Del Monte Foods Company, today announced that it expects pro forma net sales for its fourth fiscal quarter ending June 30, 2000 to be approximately 15% lower than the comparable prior year period, due primarily to lowering of retail trade inventories and the Company’s continued strategic reduction of sales of lower margin foodservice products. Pro forma earnings per share are expected to range from $0.20 to $0.24, compared with $0.28 in the prior year quarter.
Pro forma net sales for the Company’s fiscal 2000 are expected to be approximately 3% lower than in fiscal 1999, due to reductions in foodservice sales. Excluding the foodservice channel, pro forma net sales for fiscal 2000 are expected to be approximately 1% higher than in fiscal 1999. Pro forma earnings per share for fiscal 2000 are expected to range from $0.96 to $1.00, compared with $0.79 in fiscal 1999.
“Del Monte’s market shares and consumption in all major product categories increased over last year’s fourth quarter, despite category weakness,” said Richard G. Wolford, Chairman and Chief Executive Officer. “These gains demonstrate the strength of the Del Monte brand and our leadership in each of our businesses. However,” said Mr. Wolford, “this performance was offset by major grocery customers significantly reducing their inventory levels, which resulted in lower shipments this quarter.”
The Company’s actual net income for the current quarter will reflect a nonrecurring tax benefit currently estimated at approximately $60 million, or $1.14 on a per share basis. This tax benefit, which will be recognized in accordance with generally accepted accounting principles, represents the tax effect of Del Monte’s net operating loss carryforwards and other net deductible items that are expected to be realized in future periods. The recognition of this asset arises from the expectation that the Company will continue to generate taxable earnings in the foreseeable future.
Actual earnings per share for the fourth quarter are expected to range from $1.38 to $1.42, compared with $0.40 in the fourth quarter of fiscal 1999. For fiscal 2000, actual earnings per share are expected to range from $2.11 to $2.15, compared with $0.23 in fiscal 1999.
Pro forma results for fiscal 2000 are adjusted to exclude non-recurring items and special charges relating to plant consolidation. Pro forma results also include the impact of using a 39 percent income tax rate. The Company will announce its results on August 3, 2000.
This press release contains forward-looking statements conveying 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 such statements. These factors include, among others: general economic and business conditions; competition; weather conditions; crop yields; raw material costs and availability; the loss of significant customers; changes in business strategy or development plans; availability, terms and deployment of capital; availability of qualified personnel; changes in, or failure or inability to comply with, governmental regulations, including, without limitation, environmental regulations; industry trends; production capacity constraints and other factors. These factors are described in more detail in the Company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the fiscal year ended June 30, 1999. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
Del Monte Foods Company, with net sales of over $1.5 billion in fiscal 1999, is the largest producer and distributor of premium quality, branded processed fruit, vegetable and tomato products in the United States. The Del Monte brand was introduced in 1892 and is one of the best known brands in the United States. Del Monte products are sold through national grocery chains, independent grocery stores, warehouse club stores, mass merchandisers, drug stores and convenience stores. The Company also sells its products to the U.S. military, certain export markets, the foodservice industry and food processors. The Company operates fourteen production facilities and six distribution centers in the U.S., has operations in Venezuela and owns Del Monte brand marketing rights in South America.