International Multifoods Corp. (NYSE:IMC) yesterday reported a 16-percent increase in diluted earnings per share before unusual items for its third quarter ended Nov. 25. Net earnings before unusual items were $9.4 million, or 50 cents per diluted share, compared with $8.1 million, or 43 cents per share, in the prior year. Net sales were $649.8 million, up 3 percent from $632.2 million in the year-earlier quarter. Excluding unusual items, operating earnings rose 19 percent to $19.2 million, up from $16.2 million a year ago.

“We are pleased with our performance in the third quarter,” said Gary E. Costley, International Multifoods chairman, president and chief executive officer. “Our results reflect the fact that our North America Foods manufacturing business continues to do well and that our distribution group is improving, despite a number of factors working against us, including wage rate inflation in the United States, higher fuel costs and an unfavorable exchange rate.

“During the quarter, we secured more than $170 million in new foodservice distribution and foodservice manufacturing business that begins in the fourth quarter of this fiscal year,” Costley said. “This new business alone translates into 7-percent annual sales growth.”

Costley noted that the company has already begun to put in place the infrastructure necessary to support the new business. This resulted in start-up costs of about 2 cents per share in the third quarter. The company expects to incur additional start-up costs of 3 to 4 cents per share in its fourth fiscal quarter.

At the end of the quarter, the company’s debt-to-total capitalization ratio was 47 percent, compared with 50 percent last year. Debt was down $18.2 million from the end of the third quarter a year ago. This reduction in debt was driven primarily by the sale of most of the company’s retained Venezuelan assets at book value of $7.4 million and the sale of its corporate headquarters building. Net interest expense for the third quarter increased $1 million before taxes, or 3 cents per share after tax, compared with the same period a year ago as a result of higher interest rates and higher average debt balances.

Including unusual items, net earnings were $8.5 million, or 45 cents per share, compared with $8.1 million, or 43 cents per share, in the same period last year. An unusual pre-tax charge of $1.5 million, taken for exit costs related to the company’s previously announced plan to consolidate the company’s condiment processing operations in Canada, reduced net earnings per share by 5 cents. In last year’s third quarter, the company recognized an unusual pre-tax gain of $500,000 for the reversal of earlier charges associated with the distribution group’s consolidation program.

Third-Quarter Operating Results by Segment

Multifoods Distribution Group. Excluding last year’s $500,000 unusual gain, third-quarter operating earnings increased 43 percent to $6 million, up from $4.2 million a year ago. Including the unusual gain, operating earnings rose 28 percent. Sales were $518.7 million, up 5 percent from $496.2 million in the same period last year.

In vending distribution, sales to national and regional customers were up 11 percent in the quarter. The company also achieved volume gains in the independent vending, pizza, sandwich shop and theater segments. Sales were negatively affected by a continuation of low cheese prices, which dropped in October below government support levels. During the quarter, the average weekly price of cheese was 18 percent lower than in the same period last year. The lower cheese prices reduced reported sales by about $8.6 million.

In separate announcements today, the company said that it has been selected to provide distribution services for Quizno’s Corporation, Noble Roman’s and a group of Blimpie’s franchisees in the Upper Midwest. The combined revenue of this new business is valued at more than $150 million a year.

The distribution group’s results benefited from year-over-year improvements in productivity and ongoing efforts to reduce variable warehouse and delivery expenses. These improvements were partially offset by higher fuel and labor costs, which had about a 3 cents per share negative impact on the quarter.

“Our distribution business is performing better today than it was a year ago,” Costley said. “We’ve made good progress in fixing the performance issues within our control, and our focused sales efforts are beginning to pay off. The new business we’ve won will improve our asset utilization and give us greater operating leverage going forward.”

North America Foods. Operating earnings before unusual items were $14.4 million, up 4 percent from $13.9 million in the third quarter a year ago. Sales declined 4 percent to $131.1 million. Currency translation reduced third-quarter sales by $2.3 million and operating earnings by $300,000, or 1 cent per share. Excluding currency effects, sales were down about 2 percent, and operating earnings increased nearly 6 percent.

North America Foods’ operating earnings improvement reflected strong volume growth in the company’s Canadian foodservice manufacturing business, lower raw material costs and better asset utilization. Sales were impacted by difficult year-over-year comparisons in the company’s U.S. Foods foodservice manufacturing business, which benefited from a 10-percent volume increase in the third quarter a year ago.

Multifoods’ U.S. Foods group recently captured new business with a national sweet baked-goods foodservice chain. The company will begin supplying proprietary products for the customer’s more than 650 locations in January 2001. The deal is valued at $20 million a year.

