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 ST. LOUIS, Oct. 21 /PRNewswire/ -- Pet Inc. (NYSE: PT) today reported that earnings per share from continuing operations for the quarter ended Sept. 30, 1993 were 20 cents per share, compared with 18 cents per share in the comparable quarter a year ago. The 11.1 percent increase in earnings per share was primarily due to increased income from continuing operations and a reduction in average shares outstanding. Income from continuing operations for this first quarter of fiscal 1994 increased 4.5 percent to $20.8 million, compared with $19.9 million for the like quarter a year ago.
 Net income for the quarter ended Sept. 30, 1993 was $20.8 million, or 20 cents per share, compared with $2.4 million, or 2 cents per share, for the like quarter a year ago. The year ago results include a one- time after tax charge of $18.5 million, or 17 cents per share, relating to a change in accounting for postretirement benefits.
 Net sales in the September quarter were $354.9 million, 3.8 percent above net sales of $342.0 million in the comparable quarter a year ago. Excluding the $9.7 million impact of lower foreign currency exchange rates, sales would have increased 6.6 percent. Progresso soups and domestic retail Mexican foods led the sales gains.
 Miles L. Marsh, chairman and chief executive officer, commented "We are pleased with this quarter's growth in sales in the current economic environment. We have increased our investment in our key brands through heavy new product activity and consumer marketing programs."
 Net sales of Progresso soups climbed 61.6 percent over the like quarter a year ago, reflecting a strong gain in market share, modest growth in the ready-to-serve soup category and further new product introductions. Contributing to the increased sales were traditional Progresso soups, Progresso Healthy Classics, which were introduced in fiscal 1993's third quarter, and a new line, Progresso Pasta Soups.
 Progresso Healthy Classics added two new flavors during the September quarter, Beef Barley and New England Clam Chowder, expanding the product line to seven flavors. Progresso Pasta Soups were introduced in the September quarter and include three new soups and three soups repositioned from the traditional Progresso line. Initial retail and consumer acceptance of the new products has been excellent.
 Net sales of domestic retail Mexican foods increased 13.6 percent over the like quarter a year ago. This gain was primarily the result of increased volume from category growth in Mexican sauces and new products introduced in the last six months of fiscal 1993. These new products included Old El Paso fat free refried beans, soft taco shells, stone ground white corn taco shells and Las Palmas salsa and fat free refried beans. In the December quarter, introduction of Old El Paso homestyle salsa, a significant new product offering, is underway. The company also has intensified marketing programs supporting existing Mexican foods products.
 The Sutherlands meat and fish spreads acquisition in the United Kingdom last March contributed $3.4 million in sales during the quarter. This was more than offset by lower evaporated milk sales, where the company reduced capacity to forego very low margin bid business.
 The company's gross margin for the September quarter improved to 52.2 percent, up 3.3 points from the comparable prior year quarter. The improvement reflects improved sales mix, permanent cost savings and lower fish costs.
 Selling, general and administrative expenses for the September quarter were 39.0 percent of sales, up 3.6 points from the comparable prior year period, primarily due to higher advertising and promotion costs. These costs include one-time slotting fees and introductory marketing expenses to expand distribution and launch new Progresso soup products.
 Operating income increased $1.1 million, or 2.6 percent, compared with the comparable prior year quarter. Operating income as a percent of sales was 12.4 percent compared with 12.6 percent in the comparable prior year quarter.
 Interest expense for the September quarter of $7.0 million was $3.0 million lower than the comparable prior year quarter. This decrease reflects lower interest rates, primarily resulting from refinancing the company's senior debt, completed in July 1993, and lower debt levels. Total debt at Sept. 30, 1993 was $654.2 million, down $30.5 million from a year ago. In addition, $55.5 million was applied to share repurchase in the 12 months ended Sept. 30, 1993.
 As required under FASB Statement No. 109, "Accounting for Income Taxes," the company recorded a one-time charge of $0.7 million, or 1 cent per share, to reflect the retroactive impact of the U.S. federal tax law enacted in the September quarter. In addition, this new tax law increases the company's ongoing effective tax rate approximately 1 percent compared to fiscal 1993.
 Pet is a leading packaged food company. Major brands include Old El Paso Mexican foods, Progresso soups and Italian specialty foods, Downyflake frozen waffles and Van de Kamp's frozen seafood.
 Consolidated Statements of Income
 (In Millions, Except Per Share Data)
 Quarter Ended
 Sept. 30, Percent
 1993 1992 Change
 Net sales $ 354.9 $ 342.0 3.8
 Cost of goods sold 169.5 174.9
 Gross profit 185.4 167.1
 Selling, general and
 administrative expenses 138.3 121.2
 Amortization of goodwill 3.0 2.9
 Operating income 44.1 43.0 2.6
 Interest expense, net 7.0 10.0
 Other (income) expense, net 1.1 (.2)
 Income from continuing
 operations before
 income taxes 36.0 33.2 8.4
 Provision for income taxes 15.2 13.3
 Income from continuing
 operations 20.8 19.9 4.5
 Income from
 discontinued operations,
 net of income taxes --- 1.0
 Cumulative effect of
 accounting change,
 net of income taxes --- (18.5)
 Net income $ 20.8 $ 2.4
 Average number of common
 shares outstanding 104.5 107.6 (2.9)
 Net income per
 common share:
 Income from continuing
 operations $ .20 $ .18 11.1
 Income from discontinued
 operations --- .01
 Cumulative effect
 accounting change --- (.17)
 Net income $ .20 $ .02
 -0- 10/21/93
 /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

MC -- DV001 -- 4914 10/21/93 07:09 EDT
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Publication:PR Newswire
Date:Oct 21, 1993

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