<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 1997
DEL MONTE FOODS COMPANY
---------------------------
(Exact name of registrant as specified in its charter)
Maryland 33-36374-01 13-3542950
- ----------------------------- -------------------- --------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation File Number) Identification Number)
One Market, San Francisco, CA 94105
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(415) 247-3000
-------------------------------
(Registrant's telephone number,
including area code)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
As previously reported in a Quarterly Report of Del Monte Foods
Company (the "Company") on Form 10-Q filed November 14, 1997 for the
period ended September 30, 1997, the Company and Del Monte Corporation,
its wholly owned subsidiary, entered into an Asset Purchase Agreement
dated as of November 12, 1997 (the "Agreement") with Nestle USA, Inc.
("Nestle") and its subsidiary Contadina Services, Inc., providing,
among other things, for the Company's purchase of certain of
Contadina's assets comprising the Contadina processed tomato businesses
(the "Acquisition").
The closing and effective date of the Acquisition was December 19,
1997. The initial purchase price of approximately $197 million was
funded by (i) Del Monte Corporation's senior credit facility, as
amended and restated as of December 17, 1997 to permit the Acquisition
and increase the amount available for borrowing under the credit
facility, among Del Monte Corporation, Bank of America National Trust
and Savings Association, as Administrative Agent, Bankers Trust
Company, as Documentation Agent, and other financial institutions
parties thereto; (ii) proceeds from an issuance of 12 1/2% Senior
Discount Notes due 2007 under an indenture, dated as of December 17,
1997 between the Company and Marine Midland Bank, as Trustee, (the
"Indenture"); and (iii) an equity contribution from the Company's
majority shareholder. The Acquisition purchase price was determined in
arm's-length negotiations between the parties and was based on its
valuation of the assets to be acquired and the associated contractual
commitments. This description of the Acquisition is subject to, and is
qualified in its entirety by reference to, the provisions of the
Agreement, which is filed as an Exhibit to the Current Report on Form
8-K.
FOWARD-LOOKING STATEMENTS
STATEMENTS MADE HEREIN THAT ARE FORWARD-LOOKING IN NATURE ARE INTENDED
TO BE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS DESCRIBED HEREIN ARE REASONABLE, THE
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM ANY OR ALL ANTICIPATED
RESULTS DUE TO FINANCIAL AND OTHER ECONOMIC CONDITIONS AND OTHER RISKS,
UNCERTAINTIES AND CIRCUMSTANCES PARTLY OR TOTALLY OUTSIDE THE CONTROL
OF THE COMPANY, INCLUDING THOSE ATTRIBUTABLE TO THE CONDITIONS AND
TERMS SET FORTH IN THE AGREEMENT, SUCH AS A CONSEQUENCE OF THE DUE
DILIGENCE BEING PERFORMED. WORDS SUCH AS "ANTICIPATED," "EXPECT,"
"ESTIMATE," "PROJECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS.
-2-
<PAGE> 3
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
The following financial statements of Contadina (a division of Nestle
USA, Inc.) are filed with this amendment to Del Monte Foods Company (the
"Company") Form 8-K which was previously filed on January 5, 1998.
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Contadina (a division of Nestle USA, Inc.)
Independent Auditors' Report 4
Combined Balance Sheets at December 31, 1996 and
September 30, 1997 (unaudited) 5
Combined Statements of Operations and Divisional Equity for the
year ended December 31, 1996 and the nine-month periods ended
September 30, 1996 and 1997 (unaudited) 6
Combined Statements of Cash Flows for the year ended December
31, 1996 and the nine-month periods ended September 30, 1996
and 1997 (unaudited) 7
Notes to Combined Financial Statements for the year ended
December 31, 1996 and for the nine-month periods ended
September 30, 1996 and 1997 (unaudited) 8
</TABLE>
3
<PAGE> 4
Independent Auditors' Report
The Board of Directors
Del Monte Foods Company
We have audited the accompanying combined balance sheet of Contadina (a
division of Nestle USA, Inc.) as of December 31, 1996, and the related
statements of operations, divisional equity, and cash flows for the year
then ended. These financial statements are the responsibility of Del Monte
Foods Company management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Contadina (a division of
Nestle USA, Inc.) as of December 31, 1996, and the results of its operations
and its cash flows for the year then ended in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
February 16, 1998
Los Angeles, California
4
<PAGE> 5
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
COMBINED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Trade accounts receivable $ 10 $ 10
Other receivables 3 1
Inventories 92 137
---- ----
TOTAL CURRENT ASSETS 105 148
Property, plant and equipment 94 92
Goodwill 32 31
---- ----
TOTAL ASSETS $231 $271
==== ====
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 10 $ 13
Payable to Nestle USA, Inc. 17 81
---- ----
TOTAL CURRENT LIABILITIES 27 94
Divisional equity 204 177
---- ----
TOTAL LIABILITIES AND DIVISIONAL EQUITY $231 $271
==== ====
</TABLE>
See Notes to Combined Financial Statements.
