Del Monte Foods Company Reports Fiscal 2008 Fourth Quarter and Full Year Results

Business Wire, June 5, 2008

Sharpens Brand-Driven Strategic Plan to Drive Long-Term Top and Bottom-Line Growth

SAN FRANCISCO -- Del Monte Foods Company (NYSE: DLM):

Announcement Highlights

* Reported fourth quarter net sales growth of 11.1% and diluted EPS from continuing operations of $0.25 (includes $0.04 for transformation) compared to $0.18 in Q4F07 (which included $0.04 for transformation and integration).

* Reported full year 2008 net sales growth of 9.4% and diluted EPS from continuing operations of $0.66 (includes $0.08 for transformation) compared to $0.55 in F07 (which included $0.19 for transformation, integration and purchase accounting).

* Provides F09 guidance. Expects net sales growth of 5% to 7% over F08 sales of $3,736.8 million.

* Expects F09 EPS from continuing operations of $0.58-$0.62 compared to F08 of $0.66 (which included $0.08 for transformation), reflecting expected low double-digit cost escalation driven primarily by higher energy and commodity costs.

* Sharpens brand-driven strategic plan with specific initiatives to augment long-term growth engines and fortify leadership positions in branded, high growth, higher-margin businesses.

Del Monte Foods Fourth Quarter Results

Del Monte Foods today reported net sales for the fourth quarter fiscal 2008 of $1,044.1 million compared to $940.1 million last year, an increase of 11.1%. Income from continuing operations was $49.8 million, or $0.25 earnings per share from continuing operations (EPS), compared to $36.8 million, or $0.18 EPS in the previous year. Results for the fourth quarter fiscal 2008 include $0.04 of transformation-related expense, as compared to fourth quarter fiscal 2007 results, which included $0.03 of transformation-related expense and $0.01 of integration expense.

"Our fourth quarter results reflect the cumulative impact of programs fielded during the year to meet aggressive cost challenges," said Richard G. Wolford, Chairman and CEO of Del Monte Foods. "Healthy business performance, including solid volume growth, pricing actions and innovation drove double-digit net sales growth. Importantly, this strong topline, combined with our productivity programs, offset significant operational cost increases in the fourth quarter. As we look to fiscal 2009, continued execution of these pricing actions and productivity gains combined with topline growth are key priorities, as we deal with an environment of rapidly accelerating cost increases."

The 11.1% increase in net sales for the quarter was driven primarily by existing volume growth across the business. Net pricing and new product growth also contributed strongly to net sales growth.

Fourth quarter EPS of $0.25 was up $0.07 from fourth quarter fiscal 2007 EPS of $0.18. The positive impact from the topline outlined above more than offset significant year-over-year increases in inflationary and other operational costs, particularly pet ingredient costs and fish costs. The Company also benefited from lower interest expense, the absence of the impact of the March 2007 Pet recall, Pet recall insurance proceeds, and the absence of the Pacer arbitration decision. The quarter was negatively impacted by a higher tax rate.

Reportable Segments - Fourth Quarter Results

Consumer Products

For the fourth quarter, Consumer Products net sales were $642.4 million, an increase of 8.0% from net sales of $594.9 million in the prior year period. The increase in Consumer Products net sales was driven primarily by new products, existing volume growth, and pricing actions. Fruit was particularly strong in the fourth quarter (driven by new products and customer buyforward ahead of the April 2008 Fruit price advance), and StarKist seafood and College Inn broth also contributed to the sales growth. Vegetable sales declined, as expected, due to a Q3F08 buyforward ahead of the January 2008 price increase.

Consumer Products operating income increased 27.3% from $39.6 million in the fourth quarter fiscal 2007 to $50.4 million in the fourth quarter fiscal 2008. The positive impact from the topline mentioned above was partially offset by higher costs, primarily fish costs as well as energy, logistics and transportation-related costs. Also contributing to the increase in operating income was the absence of the Pacer arbitration decision.

Pet Products

For the fourth quarter, Pet Products net sales were $401.7 million, an increase of 16.4% over net sales of $345.2 million in the prior year period. The increase was driven primarily by existing product volume growth, particularly in dry dog and dry cat, resulting from effective promotional activity. Net pricing and new product volume also contributed to the net sales gain.

Pet Products operating income increased 20.3% from $66.5 million in fourth quarter fiscal 2007 to $80.0 million in fourth quarter fiscal 2008. The positive impact from the topline mentioned above more than offset higher inflationary and other costs, specifically ingredient costs. Also contributing to the increase in operating income was the absence of the Pet recall impact, Pet recall insurance proceeds, and the absence of integration expense related to the Meow Mix and Milk-Bone acquisitions.