“We continue to experience a strong response to our foodservice offerings,” Costley said. “We play a unique role by providing foodservice operators and bakeries with customized, easy-to-make products that help them address labor issues and ensure the same consistency and quality from store-to-store.”

Nine-Month Summary

For the first nine months, fully diluted earnings per share from continuing operations before unusual items were $1.02, compared with 94 cents a year ago. Net earnings from continuing operations before unusuals were $19.2 million, compared with $17.8 million in the first nine months last year. Excluding unusual items, operating earnings were $42.1 million, up 13 percent from $37.4 million in the prior year. Nine-month sales were $1.85 billion, up 3 percent year over year.

Including unusual items and last year’s loss from discontinued operations of $19.6 million, or $1.03 per diluted share, net earnings for the nine months were $18.5 million, or 98 cents per diluted share, compared with a loss of $1.8 million, or 9 cents per share, for the same period a year ago.

For the nine months, the company achieved a $4.6 million improvement in Economic Value Added (EVA), primarily as a result of the sale of Venezuela Foods, better results in North America Foods and lower corporate overhead.

Outlook

The company expects full-year fiscal 2001 earnings to be in the range of $1.41 to $1.43 per share. For fiscal 2002, the company expects earnings per share to increase 13 to 15 percent.

“We are seeing positive developments in each of our businesses, and we will benefit from this momentum next year,” Costley said. “We expect higher wages and fuel prices, currency translation and new business start-up costs to continue to affect our results for the balance of the year.”

International Multifoods will discuss its third-quarter results and its outlook on a conference call today beginning at 10 a.m. (CST). A live Webcast of the conference call will be available at www.multifoods.com or at www.streetfusion.com. A replay of the Webcast will be available at the same Web sites shortly after the call and will remain available through Jan. 31, 2001.

International Multifoods is a manufacturer for and distributor to the foodservice industry in North America. The company also is a leading manufacturer and marketer of consumer foods in Canada.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the company’s operations and financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products and pricing; market or weather conditions that may affect the costs of grain, cheese, other raw materials and fuel; changes in laws and regulations; fluctuations in interest rates; fluctuations in foreign exchange rates; the company’s ability to increase the distribution group’s sales and reduce delivery and distribution costs, and realize the earnings benefits from the distribution group’s consolidation and expansion plans; risks commonly encountered in international trade; and other factors as may be discussed in the company’s Report on Form 10-K for the year ended Feb. 29, 2000, and other reports filed with the Securities and Exchange Commission.

                 International Multifoods Corporation
Segment and Earnings Digest
(unaudited)
(in millions, except per share data)

FY 2001 – Third Quarter Ended November 25
—————————————–
Operating
Earnings
Before
Net Operating Unusual Unusual Operating
Sales Costs Items Items Earnings
——– ——— ——– ——– ———
Multifoods
Distribution Group $ 518.7 $ (512.7) $ 6.0 $ – $ 6.0
North America Foods 131.1 (116.7) 14.4 (1.5) 12.9
Corporate Expenses – (1.2) (1.2) – (1.2)
——– ——— ——– ——– ———
Total $ 649.8 $ (630.6) $ 19.2 $ (1.5) $ 17.7
======== ========= ======== ======== =========

Reconciliation of operating earnings to net earnings:
—————————————————–
Before
Unusual Unusual
Items Items Total
——– ——– ———
Operating earnings $ 19.2 $ (1.5) $ 17.7
Interest, net (3.7) – (3.7)
Other income (expense), net (0.3) – (0.3)
——– ——– ———
Earnings from continuing operations
before income taxes 15.2 (1.5) 13.7
Income taxes (5.8) 0.6 (5.2)
——– ——– ———
Earnings from continuing operations 9.4 (0.9) 8.5
Loss from discontinued operations – – –
——– ——– ———
Net earnings $ 9.4 $ (0.9) $ 8.5
======== ======== =========

Basic earnings per share:
Continuing operations $ 0.50 $(0.05) $ 0.45
Discontinued operations – – –
——– ——– ———
Total $ 0.50 $(0.05) $ 0.45
======== ======== =========

Diluted earnings per share:
Continuing operations $ 0.50 $(0.05) $ 0.45
Discontinued operations – – –
——– ——– ———
Total $ 0.50 $(0.05) $ 0.45
======== ======== =========

International Multifoods Corporation
Segment and Earnings Digest
(unaudited)
(in millions, except per share data)

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By GlobalData

FY 2000 – Third Quarter Ended November 30
—————————————–
Operating
Earnings
Before
Net Operating Unusual Unusual Operating
Sales Costs Items Items Earnings
——– ——— ——– ——– ———
Multifoods
Distribution Group $ 496.2 $ (492.0) $ 4.2 $ 0.5 $ 4.7
North America Foods 136.0 (122.1) 13.9 – 13.9
Corporate Expenses – (1.9) (1.9) – (1.9)
——– ——— ——– ——– ———
Total $ 632.2 $ (616.0) $ 16.2 $ 0.5 $ 16.7
======== ========= ======== ======== =========