5
<PAGE> 6
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
COMBINED STATEMENTS OF OPERATIONS AND
DIVISIONAL EQUITY
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1996 1997
----- ----- -----
(UNAUDITED)
<S> <C> <C> <C>
Net sales $ 160 $ 112 $ 108
Cost of products sold 151 108 112
----- ----- -----
Gross profit (loss) 9 4 (4)
Selling, advertising, administrative and general
expense 20 19 19
----- ----- -----
OPERATING LOSS (11) (15) (23)
Interest expense 6 4 4
----- ----- -----
NET LOSS BEFORE INCOME TAXES (17) (19) (27)
DIVISIONAL EQUITY, BEGINNING OF PERIOD 221 221 204
----- ----- -----
DIVISIONAL EQUITY, END OF PERIOD $ 204 $ 202 $ 177
===== ===== =====
</TABLE>
See Notes to Combined Financial Statements.
6
<PAGE> 7
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1996 1997
---- ---- ----
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(17) $(19) $(27)
Adjustments to reconcile net loss to net cash flows used in
operating activities:
Depreciation and amortization 12 8 8
Gain on sale of assets (1)
Changes in operating assets and liabilities:
Accounts receivable 9 7 2
Inventories (16) (40) (45)
Prepaid expense and other current assets (1)
Accounts payable and accrued expenses 4 10 3
---- ---- ----
NET CASH USED IN OPERATING ACTIVITIES (8) (36) (59)
INVESTING ACTIVITIES:
Capital expenditures (10) (7) (6)
Proceeds from sale of assets 1 1
---- ---- ----
NET CASH USED IN INVESTING ACTIVITIES (9) (6) (6)
FINANCING ACTIVITIES:
Net borrowings from Nestle USA, Inc. 17 42 65
---- ---- ----
NET CHANGE IN CASH AND CASH EQUIVALENTS - - -
Cash and cash equivalents at beginning of period - - -
---- ---- ----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ - $ - $ -
==== ==== ====
</TABLE>
See Notes to Combined Financial Statements.
7
<PAGE> 8
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(DOLLARS IN MILLIONS)
NOTE A - ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION
General: The accompanying combined financial statements includes the
accounts of Contadina Services, Inc., a wholly-owned subsidiary of Nestle USA,
Inc. ("Nestle") and other divisional accounts related to the Contadina canned
tomato business within the culinary division of Nestle ("Contadina") on a
carve-out basis, excluding the effects of product lines not acquired (see Note
E). Contadina operates in one business segment which manufactures and markets
branded, private label, industrial and foodservice processed tomato products
from manufacturing facilities in Hanford, California and Woodland, California.
Contadina's products are distributed throughout the United States.
Contadina does not maintain stand-alone corporate treasury, legal, tax
and other similar corporate support functions. Therefore, corporate general and
administrative expense and interest expense, as well as certain other expenses
(see Note D), are allocated to Contadina from Nestle generally on a proportional
basis. Allocations and estimates, as described in Note D, are based on
assumptions that management believes are reasonable. It is impracticable to
determine whether such costs are comparable to those which would have been
incurred on a stand-alone basis. Long-term debt and income taxes are not
allocated by Nestle.
All purchases of inventory, payroll, capital and other expenditures are
funded through Contadina's intercompany account with Nestle. Remittances from
sales to customers are collected by Nestle and are accounted for through the
intercompany account. Accordingly, Contadina has no cash on a stand-alone basis.
