Del Monte Foods Company (NYSE: DLM - News) announced today net sales of $559.1 million and net income of $24.4 million, or $0.13 diluted earnings per share, for the third quarter ended January 29, 2003.

These results include the results of operations of Del Monte's fruit, vegetable and tomato businesses
("Del Monte Brands") only for the period after the December 20, 2002, merger with certain businesses of the H.J. Heinz Company (NYSE: HNZ - News). These results also include certain merger-related expenses, the detail of which is shown in the Company's Consolidated Statements
of Income. The impact of including the results of Del Monte Brands for the entire period and eliminating these merger-related expenses is partially offset by the impact of pro forma interest expense and the dilutive effect of including the number of shares outstanding for the entire period as if the merger had occurred on the first day of each period reported. Adjusting for these factors would have resulted in diluted earnings per share of $0.26 in the third quarter of fiscal 2003.

"This is the first quarter reporting as the new Del Monte Foods. We believe we are off to a strong start. Our team is pleased with the performance delivered by our businesses as a whole and with the initial implementation of our integration plans," said Richard G. Wolford, Chairman and Chief Executive Officer. "During the quarter we have begun to successfully leverage Del Monte's U.S. retail go-to-market platform in support of the combined businesses, as we had anticipated. Our integration initiatives are moving forward and, in early February, we centralized sales and consolidated our broker network into one organization. We have also initiated the expansion of our Mendota vegetable facility to supply soup products currently co-packed by a third party. Broth items are already being produced in Mendota. We expect these, as well as other initiatives, to deliver synergy savings in our next fiscal year." 

Del Monte merged with the U.S. StarKist seafood, North American pet food and pet snacks, U.S. private label soup, College Inn broth and the U.S. infant feeding businesses of the H. J. Heinz Company (the "Spun-off Businesses") on December 20, 2002. For accounting purposes, the Spun-off Businesses are considered the surviving entity and the historical financial statements of the Spun-off Businesses now constitute the historical financial statements of the Company. Therefore, the results reported above for the third quarter of fiscal 2003 include the results of operations of the Spun-off Businesses for the entire quarter and the results of operations of Del Monte Brands for the approximately five-week period since completion of the merger through the end of the quarter. Reported financial results for periods prior to the merger reflect only the financial results of the Spun-off Businesses.

For the third quarter of fiscal 2002, the Spun-off Businesses had net sales of $437.8 million and net income of $45.7 million, or $0.29 diluted earnings per share. These results do not include the results of operations of Del Monte Brands. These results do include certain other income and expenses, the detail of which is shown in the Company's Consolidated Statements of Income. The impact of including Del Monte Brands for the entire period and eliminating these other income and expenses is more than offset by the impact of pro forma interest expense and the dilutive effect of including the number of shares outstanding for the entire period as if the merger had occurred on the first day of each period reported. Adjusting for these factors would have resulted in diluted earnings per share of $0.22 in the third quarter of fiscal 2002.

The increase in reported net sales of $559.1 for the quarter, when compared to net sales of $437.8 million for the third quarter of fiscal 2002, was due primarily to the inclusion of Del Monte Brands sales after the completion of the merger; increased pet snacks and veterinary products sales and increased tuna pouch and soup volumes; partially offset by a planned reduction in sales of private label and other non-core branded pet food products, and lower volumes of canned tuna and infant feeding products.

Reported earnings per share of $0.13 for the quarter, when compared to $0.29 for the third quarter of fiscal 2002, primarily reflects the inclusion of interest expense in fiscal 2003 (prior period financials reflect no interest expense), inventory step-up in accordance with purchase accounting rules applied to the merger, a higher tax rate primarily due to a charge to increase deferred taxes to the combined statutory rates projected for the Company and a loss on foreign exchange.

Nine Months Ended January 29, 2003

The Company reported net sales of $1,395.1 million and net income of $110.0 million, or $0.66 diluted earnings per share, for the first nine months of fiscal 2003. These results include the results of operations of Del Monte Brands only for the period after December 20, 2002. These results also include certain merger-related expenses, the detail of which is shown in the Company's Consolidated Statements of Income. The impact of including Del Monte Brands for the entire period and eliminating these merger-related expenses is more than offset by the impact of pro forma interest expense and the dilutive effect of including the number of shares outstanding for the entire period as if the merger had occurred on the first day of the period reported. Adjusting for these factors would have resulted in diluted earnings per share of $0.64 for the first nine months of fiscal 2003.

For the first nine months of fiscal 2002, the Spun-off Businesses had net sales of $1,318.6 million and net income of $132.5 million, or $0.84 diluted earnings per share. These results do not include the results of operations of Del Monte Brands. These results do include certain other income and expenses, the detail of which is shown in the Company's Consolidated Statement of Income. The impact of including Del Monte Brands for the entire period and eliminating these other expenses is more than offset by the impact of pro forma interest expense and the dilutive effect of including the number of shares outstanding for the entire period as if the merger had occurred on the first day of each period reported. Adjusting for these factors would have resulted in diluted earnings per share of $0.60 in the first nine months of fiscal 2002.

The increase in reported net sales of $1,395.1 million for the first nine months of fiscal 2003, when compared to net sales of $1,318.6 for the same period of fiscal 2002, was due primarily to the inclusion of Del Monte Brands after the completion of the merger; increased tuna pouch and soup volumes and increased veterinary products sales; partially offset by a planned reduction in sales of private label and other non-core branded pet food products, and lower volumes of canned tuna and infant feeding products.

Reported earnings per share of $0.66, when compared to $0.84 for the same period of fiscal 2002, primarily reflects the inclusion of interest expense in fiscal 2003 (prior period financials reflect no interest expense), inventory step-up in accordance with purchase accounting rules applied to the merger, a higher tax rate primarily due to a charge to increase deferred taxes to the combined statutory rates projected for the Company and a loss on foreign exchange.

Del Monte Foods Company, with over $3 billion in expected sales, is one of the country's largest and most prominent providers of high-quality, branded consumer products to the U.S. retail grocery market. With a leading portfolio of top-name brands such as Del Monte, Contadina, StarKist, S&W, Nature's Goodness, College Inn, 9Lives, Kibbles 'n Bits, Pup-Peroni, Snausages, and Naw Somes!, Del Monte products are sold nationwide and can be found in 8 out of 10 American households. The Company is also the nation's largest supplier of private label soup products. Along with being an important partner to a full range of retail outlets - from neighborhood markets to urban superstores - Del Monte is also a key supplier to the U.S. military, certain export markets, the foodservice industry and food processors. Headquartered in San Francisco, the Company operates 17 production facilities and 18 distribution centers in North America and has operating facilities in American Samoa, Ecuador and Venezuela. For more information on Del Monte Foods Company, visit the Company's website at www.delmonte.com. 

Company news release
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