CHERRY HILL, N.J., May 24 /PRNewswire/ -- Vlasic Foods International (NYSE: VL) today reported its fiscal 1999 third quarter results and announced that it would expand its consumption growth strategies in its core "Swanson" and "Vlasic" businesses to fuel volume growth in fiscal 2000. This expansion will include the introduction of more than 20 new and improved products in the "Swanson" and "Vlasic" businesses for next year. Vlasic Foods reported third quarter earnings per share before special items of $0.15 per diluted share for the period ending May 2, 1999, up from $0.10 per share on a pro forma basis before special items and one-time charges a year ago. EBITDA in the quarter before special items was $33.8 million, up from $31.3 million before special items and one-time charges a year ago. During the quarter the Company recognized special items of $146.8 million, or $3.23 per share. Special items include charges of $140 million, or $3.08 per share, associated with today's announced divestiture of the Swift-Armour Argentine beef business,* $7 million, or $0.15 per share, for the impact on the Company's effective tax rate for the repatriation of foreign dividends and $3 million, or $0.07 per share, for charges associated with the previously announced closure of the Dublin, Ga., mushroom farm. These charges were partially offset by reversing $3.2 million, or $0.07 per share, of a reserve established in fiscal 1998 for Company restructuring. This program is now complete. Including special items, the quarter showed a loss of $140.1 million or $3.08 per share. Sales for the quarter were $320.6 million, versus $320.7 million a year ago. Excluding sales from divested businesses sales increased 5 percent in the quarter. In the quarter the Company increased consumption in its "Swanson" and "Vlasic" businesses. The "Swanson" business reversed its three-year consumption decline and grew approximately 2 percent in the third quarter. Results were driven by the successful January re-launch of the Company's largest frozen food segment -- fried chicken dinners. "Swanson" fried chicken dinner volume has grown 20 percent, profit has increased and the new "Swanson Hungry-Man" boneless fried chicken dinner is now the number one dinner in dollar sales in the entire frozen dinner category. The "Vlasic" business reversed its three-year consumption decline and achieved 8 percent consumption growth in the quarter. Also in the quarter, "Vlasic" began shipping its "Vlasic Hamburger Stackers" pickles that cover an entire hamburger with a single, giant slice. Initial consumer marketing efforts for this product began this month with more to follow throughout the summer grilling season. To further spur consumption growth in its "Swanson" and "Vlasic" businesses, Vlasic Foods International President and Chief Executive Officer, Robert F. Bernstock said the Company will launch and support new and improved products across 5 major segments of these brands during next fiscal year. "The story of our Company has always been that of a turnaround of our core businesses," said Bernstock. "The strong results on our recently introduced `Swanson' boneless fried chicken dinners and `Vlasic Hamburger Stackers,' tell us that if we focus on a segment of our business we can drive growth. In retrospect, we simply have not impacted enough of our segments to achieve the results we initially had expected. We will now make the necessary investments to continue the growth of `Swanson' and `Vlasic'. "As a result of not impacting enough of our core segments, continued disappointment in our mushroom and U.K. businesses and the need to invest in our core businesses, we expect fiscal 1999 and 2000 earnings to be significantly below Wall Street expectations. Despite the expected lower earnings per share, operating earnings in our core businesses will be about flat this year," said Bernstock. The new growth initiatives will include the re-engineering and re-launch of two of its three largest frozen food segments -- pot pies and frozen breakfasts -- as well as bolstering its