Trade receivables and payables do represent the amounts due from/to
customers/suppliers at the dates presented.
Interim Financial Information: The accompanying financial statements at
September 30, 1997 and for the nine-month periods ended September 30, 1996 and
1997, are unaudited, but are prepared in accordance with generally accepted
accounting principles for interim financial information and include all
adjustments (consisting only of normal recurring entries and the appropriate
allocations consistent with the annual financial statements) which, in the
opinion of management, are necessary for a fair presentation of financial
position, results of operations and cash flows.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories: Inventories are stated at the lower of cost (first-in,
first-out) or market.
Property, plant and equipment and depreciation: Property, plant and
equipment are stated at cost and depreciated over their estimated useful lives,
principally by the straight-line method. Maintenance and repairs are expensed as
incurred. Significant expenditures that increase useful lives are capitalized.
The ranges of estimated useful lives for computing depreciation are: buildings -
30 years; leasehold improvements - the shorter of useful life or life of lease;
and machinery and equipment - 5 to 17 years. Depreciation of plant and equipment
and building and leasehold improvements amortization was $11 for the year ended
December 31, 1996 and $7 (unaudited) for each of the nine-month periods ended
September 30, 1996 and 1997.
8
<PAGE> 9
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
Goodwill: Goodwill represents the excess purchase price over fair value
of acquired assets and liabilities. Goodwill is amortized on a straight-line
basis over 40 years.
Fair Value of Financial Instruments: The carrying amount of the
Company's financial instruments, which primarily include trade accounts
receivable, accounts payable, and accrued expenses, approximates fair value due
to the relatively short maturity of such instruments.
Cost of Products Sold: Cost of products sold includes raw material,
labor, and overhead.
Royalties: Under a royalty agreement with Nestle S.A. (parent of Nestle
and legal entity which owns the Contadina trademarks), royalties are charged for
the license of the Contadina trademarks at a rate of 3% of net sales. Royalty
expense under this agreement was $5 for the year ended December 31, 1996 and $3
(unaudited) for each of the nine-month periods ended September 30, 1996 and
1997.
Divisional Equity: Divisional equity includes the combined historical
legal capital of Contadina Services, Inc. and profit and losses of Contadina
from 1995 on a carve-out basis. Pre-1995 results of operations for the acquired
product line are not available. Transactions with Nestle for all other
intercompany transactions are included in and settled through the intercompany
account payable to Nestle.
Use of Estimates: Certain amounts reported in the financial statements
are based on management estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities as of December 31, 1996 and September 30, 1997, and the reported
amounts of income and expenses for the year ended December 31, 1996 and the
nine-month periods ended September 30, 1996 and 1997. The ultimate resolution of
these items may differ from those estimates.
Change in Accounting Principle: Effective January 1, 1996, Contadina
adopted the provisions of SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of". The statement requires that
assets held and used be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Contadina evaluates impairment based upon future cash flows. If
such cash flows indicate that long-lived assets may not be recoverable, the loss
is measured by discounting cash flows to present value. The statement also
requires that all long-lived assets, for which management has committed to a
plan to dispose, be reported at the lower of carrying amount or fair value.
Contadina does not depreciate long-lived assets held for sale. There was no
material effect upon the adoption of this statement.
9
<PAGE> 10
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE C - SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
Trade Accounts Receivable:
Trade $ 10 $ 10
Allowance for doubtful accounts - -
----- -----
TOTAL TRADE ACCOUNTS RECEIVABLE $ 10 $ 10
===== =====
Inventories:
Finished product $ 60 $ 96
Raw materials and supplies 35 44
Other, principally packaging material 2 2
Reserves (5) (5)
----- -----
TOTAL INVENTORIES $ 92 $ 137
===== =====
Property, Plant and Equipment:
Land and land improvements $ 8 $ 8
Buildings 36 35
Machinery and equipment 110 118
Construction in progress 10 10
----- -----
164 171
Accumulated depreciation (70) (79)
----- -----
PROPERTY, PLANT AND EQUIPMENT, NET $ 94 $ 92
===== =====
Goodwill:
Goodwill $ 44 $ 44
Accumulated amortization (12) (13)
----- -----
GOODWILL, NET $ 32 $ 31
===== =====
Accounts payable and accrued expenses
Accounts payable $ 6 $ 7
Payroll 1 2
Marketing 1 2
Other 2 2
----- -----
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 10 $ 13
===== =====
</TABLE>
10
<PAGE> 11
NOTE D - CORPORATE ALLOCATIONS AND RELATED PARTY INFORMATION
Goodwill associated with the acquisition of Carnation Foods in 1985,
the then-parent of Contadina, was not recorded in the individual business units'
accounts. As such, goodwill relating to Contadina has been allocated based on a
percentage derived from the tax basis goodwill specifically identified to
Contadina in relation to total tax basis goodwill. This relative percentage was
then applied to aggregate goodwill to determine book basis goodwill attributable
to Contadina. This allocation basis was determined to be reasonable.