Reconciliation of operating earnings to net earnings:
—————————————————–
Before
Unusual Unusual
Items Items Total
——– ——– ———
Operating earnings $ 16.2 $ 0.5 $ 16.7
Interest, net (2.7) – (2.7)
Other income (expense), net (0.4) – (0.4)
——– ——– ———
Earnings from continuing operations
before income taxes 13.1 0.5 13.6
Income taxes (5.0) (0.5) (5.5)
——– ——– ———
Earnings from continuing operations 8.1 – 8.1
Loss from discontinued operations – – –
——– ——– ———
Net earnings $ 8.1 $ – $ 8.1
======== ======== =========

Basic earnings per share:
Continuing operations $ 0.43 $ – $ 0.43
Discontinued operations – – –
——– ——– ———
Total $ 0.43 $ – $ 0.43
======== ======== =========

Diluted earnings per share:
Continuing operations $ 0.43 $ – $ 0.43
Discontinued operations – – –
——– ——– ———
Total $ 0.43 $ – $ 0.43
======== ======== =========

International Multifoods Corporation
Segment and Earnings Digest
(unaudited)
(in millions, except per share data)

FY 2001 – Nine Months Ended November 25
—————————————
Operating
Earnings
Before
Net Operating Unusual Unusual Operating
Sales Costs Items Items Earnings
——– ——— ——– ——– ———
Multifoods
Distribution Group $1,483.4 $(1,468.4) $ 15.0 $ (0.3) $ 14.7
North America Foods 362.0 (331.0) 31.0 (1.5) 29.5
Corporate Expenses – (3.9) (3.9) 5.6 1.7
——– ——— ——– ——– ———
Total $1,845.4 $(1,803.3) $ 42.1 $ 3.8 $ 45.9
======== ========= ======== ======== =========

Reconciliation of operating earnings to net earnings:
—————————————————–
Before
Unusual Unusual
Items Items Total
——– ——– ———
Operating earnings $ 42.1 $ 3.8 $ 45.9
Interest, net (10.2) – (10.2)
Other income (expense), net (0.9) – (0.9)
——– ——– ———
Earnings from continuing operations
before income taxes 31.0 3.8 34.8
Income taxes (11.8) (4.5) (16.3)
——– ——– ———
Earnings from continuing operations 19.2 (0.7) 18.5
Loss from discontinued operations – – –
——– ——– ———
Net earnings $ 19.2 $ (0.7) $ 18.5
======== ======== =========

Basic earnings per share:
Continuing operations $ 1.03 $(0.04) $ 0.99
Discontinued operations – – –
——– ——– ———
Total $ 1.03 $(0.04) $ 0.99
======== ======== =========

Diluted earnings per share:
Continuing operations $ 1.02 $(0.04) $ 0.98
Discontinued operations – – –
——– ——– ———
Total $ 1.02 $(0.04) $ 0.98
======== ======== =========

International Multifoods Corporation
Segment and Earnings Digest
(unaudited)
(in millions, except per share data)

FY 2000 – Nine Months Ended November 30
—————————————
Operating
Earnings
Before
Net Operating Unusual Unusual Operating
Sales Costs Items Items Earnings
——– ——— ——– ——– ———
Multifoods
Distribution Group $1,420.7 $(1,405.4) $ 15.3 $ 0.5 $ 15.8
North America Foods 369.0 (340.8) 28.2 – 28.2
Corporate Expenses – (6.1) (6.1) – (6.1)
——– ——— ——– ——– ———
Total $1,789.7 $(1,752.3) $ 37.4 $ 0.5 $ 37.9
======== ========= ======== ======== =========

Reconciliation of operating earnings to net loss:
————————————————-
Before
Unusual Unusual
Items Items Total
——– ——– ———
Operating earnings $ 37.4 $ 0.5 $ 37.9
Interest, net (7.9) – (7.9)
Other income (expense), net (0.8) – (0.8)
——– ——– ———
Earnings from continuing operations
before income taxes 28.7 0.5 29.2
Income taxes (10.9) (0.5) (11.4)
——– ——– ———
Earnings from continuing operations 17.8 – 17.8
Loss from discontinued operations (19.6) – (19.6)
——– ——– ———
Net loss $ (1.8) $ – $ (1.8)
======== ======== =========

Basic earnings (loss) per share:
Continuing operations $ 0.95 $ – $ 0.95
Discontinued operations (1.04) – (1.04)
——– ——– ———
Total $ (0.09) $ – $ (0.09)
======== ======== =========

