
 Ended June 30, Ended June 30,
 Pct. Pct.
 1993 1992 chg. 1993 1992 chg.
 Sales $ 357.1 $ 349.8 2.1 $1,520.2 $1,520.8 (0.0)
 CGS 176.2 178.9 753.2 790.7
 Gross profit 180.9 170.9 767.0 730.1
 SG&A 128.3 126.1 527.6 494.9
 Goodwill amort. 3.0 2.9 11.9 11.9
 Operating inc. 49.6 41.9 18.4 227.5 223.3 1.9
 Int. exp., net 9.2 10.6 39.2 45.9
 Other exp., net 1.3 .3 1.8 3.0
 Inc. from cont.
 ops. before
 inc. taxes 39.1 31.0 186.5 174.4
 Prov. for inc.
 taxes 13.9 10.0 72.9 68.6
 Inc. from cont.
 ops. 25.2 21.0 20.0 113.6 105.8 7.4
 Loss from
 disc. ops. (.8) (2.5) (4.3) (2.4)
 Loss on disp. of
 disc. ops. (165.8) --- (181.9) ---
 Ext. item, loss
 on debt ext. (31.9) --- (31.9) ---
 Cum. effect of
 acct. chg. --- --- (18.5) ---
 Net inc. (loss) $(173.3) $ 18.5 $ (123.0) $ 103.4
 Avg. shs. o/s 106.9 107.7 107.3 107.8
 Net inc. (loss)
 common share:
 Inc. (loss):
 Cont. ops. $ .24 $ .19 $ 1.06 $ .98
 Disc. ops. (.01) (.02) (.04) (.02)
 Loss on disp.
 disc. ops. (1.55) --- (1.70) ---
 Ext. item,
 debt ext. (.30) --- (.30) ---
 Cum. effect
 acct. chg. --- --- (.17) ---
 Net inc. (loss) $ (1.62) $ .17 $ (1.15) $ .96
 -0- 7/29/93
 /CONTACT: Beatrice E. Miller, 314-622-6672; or Harry F. Estill, 314-622-6136, both of Pet/

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

BB -- DV001 -- 7065 07/29/93 07:11 EDT
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Publication:PR Newswire
Date:Jul 29, 1993

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