Vlasic Foods International (NYSE: VL) yesterday announced its fiscal 2001 first quarter results for the period ending October 29, 2000. The Company said that its strategic review process, which it is implementing together with Lazard Freres, is progressing and continues to move forward.
Vlasic Foods reported first quarter sales of $215 million, compared to $235 million a year ago. This decrease was primarily due to a decline of 12 percent in sales of “Vlasic” pickles and a 2 percent decline in “Swanson” frozen foods related to reduced inventories held by our customers. Also, the shifting of marketing programs from the first quarter a year ago to the second quarter this year impacted pickle sales. However, consumption in the quarter increased 1 percent in “Vlasic” pickles and was flat in “Swanson.” Sales in the U.K. were negatively impacted by aggressive competition and pricing pressures as well as currency exchange.
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As a result of ongoing operational difficulties and uncertainties associated with the strategic review process, the Company recorded special charges of $133 million or $2.94 per share in the first quarter. Those charges include $96 million or $2.12 per share for the impairment of its United Kingdom assets resulting from continuing declines in those businesses; and $21 million, or $0.46 per share for the impairment of certain frozen food manufacturing assets in Omaha, Neb., due to less favorable terms in a revised frozen foodservice supply agreement. Also included is $16.2 million or $0.36 per share related to valuation allowances for deferred taxes no longer likely to be realized. Including these charges, the net loss for the first quarter was $148.9 million, or $3.28 per share.
Excluding special items, net earnings (loss) from continuing operations for the quarter showed a loss of $15.7 million, or $0.34 per share versus earnings of $5.4 million, or $0.12 per share a year ago principally driven by soft results in the U.K. and the lower pickle sales.
During the quarter the Company continued to focus on cash generation. The Company completed the quarter with $10 million in cash.
Also in the quarter, the Company successfully implemented a distribution expansion program for its key “Swanson” and “Vlasic” businesses. As a result, the Company has secured more than 200 additional points of distribution in its pickle business, or the equivalent of two new products receiving full national distribution. Similar new distribution gains have also been achieved in the “Swanson” business behind the new Potato Topped Pie line and new and improved “Swanson” beef and turkey dinners.
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By GlobalDataForward 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 new products, consumption patterns, marketing strategies, 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
October 29, October 31,
2000 1999
Net sales $215,252 $234,935
Costs and expenses
Cost of products sold 148,353 155,261
Marketing and selling expenses 54,613 45,309
Administrative expenses 14,668 11,409
Research and development expenses 1,786 2,066
Other expense, net (3,159) 585
Special items 117,000 –
Total costs and expenses 333,261 214,630
Earnings (loss) before interest and taxes (118,009) 20,305
Interest expense, net 14,464 11,524
Earnings (loss) before taxes (132,473) 8,781
Taxes on earnings 16,400 3,425
Earnings (loss) from continuing operations (148,873) 5,356
Discontinued operations
Earnings (loss) from discontinued
operations, net of tax – (1,247)
Net earnings (loss) $(148,873) $4,109
Earnings (loss) per share – basic
Earnings (loss) from continuing operations $(3.28) $0.12
Earnings (loss) from discontinued operations $ – $(0.03)
Net earnings (loss) $(3.28) $0.09
Weighted average shares outstanding – basic 45,418 45,502
Earnings (loss) per share – assuming dilution
Earnings (loss) from continuing operations $(3.28) $0.12
Earnings (loss) from discontinued operations $ – $(0.03)
Net earnings (loss) $(3.28) $0.09
Weighted average shares outstanding
– assuming dilution 45,418 * 45,529 *
Excludes potentially dilutive shares as the result would be antidilutive.
VLASIC FOODS INTERNATIONAL
SCHEDULES OF SEGMENT INFORMATION (unaudited)
(in thousands)
QUARTER ENDED
October 29, October 31, Percent
2000 1999 Change
Net Sales
Frozen Foods $135,174 $139,929 -3%
Grocery Products 52,629 58,944 -11%
United Kingdom Operations 27,449 36,062 -24%
Total $215,252 $234,935 -8%
Earnings (Loss) Before Interest
and Taxes from Continuing
Operations (A)
Frozen Foods $(14,709) $15,243
Grocery Products (3,690) 7,569
United Kingdom Operations (99,891) (405)
Unallocated Corporate Expenses 281 (2,102)
Total $(118,009) $20,305
(A) Contributions to earnings (loss) before interest and taxes from continuing operations in the quarter ended October 29, 2000, included the following special items: non-cash writedowns of impaired assets of $96 million relating to our United Kingdom operations as the result of ongoing diminished cash flows and $21 million relating to our Omaha frozen food plant as the result of the revised contract for frozen foodservice copacking for Campbell Soup Company.
QUARTER ENDED
October 29, October 31,
2000 1999
Frozen Foods $21,000 $ –
Grocery Products – –
United Kingdom Operations 96,000 –
Unallocated Corporate Expenses – –
Total $117,000 $ –
VLASIC FOODS INTERNATIONAL
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
October 29, July 30,
2000 2000
(unaudited) (audited)
Cash and cash equivalents $10,012 $24,092
Restricted cash 7,358 9,873
Other current assets 206,814 188,888
Plant assets, net 176,652 266,347
Other assets, principally intangibles, net 57,481 92,973
Total assets $458,317 $582,173
Notes payable $285,783 $285,287
Other current liabilities 121,968 111,668
Long-term debt 197,258 197,230
Other liabilities 44,980 47,456
Shareowners’ deficit (191,672) (59,468)
Total liabilities and
shareowners’ deficit $458,317 $582,173
Total debt $483,041 $482,517