Since invoicing is centralized at Nestle for all business units,
customer discounts and unapplied cash related to trade receivables are allocated
based on Contadina relative sales dollars on a customer invoice as a percentage
of the total sales dollars on the customer invoice. Cash discounts are allocated
to Contadina based on Contadina receivables as a percent of total consolidated
Nestle receivables. A specific reserve for doubtful accounts is not maintained
on a business unit basis. Therefore, a reserve for doubtful accounts was
established for Contadina through an allocation of the corporate reserve based
on the percentage of Contadina's outstanding receivables to the total Nestle
outstanding accounts receivable balance.
Variable distribution costs are allocated based on the applied usage
rate for the respective products. Fixed distribution costs are allocated on an
historical average cost per case basis. Allocated distribution costs included in
cost of product sold for the year ended December 31, 1996 were $5 and for the
nine-month periods ended September 30, 1996 and 1997 were $5 (unaudited) for
each of the periods. Marketing and sales force expense is allocated based on
relative Contadina sales dollars to total Nestle sales dollars. The majority of
warehousing costs reported are actual costs related to Contadina's two
facilities; however, a component of warehousing cost also includes costs
allocated from Nestle based on historical average inventory stored at the
distribution center.
General and administrative expense are, for the most part, allocated by
function. Allocated selling, marketing, general and administrative expenses
amounted to $12 for the year ended December 31, 1996 and to $13 and $14
(unaudited) for the nine-month periods ended September 30, 1996 and 1997,
respectively. Benefit costs are allocated at a rate of 40% of gross wages which
is representative of total benefit costs (including pension, postretirement
benefits, bonus, 401(k) matching contribution, vacation) to total compensation.
Interest expense is charged to Contadina based on the end-of-month working
capital balance at an intercompany rate equal to 7% for all periods.
Contadina's sales of product to Nestle for the year ended December 31,
1996 were $6 and for the nine-month periods ended September 30, 1996 and 1997
were $3 and $3 (unaudited), respectively. Contadina sales price to Nestle is on
a basis that approximates cost.
11
<PAGE> 12
CONTADINA
(A DIVISION OF NESTLE USA, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
NOTE E - SALE OF CONTADINA
On December 19, 1997, Del Monte Foods Company acquired the Contadina
canned tomato businesses, including the Contadina trademark worldwide, capital
assets and inventory from Nestle and Contadina Services, Inc. for a total
purchase price of $197, comprised of a base price of $177 and an estimated net
working capital adjustment of $20. The purchase price is subject to adjustment
based on the final calculation of net working capital as of the closing date. In
accordance with the asset purchase agreement dated November 12, 1997 by and
among Del Monte Foods Company, Del Monte Corporation ("DMC"), and Nestle USA,
Inc., Nestle has provided its calculation of the net working capital which would
result in a payment to DMC of approximately $2. DMC has until April 18, 1998 to
review this calculation and determine if it has an objection to this
calculation.
12
<PAGE> 13
(b) Pro Forma Financial Information.
The following unaudited pro forma information required pursuant to
Article 11 of regulation S-X is filed with this amendment to the
Company's Form 8-K which was previously filed on January 5, 1998.
