Vlasic Foods International (OTC Bulletin Board: VLFIQ) yesterday announced its second quarter 2001 results for the period ending January 28, 2001.
The Company also announced that is has agreed to sell its two businesses in the United Kingdom – “Freshbake” frozen foods and SonA canned and jarred fruits, vegetables and beans – to separate parties, subject to bankruptcy court approval. These businesses are now reported as discontinued operations, as are the Company’s pickle and barbecue sauce businesses which the Company previously announced it has agreed to sell to H.J. Heinz, subject to standard government and regulatory clearances and bankruptcy court approval.
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On January 29 Vlasic Foods and its domestic subsidiaries announced that it voluntarily filed petitions under Chapter 11 of the U.S. Bankruptcy Code in order to implement the terms of the Heinz sale pursuant to section 363.
Second quarter operating earnings before interest expense and taxes for the Frozen Foods segment, which consists of the Company’s various frozen foods businesses in North America, were $5.2 million versus a loss of 6.0 million a year ago.
Sales for the second quarter were $119 million versus $131 million a year ago. Sales were impacted by the continued reduction of retail inventories by customers as well as a 3 percent decline in consumption.
Net earnings including discontinued operations showed a loss of $22.2 million or a loss of $0.49 per share versus a loss of $21.7 million or $0.48 per share a year ago.
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By GlobalDataDavid Pauker, managing director of Goldin Associates, a nationally recognized turnaround manager retained by Vlasic Foods to assist in implementing a financial restructuring, said, “We are continuing to consider all of our options regarding the reorganization or sale of our various North American frozen foods businesses. And as we announced earlier this month, all competitive bids are due on March 27th regarding the pickle, condiments and barbecue sauce businesses.”
Vlasic Foods completed the quarter with more than $27 million of cash on- hand. “We are in an even stronger cash position today than when we closed the quarter in January,” said Pauker, “as we now hold more than $50 million of cash.”
Sales for the first six months were $254 million versus $271 million a year ago. Excluding impairment charges of $21 million recorded in the first quarter, operating earnings before interest expense and taxes for the Frozen Food segment for the first six months were $11.5 million versus $9.2 million a year ago. Including the impairment charges, operating earnings before interest expense and taxes for the Frozen Food segment for the first six months showed a loss of $9.5 million. First half net earnings including discontinued operations showed a loss of $171.1 million or a loss of $3.77 per share versus a loss of $17.6 million or $0.39 per share a year ago. Fiscal 2001 includes impairment charges of $117 million recorded in the first quarter. Excluding these charges, first half net earnings including discontinued operations showed a loss of $54 million or a loss of $1.19 per share.
Further information regarding the sale of the U.K. businesses will be made available upon completion of those transactions, which is expected by the end of April.
Forward Looking Statement
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company believes the assumptions underlying the forward-looking statements, including those relating to planned divestitures, financial restructuring, cash positions, financing, and the strategic review process are reasonable. However, any of the assumptions could be inaccurate, and therefore there can be no assurance that the forward-looking statements contained in this release will prove to be accurate. Additional information that could cause actual results to vary materially from the results anticipated may be found in the Company’s most recent Form 10-K and other reports filed with the Securities Exchange Commission. Furthermore, the Company disclaims any obligation or intent to update any such factors or forward-looking statements to disclaim future events and developments.
VLASIC FOODS INTERNATIONAL
STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share amounts)
QUARTER ENDED SIX MONTHS ENDED
Jan. 28, Jan. 30, Jan. 28, Jan. 30,
2001 2000 2001 2000
Net sales $118,797 $131,016 $253,971 $270,945
Costs and expenses
Cost of products sold 78,593 85,978 166,786 176,587
Marketing and selling
expenses 28,504 42,203 61,678 69,858
Administrative expenses 12,627 8,169 22,815 15,553
Research and development
expenses 748 779 1,488 1,861
Other (income) expense, net (1,100) 736 (4,794) 796
Special items – 345 21,000 345
Total costs and expenses 119,372 138,210 268,973 265,000
Earnings (loss) before
interest and taxes (575) (7,194) (15,002) 5,945
Interest expense, net 17,398 12,181 32,057 23,749
Loss before taxes (17,973) (19,375) (47,059) (17,804)
Taxes on earnings 325 (7,646) 16,725 (7,176)
Loss from continuing
operations (18,298) (11,729) (63,784) (10,628)
Discontinued operations
Loss from discontinued
operations, net of tax (380) (9,935) (103,767) (6,927)
Loss on sale of discontinued
operations (3,560) – (3,560) –
Net loss $(22,238) $(21,664) $(171,111) $(17,555)
Loss per share – basic
Loss from continuing
operations $(0.40) $(0.26) $(1.41) $(0.24)
Loss from discontinued
operations $(0.09) $(0.22) $(2.36) $(0.15)
Net loss $(0.49) $(0.48) $(3.77) $(0.39)
Weighted average shares
outstanding – basic 45,418 45,418 45,418 45,418
Loss per share – assuming
dilution
Loss from continuing
operations $(0.40) $(0.26) $(1.41) $(0.24)
Loss from discontinued
operations $(0.09) $(0.22) $(2.36) $(0.15)
Net loss $(0.49) $(0.48) $(3.77) $(0.39)
Weighted average shares
outstanding
– assuming dilution 45,418 * 45,418 * 45,418 * 45,418 *
* Excludes potentially dilutive shares as the result would be
antidilutive.
VLASIC FOODS INTERNATIONAL
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
January 28, July 30,
2001 2000
(unaudited) (audited)
Cash and cash equivalents $27,773 $17,445
Restricted cash 7,400 9,873
Other current assets 63,242 73,855
Plant assets, net 112,591 139,858
Net assets of discontinued operations 182,641 250,073
Other assets, net 7,475 27,894
Total assets $401,122 $518,998
Notes payable (a) $516,030 $285,287
Other current liabilities 59,181 51,521
Long-term debt 41 197,230
Other liabilities 39,997 44,428
Shareowners’ deficit (214,127) (59,468)
Total liabilities and
shareowners’ deficit $401,122 $518,998
Total debt $516,071 $482,517
(a) Includes senior subordinated notes of $197,246 at January 28, 2001.