frozen dinner line, including expansion into the fast growing multi-serve segment. "The pot pie and breakfast initiatives will follow the same business model as our successful fried chicken initiative," Bernstock said. "In this model we will re-launch major segments, based on consumer research, that will contemporize the Swanson brand and improve product quality. And, as we do this, we will improve the overall economics of the business." The "Vlasic" pickles and condiments business will launch two initiatives for fiscal 2000. The first is a re-launch of the Company's "Sandwich Stackers" line that is now approximately 20 percent of the entire "Vlasic" pickle business. Vlasic will also launch an additional major new product line later this summer. All new products will begin selling to retail customers in June and are expected to be on-shelf by late fall. The new product introductions are part of Vlasic Foods' five-part program to strengthen the Company. The program includes sustained growth initiatives for its core "Vlasic" and "Swanson" brands; cost savings actions; asset management programs to maximize returns; portfolio reconfiguration; and capital structure management. So far this year the Company has begun the turnaround of its core businesses, exited the Kattus gourmet foods distribution company in Germany and announced it will sell the Swift-Armour Argentine beef business, and closed three manufacturing facilities. Earnings before special items and one-time charges for the first nine months were $24.3 million, a 6 percent decrease from a year ago. Sales for the first nine months were $1.0 billion, a 4 percent decrease from the previous year. Excluding sales from divested businesses, sales decreased 3 percent in the first nine months. Forward Looking Statement This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company believes the assumptions underlying the forward-looking statements, including those relating to new products, consumption patterns, marketing strategies, global and Argentine business and economic conditions, are reasonable. However, any of the assumptions could be inaccurate, and therefore there can be no assurance that the forward-looking statements contained in this release will prove to be accurate. Additional information that could cause actual results to vary materially from the results anticipated may be found in the Company's most recent Form 10-K and other reports filed with the Securities Exchange Commission. Furthermore, the Company disclaims any obligation or intent to update any such factors or forward-looking statements to disclaim future events and developments. *(see separate announcement) VLASIC FOODS INTERNATIONAL STATEMENTS OF EARNINGS (unaudited) (in thousands except per share amounts) QUARTERS ENDED NINE MONTHS ENDED May May May May 2, 1999 3, 1998 2, 1999 3, 1998 ProForma(A) ProForma(A) Net sales $320,633 $320,694 $1,004,308 $1,043,863 Costs and expenses Cost of products sold 222,175 231,457 707,923 750,681 Marketing and selling expenses 61,888 55,947 175,868 170,768 Administrative expenses 11,385 17,315 49,031 46,047 Research and development expenses 2,472 1,895 5,920 5,843 Other expenses (income) 164 (123) 738 (214) Special items 139,785 28,050 136,585 28,050 437,869 334,541 1,076,065 1,001,175 Earnings (loss) before interest and taxes (117,236) (13,847) (71,757) 42,688 Interest expense, net 10,892 9,204 32,202 29,524 Earnings (loss) before taxes (128,128) (23,051) (103,959) 13,164 Taxes on earnings 12,000 (2,273) 19,700 12,778 Net earnings (loss) $(140,128) $(20,778) $(123,659) $386 Per share - basic $(3.08) $(0.46) $(2.72) $0.01 Weighted average shares outstanding - basic 45,500 45,413 45,497 45,413 Per share - assuming dilution $(3.08) $(0.46) $(2.72) $0.01 Weighted average shares outstanding - assuming dilution 45,500(B) 45,413(B) 45,497(B) 45,941 (A) Pro Forma Earnings (Loss) for the three and nine months ended May 3, 1998 gives effect to interest expense on debt assumed as of the spin-off date as if it were outstanding for the entire period. The related tax impact