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International Multifoods Corp.

Posted On: 3/25/2001

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International Multifoods Corp. reported fiscal 2001 net earnings before unusual items of $22.1 million, or $1.17 per diluted share. This compares with earnings from continuing operations before unusual items of $24.7 million, or $1.31 per share, a year ago. On February 5, the company had predicted full-year earnings per diluted share in the range of $1.16 to $1.19.

The decline in earnings was primarily attributable to increased interest expense and lower operating earnings in Multifoods Distribution Group, a principal component of which is the VSA organization. As previously reported, the distribution business was adversely affected by higher fuel prices and wage rates, and by start-up costs associated with $150 million in annualized new business it began to serve during the fourth quarter.

Net sales for the 53-week year ended March 3 increased 6 percent to $2.52 billion, up from $2.38 billion last year. Excluding unusual items, fiscal 2001 operating earnings totaled $51.8 million, flat compared with the prior year.

Including unusual items and last year's loss from the company's discontinued Venezuelan operation, which was sold in the second quarter of fiscal 2000, full-year net earnings were $21.2 million, or $1.12 per diluted share, compared with $5.1 million, or 27 cents per diluted share a year ago.

Gary E. Costley, International Multifoods chairman and chief executive officer, said the company's results were in line with expectations. "We continued to see good performance in our North American Foods manufacturing business, and we were pleased with the solid sales growth in Multifoods Distribution Group," Costley commented. "At the same time, our distribution group's results were disappointing, mainly because the impact of higher fuel, payroll and new business transition costs offset the benefits of the sales gains."

The company's fourth-quarter fiscal 2001 earnings were $2.9 million, or 15 cents per diluted share, compared with $6.9 million, or 37 cents per share, for the same period a year ago.

Net sales for the quarter were $679.5 million, up 14 percent from $595 million last year.

During the quarter, the company continued to achieve greater penetration in vending distribution. On a comparable 13-week basis, volume in the vending segment increased 5.4 percent.

For the full year, the distribution group recorded operating earnings before unusual items of $16.8 million, down from $20.4 million in the prior year. Fiscal 2001 sales were $2.04 billion, up 7.5 percent from $1.9 billion last year. Adjusting for the extra week and the impact of lower cheese prices, sales grew 6.5 percent.

Fourth quarter operating earnings were $1.8 million, compared with $5.1 million in the same period a year ago.

Sales in the fourth quarter rose 17 percent to $559.1 million, up from $478.9 million last year.

Last month, International Multifoods Corp. entered into an agreement with a U.S.-based frozen doughnut manufacturer to produce doughnuts for Multifoods, enabling Multifoods to broaden its foodservice offerings.

On Feb. 5, the company announced an agreement to acquire Pillsbury's desserts and specialty products portfolio, which includes non-custom foodservice baking mix business and General Mills' U.S. Robin Hood brand. The company expects the transaction to be completed by the end of May.

Multifoods expects full-year fiscal 2002 earnings to be in the range of $1.55 to $1.65 per share. These estimates include results from the acquisition for nine months of the company's fiscal year. On Feb. 5, the company announced that it anticipated incremental earnings per share benefits from the acquisition of 18 cents in the first full year after closing.

"After the last several years, we have invested in our businesses to better position them for the long term," said Costley. "We have market-leading positions in both our manufacturing and distribution businesses, and solid platforms on which to grow. Now, with the acquisition of the Pillsbury businesses and the U.S. Robin Hood brand, we will be able to provide greater long-term value through higher earnings and stronger cash flows."