<TABLE>
<S> <C>
Del Monte Foods Company
Basis of Presentation 14
Pro Forma Consolidated Statement of Operations (unaudited)
for the year ended June 30, 1997 15
Pro Forma Consolidated Statement of Operations (unaudited)
for the six months ended December 31, 1997 16
Notes to Pro Forma Consolidated Financial Statements (unaudited) 17
</TABLE>
13
<PAGE> 14
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The following unaudited pro forma consolidated financial statements of
Del Monte Foods Company (the "Unaudited Pro Forma Consolidated Financial
Statements") give effect to (A) the acquisition by Del Monte Foods Company (the
"Company") from Nestle USA, Inc. and Contadina Services, Inc. on December 19,
1997 of certain assets comprising Nestle's U.S. business of manufacturing and
marketing certain canned tomato products for the retail, foodservice and
industrial markets (the "Contadina Acquisition"); and (B) the recapitalization
of the Company on April 18, 1997, through the merger of TPG Shield Acquisition
Corporation with and into the Company, with the Company being the surviving
corporation pursuant to an agreement and plan of merger (the
"Recapitalization"); and (C) all financings related to the Contadina Acquisition
and the Recapitalization. The unaudited pro forma adjustments are based on
available information and certain assumptions that the Company believes are
reasonable.
The Unaudited Pro Forma Consolidated Financial Statements have been
prepared as if the Contadina Acquisition, the Recapitalization and related
financings had occurred as of July 1, 1996. The acquisition was accounted for
using the purchase method of accounting. The total purchase price was allocated
to the tangible and intangible assets acquired and liabilities assumed based
upon their respective fair values. The allocation of the Contadina purchase
price reflected in the Unaudited Pro Forma Consolidated Financial Statements is
preliminary and is subject to change upon finalization. The Recapitalization was
accounted for as a leveraged recapitalization transaction.
The historical financial information for Contadina for the twelve-month
period ended September 30, 1997 was derived from the audited and unaudited
financial statements appearing elsewhere herein. The Unaudited Pro Forma
Statement of Operations for the six-month period ended December 31, 1997
reflects the historical revenues and expenses of Contadina from July 1, 1997
through December 18, 1997. The historical financial data obtained by the Company
includes certain allocated expenses for functions and services provided by
Nestle. Such allocated costs are comprised of, without limitation, costs of
utilizing outside storage facilities; all selling costs including, without
limitation, direct sales force and brokerage expenses; costs for utilizing
centralized distribution and storage facilities; costs associated with marketing
services; general and administrative costs associated with support services such
as, finance, legal, human resources and information services and interest.
The Unaudited Pro Forma Consolidated Financial Statements do not purport
to be indicative of what the Company's results of operations would actually have
been had the Contadina Acquisition, Recapitalization and related financings been
completed on the date indicated or to project the Company's results of
operations for any future period. The Unaudited Pro Forma Consolidated Financial
Statements should be read in conjunction with the accompanying notes and the
historical consolidated financial statements of the Company (previously filed
with the Securities and Exchange Commission) and the financial statements and
notes of Contadina contained herein.
14
<PAGE> 15
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
YEAR ENDED JUNE 30, 1997
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL
---------------------------
DEL MONTE CONTADINA
FOODS COMPANY TWELVE MONTHS PRO FORMA
YEAR ENDED ENDED CONSOLIDATED
JUNE 30, SEPTEMBER 30, PRO FORMA YEAR ENDED
1997 1997(a) ADJUSTMENTS JUNE 30, 1997
------- ------- ----------- -------------
<S> <C> <C> <C> <C>
Net sales $1,217 $156 $1,373
Cost of products sold 817 155 $(10) (c) 962
------- ----- ---- ------
Gross profit 400 1 10 411
Selling, advertising, administrative and
general expense 327 20 14 (d) 361
------- ----- ---- ------
OPERATING INCOME (LOSS) 73 (19) (4) 50
Interest expense 52 6 35 (e) 93
Loss on sale of divested assets 5 5
Other expense 30 7 (f) 37
------- ----- ---- ------
LOSS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (14) (25) (46) (85)
Provision for income taxes
------- ----- ---- ------
LOSS BEFORE EXTRAORDINARY
ITEM $ (14) $ (25) $(46) $ (85)
======= ===== ==== ======
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
15
<PAGE> 16
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, 1997
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------
DEL MONTE PRO FORMA PRO FORMA
FOODS COMPANY CONTADINA(a)(b) ADJUSTMENTS CONSOLIDATED
------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $620 $ 92 $712
Cost of products sold 413 91 $(16)(c) 488
------ ---- ----- ------
Gross profit 207 1 16 224
Selling, advertising, administrative and
general expense 162 13 12 (d) 187
------ ---- ----- ------
OPERATING INCOME (LOSS) 45 (12) 4 37
Interest expense 36 3 10 (e) 49
Other (income) expense 6 (7)(f) (1)
------ ---- ----- ------
INCOME (LOSS) BEFORE INCOME TAXES 3 (15) 1 (11)
Provision for income taxes
------ ---- ----- ------
INCOME (LOSS) $ 3 $(15) $ 1 $ (11)
====== ==== ===== ======
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
16
<PAGE> 17
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(a) Represents the historical revenue and expenses of Contadina. The
historical financial information for Contadina for the twelve-month
period ended September 30, 1997 was derived from the audited and
unaudited financial statements appearing elsewhere herein. Selling,
administrative and general expenses includes non-trade marketing
expenses such as coupon redemptions and fixed marketing expenses.