of the pro forma interest expense is included within taxes on earnings. Pro Forma Earnings (Loss) Per Share for the three and nine months ended May 3, 1998 assumes common shares outstanding as of the spin-off date were outstanding for the entire period. (B) Excludes potentially dilutive shares as the result would be antidilutive. VLASIC FOODS INTERNATIONAL SCHEDULES OF SEGMENT INFORMATION (unaudited) (in thousands except per share amounts) QUARTERS ENDED May May 2, 1999 3, 1998 Pro Forma (A) Net Sales Frozen Foods $137,420 $117,024 Grocery Products 105,730 118,098 Agricultural Products 78,907 86,951 Eliminations (1,424) (1,379) Net sales $320,633 $320,694 Earnings (Loss) Before Interest and Taxes (B) Frozen Foods $13,964 $(3,887) Grocery Products 13,895 (6,208) Agricultural Products (145,095) (3,752) Earnings (loss) before interest and taxes (117,236) (13,847) Earnings (Loss) Per Share Interest expense, net 10,892 9,204 Earnings (loss) before taxes (128,128) (23,051) Taxes on earnings 12,000 (2,273) Net earnings (loss) $(140,128) $(20,778) Earnings (loss) per share - basic $(3.08) $(0.46) Earnings (loss) per share - assuming dilution $(3.08) $(0.46) (A) Pro Forma Earnings (Loss) for the three and nine months ended May 3, 1998 gives effect to interest expense on debt assumed as of the spin-off date as if it were outstanding for the entire period. The related tax impact of the pro forma interest expense is included within taxes on earnings. (B) Contributions to earnings (loss) before interest and taxes by segment include the effects of the third quarter fiscal 1999 charge of $140.0 million for the divestiture of the Swift-Armour Argentine beef business and $3.0 million for charges associated with the closure of the Dublin, Ga., mushroom farm. These charges were partially offset by reversing $3.2 million of a $28.1 million reserve established in fiscal 1998 for restructuring which is now complete. Fiscal 1999 Fiscal 1998 Frozen Foods $2,115 $(9,700) Grocery Products 1,100 (17,950) Agricultural Products (143,000) (400) $(139,785) $(28,050) VLASIC FOODS INTERNATIONAL SCHEDULES OF SEGMENT INFORMATION (unaudited) (in thousands except per share amounts) NINE MONTHS ENDED May May 2, 1999 3, 1998 Pro Forma (A) Net Sales Frozen Foods $421,964 $436,617 Grocery Products 329,516 342,381 Agricultural Products 258,059 272,431 Eliminations (5,231) (7,566) Net sales $1,004,308 $1,043,863 Earnings Before Interest and Taxes (B) Frozen Foods $39,552 $34,251 Grocery Products 37,327 12,879 Agricultural Products (148,636) (4,442) Earnings (loss) before interest and taxes (71,157) 42,688 Earnings (Loss) Per Share Interest expense, net 32,202 29,524 Earnings (loss) before taxes (103,959) 13,164 Taxes on earnings 19,700 12,778 Net earnings (loss) $(123,659) $386 Earnings (loss) per share - basic $(2.72) $0.01 Earnings (loss) per share - assuming dilution $(2.72) $0.01 (A) Pro Forma Earnings (Loss) for the three and nine months ended May 3, 1998 gives effect to interest expense on debt assumed as of the spin-off date as if it were outstanding for the entire period. The related tax impact of the pro forma interest expense is included within taxes on earnings. (B) Contributions to earnings (loss) before interest and taxes by segment include the effects of the third quarter fiscal 1999 charge of $140.0 million for the divestiture of the Swift-Armour Argentine beef business and $3.0 million for charges associated with the closure of the Dublin, Ga., mushroom farm. These charges were partially offset by reversing $3.2 million of a $28.1 million reserve established in fiscal 1998 for restructuring which is now complete and a $3.2 million special item incurred in the second quarter of fiscal 1999 related to the sale of the Kattus business. Fiscal 1999 Fiscal 1998 Frozen Foods $2,115 $(9,700) Grocery Products 4,300 (17,950) Agricultural Products (143,000) (400) $(136,585) $(28,050) VLASIC FOODS INTERNATIONAL SCHEDULES OF GEOGRAPHIC INFORMATION (unaudited) (in thousands except per share amounts) QUARTERS ENDED May May 2, 1999 3, 1998 (A) Pro Forma (B) Net Sales United States $239,533 $207,891 Europe 40,731 65,007 South America 41,793 49,175 Elimination (1,424) (1,379) Net sales $320,633 $320,694 Earnings (Loss) Before Interest and Taxes (C) United States $17,063 $(999) Europe 3,703 (12,256) South America (138,002) (592) Earnings (loss) before interest and taxes (117,236) (13,847) Earnings (Loss) Per Share Interest expense, net 10,892 9,204 Earnings (loss) before taxes (128,128) (23,051) Taxes on earnings 12,000 (2,273) Net earnings (loss) $(140,128) $(20,778) Earnings (loss) per share - basic $(3.08) $(0.46) Earnings (loss) per share - assuming dilution $(3.08) $(0.46) (A) Prior quarter amounts have been reclassified to conform with current year presentation. (B) Pro Forma Earnings (Loss) for the three and nine months ended May 3, 1998 gives effect for interest expense on debt assumed as of the spin-off date as if it were outstanding for the entire period. The related tax impact of the pro forma interest expense is included within taxes on earnings. (C) Contributions to earnings (loss) before interest and taxes by segment include the effects of the third quarter fiscal 1999 charge of $140.0 million for the divestiture of the Swift-Armour Argentine beef business and $3.0 million for charges associated with the closure of the Dublin, Ga., mushroom farm. These charges were partially offset by reversing $3.2 million of a $28.1 million reserve established in fiscal 1998 for restructuring which is now complete. Fiscal 1999 Fiscal 1998 United States $(1,900) $(15,650) Europe 2,115 (12,400) South America (140,000) 0 $(139,785) $(28,050) VLASIC FOODS INTERNATIONAL SCHEDULES OF GEOGRAPHIC INFORMATION (unaudited) (in thousands except per share amounts) NINE MONTHS ENDED May May 2, 1999 (A) 3, 1998 (A) Pro Forma (B) Net Sales United States $682,835 $679,990 Europe 183,973 213,285 South America 142,731 158,154 Elimination (5,231) (7,566) Net sales $1,004,308 $1,043,863 Earnings Before Interest and Taxes (C) United States $53,845 $49,519 Europe 11,793 (7,348) South America (137,395) 517 Earnings (loss) before interest and taxes (71,757) 42,688 Earnings (Loss) Per Share Interest expense, net 32,202 29,524 Earnings (loss) before taxes (103,959) 13,164 Taxes on earnings 19,700 12,778 Net earnings (loss) $(123,659) $386 Earnings (loss) per share - basic $(2.72) $0.01 Earnings (loss) per share - assuming dilution $(2.72) $0.01 (A) Prior quarter amounts have been reclassified to conform with current year presentation. (B) Pro Forma Earnings (Loss) for the three and nine months ended May 3, 1998 gives effect for interest expense on debt assumed as of the spin-off date as if it were outstanding for the entire period. The related tax impact of the pro forma interest expense is included within taxes on earnings. (C) Contributions to earnings (loss) before interest and taxes by segment include the effects of the third quarter fiscal 1999 charge of $140.0 million for the divestiture of the Swift-Armour Argentine beef business and $3.0 million for charges associated with the closure of the Dublin, Ga., mushroom farm. These charges were partially offset by reversing $3.2 million of a $28.1 million reserve established in fiscal 1998 for restructuring which is now complete and a $3.2 million special item incurred in the second quarter of fiscal 1999 related to the sale of the Kattus business. Fiscal 1999 Fiscal 1998 United States $(1,900) $(15,650) Europe 5,315 (12,400) South America (140,000) 0 $(136,585) $(28,050) VLASIC FOODS INTERNATIONAL CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) May 2, August 2, 1999 1998 (unaudited) (audited) Current assets $376,881 $352,940 Plant assets, net 367,775 520,075 Other assets, principally intangibles, net 79,375 86,258 Total assets $824,031 $959,273 Current liabilities $186,096 $227,075 Long-term debt 580,663 558,873 Nonpension postretirement benefits 35,826 32,493 Other liabilities 39,346 34,228 Shareowners' equity (deficit) (17,900) 106,604 Total liabilities and shareowners' equity (deficit) $824,031 $959,273 Total debt $588,237 $571,408  