Diluted earnings (loss) per share:
Continuing operations $ 0.94 $ – $ 0.94
Discontinued operations (1.03) – (1.03)
——– ——– ———
Total $ (0.09) $ – $ (0.09)
======== ======== =========

International Multifoods Corporation
Consolidated Statements of Earnings
(unaudited)

Third Quarter Ended
———————–
Nov. 25, Nov. 30,
(in millions, except per share data) 2000 1999
—————————————————————–
Net sales $ 649.8 $ 632.2
Cost of materials and production (550.3) (537.1)
Delivery and distribution (46.9) (44.6)
—————————————————————–
Gross profit 52.6 50.5
Selling, general and administrative (33.4) (34.3)
Unusual items (1.5) 0.5
—————————————————————–
Operating earnings 17.7 16.7
Interest, net (3.7) (2.7)
Other income (expense), net (0.3) (0.4)
—————————————————————–
Earnings from continuing operations
before income taxes 13.7 13.6
Income taxes (5.2) (5.5)
—————————————————————–
Earnings from continuing operations 8.5 8.1
Loss from discontinued operations – –
—————————————————————–
Net earnings $ 8.5 $ 8.1
=================================================================

Basic earnings per share:
Continuing operations $ 0.45 $ 0.43
Discontinued operations – –
—————————————————————–
Total $ 0.45 $ 0.43
=================================================================

Diluted earnings per share:
Continuing operations $ 0.45 $ 0.43
Discontinued operations – –
—————————————————————–
Total $ 0.45 $ 0.43
=================================================================

Average shares outstanding:
Basic 18.7 18.8
Diluted 18.9 18.8
—————————————————————–

International Multifoods Corporation
Consolidated Statements of Operations
(unaudited)

Nine Months Ended
———————–
Nov. 25, Nov. 30,
(in millions, except per share data) 2000 1999
—————————————————————–
Net sales $ 1,845.4 $ 1,789.7
Cost of materials and production (1,569.2) (1,526.6)
Delivery and distribution (133.9) (126.3)
—————————————————————–
Gross profit 142.3 136.8
Selling, general and administrative (100.2) (99.4)
Unusual items 3.8 0.5
—————————————————————–
Operating earnings 45.9 37.9
Interest, net (10.2) (7.9)
Other income (expense), net (0.9) (0.8)
—————————————————————–
Earnings from continuing operations
before income taxes 34.8 29.2
Income taxes (16.3) (11.4)
—————————————————————–
Earnings from continuing operations 18.5 17.8
Loss from discontinued operations – (19.6)
—————————————————————–
Net earnings (loss) $ 18.5 $ (1.8)
=================================================================

Basic earnings (loss) per share:
Continuing operations $ 0.99 $ 0.95
Discontinued operations – (1.04)
—————————————————————–
Total $ 0.99 $ (0.09)
=================================================================

Diluted earnings (loss) per share:
Continuing operations $ 0.98 $ 0.94
Discontinued operations – (1.03)
—————————————————————–
Total $ 0.98 $ (0.09)
=================================================================

Average shares outstanding:
Basic 18.7 18.8
Diluted 18.8 18.8
—————————————————————–

International Multifoods Corporation
Consolidated Condensed Balance Sheets
(unaudited)

Nov. 25, Feb. 29, Nov. 30,
(in millions) 2000 2000 1999
——————————————————————-
Assets
——
Current assets:
Cash and cash equivalents $ 9.7 $ 11.2 $ 11.0
Trade accounts receivable, net 132.3 122.6 141.1
Inventories 190.9 171.3 192.4
Other current assets 54.8 48.9 56.3
——————————————————————-
Total current assets 387.7 354.0 400.8
——————————————————————-

Property, plant and equipment, net 201.7 204.9 194.2
Goodwill, net 82.6 84.9 85.5
Other assets 93.3 92.4 91.5
——————————————————————-
Total assets $765.3 $736.2 $772.0
===================================================================

Liabilities and Shareholders’ Equity
————————————
Current liabilities:
Notes payable $ 80.3 $ 41.5 $ 77.7
Current portion of long-term debt 1.0 20.0 20.0
Accounts payable 176.6 167.3 169.3
Other current liabilities 43.3 48.7 52.0
——————————————————————-
Total current liabilities 301.2 277.5 319.0
——————————————————————-

Long-term debt 145.4 147.2 147.2
Employee benefits and other liabilities 61.3 56.4 56.2
——————————————————————-
Total liabilities 507.9 481.1 522.4
——————————————————————-

Shareholders’ equity 257.4 255.1 249.6
——————————————————————-
Total liabilities and
shareholders’ equity $765.3 $736.2 $772.0
===================================================================