Del Monte Reports Loss After Refinancing Debt

Del Monte Foods Co., the largest U.S. producer of canned fruits and vegetables, had a loss in the fiscal fourth quarter because it spent more to refinance debt, the company said Thursday.

San Francisco-based Del Monte had a loss of $11.8 million, or 23 cents a share, in the quarter ended June 30, compared with net income of $89.7 million, or $1.70, a year earlier. Sales rose 22% to $389.6 million, helped by the recent acquisitions of the Sunfresh and S&W; food brands, the company said.

In May, Del Monte sold loans and high-yield bonds to refinance existing notes due in 2006 and 2007 and entered into an amended credit agreement to repay debt. In addition, retailers continued to reduce inventory, ordering about 2.8 million fewer cases of food from Del Monte as consumers bought less fruit.

Del Monte expects 2002 earnings to be 83 cents to 87 cents a share, it said in a statement. The company had net income of $13.8 million, or 26 cents a share, last year.

Shares of Del Monte were unchanged at $9 on the New York Stock Exchange. They have risen 27% in the last year.

Excluding expenses related to debt refinancing and charges for plant consolidations and other items, profit in the latest quarter was $18.1 million, or 34 cents a share, the company said.

On that basis, Del Monte was expected to have profit of 23 cents a share, the average estimate of four analysts surveyed by First Call/Thomson Financial.

Other California companies reporting earnings Thursday:

* Equity Marketing Inc. reported an 83% drop in profit, largely due to a reduction in promotional activity by its No. 1 client, Burger King, and it lowered its expectations for the year.

Los Angeles-based Equity, which designs promotional marketing campaigns tied to toys, said second-quarter net income was $485,000, or 8 cents a share, down from $2.9 million, or 41 cents, a year ago. Revenue plunged 50% to $28.2 million.

Equity, which also said it purchased British marketing firm Logistix Ltd. for $12.1 million, said it will continue to buy back its shares. The company, which has 6.2 million outstanding diluted shares, had spent $6.4 million on 531,000 shares as of June 30, and allocated another $6.4 million for additional repurchasing.

For the year, the company lowered its earnings-per-share forecast to between 65 cents and 85 cents, rather than the $1.05 to $1.40 previously forecast. Revenue is predicted to slip to between $155 million and $175 million from a forecast of $185 million to $215 million.

* ICN Pharmaceuticals Inc. said second-quarter earnings fell 32% as royalties decreased for its biggest product, the ribavirin hepatitis C drug.

Net income fell to $21 million, or 26 cents a share, from $31 million, or 38 cents, a year earlier. The Costa Mesa drug maker was expected to earn 24 cents a share. Revenue increased 7% to $206 million.

Ribavirin royalties fell 27% to $31 million as doctors held off prescribing the drug, which is sold only in combination with Schering-Plough Corp.’s Intron A to treat the liver disease. Doctors have been waiting for U.S. regulators to approve a combination with an improved version of Intron A, known as Peg-Intron, and ribavirin.

* Home builder William Lyon Homes of Newport Beach reported that net income for the second quarter rose 25% to $9.6 million, or 90 cents a share, from $7.7 million, or 73 cents a share, for the same period last year. Revenue rose 10% to $106.7 million.