Cherry Hill, NJ - Vlasic Foods International announced its fiscal 1998 fourth quarter and year-end results for the period ending August 2. The Company also announced its decision to sell its Kattus gourmet foods distribution business in Germany and the sale of a frozen sweet goods plant in the U.K.* These divestitures will increase profitability and allow the Company to focus on growing its core "Vlasic" and "Swanson" businesses. Vlasic Foods International said it is in negotiations with several parties to sell its Kattus business and that it has agreed to sell its frozen foods facility in Peterlee in the U.K. to Hibernia Foods for an undisclosed sum of cash.
As expected, Vlasic reported a loss of $0.05 per share for the fourth quarter before restructuring, one-time and transition charges. During the fourth quarter, the Company successfully implemented its previously announced program to realign shipments to consumption patterns. In addition, one-time and transition costs, such as information technology infrastructure development and transition services, impacted earnings in the fourth quarter by $0.16 per share, or $12 million before taxes. Also, the fourth quarter included a non-cash charge of $14.4 million, or $0.32 per share, for the planned divestiture of Kattus. Including the one-time, transition and restructuring charges, the fourth quarter net loss was $24.1 million or $0.53 per share.
For the year, on a pro forma basis, the Company reported a net loss of $23.7 million or $0.52 per share, including one-time and transition costs of $17.5 million before taxes or $0.24 per share and restructuring and special charges of $42.5 million or $0.80 per share. Restructuring charges for the year also include the third quarter $28.1 million pre-tax restructuring charge which provides for manufacturing and administrative efficiencies in Europe and the U.S.
Sales for the fourth quarter were $313.4 million, a 22% decline versus a year ago. The sales decrease was primarily due to lower sales in the U.S. frozen foods and pickle businesses as retail inventories were brought more in line with consumption patterns, and as consumption declines occurred from a lack of marketing support. Also the fourth quarter and fiscal year was one week shorter than the prior year, which resulted in a 7% decline in sales for the quarter and a two% decline for the year. Sales for the total year were $1.4 billion versus $1.5 billion a year ago. The Company is implementing a number of growth initiatives in fiscal 1999 to grow its "Vlasic" and "Swanson" businesses. These include:
A re-launch of the $75 million Swanson fried chicken business with new and improved products to deliver superior consumer value. Of equal importance, the re-launch will improve the business from marginally profitable to a strong earnings contributor. Retailer reaction to this has been positive and the brand already is gaining expanded distribution points. A new advertising campaign, "Make New Memories with Swanson" will begin in January, marking the first television advertising for the brand in nearly 10 years. An expansion of Vlasic and Swanson's presence in non-grocery store channels. The Swanson business also is delivering its first ever products to club stores this year. An announcement next month of a new product that consumers say is every "bite" the innovation of "Vlasic Sandwich Stackers." The product will begin shipping to customers in January and will be available at retail in April.
Meat Industry Insights News Service
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