Certain other operating costs include allocations from Nestle
comprising, without limitation, costs of utilizing outside storage
facilities; all selling costs including, without limitation, direct
sales force and brokerage expenses; costs for utilizing centralized
distribution and storage facilities; costs associated with marketing
services; general and administrative costs associated with support
services such as, finance, legal, human resources and information
services and interest.
(b) Represents the historical revenue and expenses of Contadina from July
1, 1997 through December 18, 1997.
(c) Adjustment to cost of sales reflects the following:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
JUNE 30, DECEMBER 31,
1997 1997
-------- ------------
<S> <C> <C>
Reclassification of Contadina trade promotion
costs $(14) $(13)
Elimination of royalties to Nestle for
trademark license (5) (3)
Inventory step-up 9
---- ----
$(10) $(16)
==== ====
</TABLE>
(d) Adjustment to selling, advertising, general and administrative expenses
reflect the following:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
JUNE 30, DECEMBER 31,
1997 1997
-------- ------------
<S> <C> <C>
Reclassification of Contadina trade promotion $14 $13
costs
Elimination of amortization of Nestle goodwill (1) (1)
Amortization of intangibles acquired 1
--- ---
$14 $12
=== ===
</TABLE>
(e) Adjustment represents interest adjustments due to debt incurred related
to the Contadina Acquisition, interest adjustments for the pro forma
interest expense related to the Recapitalization and the reversal of
interest allocated from Nestle.
17
<PAGE> 18
DEL MONTE FOODS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN MILLIONS)
(f) Adjustment to other expense for the year ended June 30, 1997 represents
$7 of certain indirect expenses incurred in connection with the
Contadina Acquisition. Adjustment for the six months ended December 31,
1997, represents exclusion of $7 of such indirect expenses.
18
<PAGE> 19
(c) Exhibits
10.1 Asset Purchase Agreement dated as of November 12, 1997 by and between the
Company, Del Monte Corporation, Contadina Services, Inc. and Nestle.
(Incorporated by reference to Exhibit 10.1 to report on Form 8-K filed
January 5, 1998.)
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
19
<PAGE> 20
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, HEREUNTO DULY AUTHORIZED.
DEL MONTE FOODS COMPANY
By: /s/ RICHARD G. WOLFORD Date: March 2, 1998
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Richard G. Wolford
Chief Executive Officer
By: /s/ DAVID L. MEYERS Date: March 2, 1998
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David L. Meyers
Executive Vice President, Administration
and Chief Financial Officer
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EXHIBIT 23.1
The Board of Directors
Del Monte Foods Company
We consent to the inclusion of our report dated February 16, 1998, with respect
to the combined balance sheet of Contadina (a division of Nestle USA, Inc.) as
of December 31, 1996 and the related statements of operations, divisional
equity, and cash flows for the year ended which report appears in the Form 8-K
of Del Monte Foods Company dated March 3, 1998.
/s/ KPMG Peat Marwick LLP
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Los Angeles, California
March 3, 1998
