Nabisco Holdings Corp. (NYSE: NA) and Nabisco Group Holdings Corp. (NYSE: NGH) today announced results for the third quarter ended September 30, 2000.
Nabisco’s reported net sales for the quarter increased nearly 10 percent to $2.25 billion from $2.06 billion in last year’s third quarter. Worldwide sales from ongoing operations, excluding Nabisco’s European businesses transferred during the quarter to the new United Biscuits investment venture, advanced 13 percent to $2.25 billion from $1.99 billion.
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For NA, third quarter net income, excluding special and extraordinary items, was $108 million, or $.40 per diluted share, up 33 percent from $.30 reported in the same quarter last year. On a reported basis, including special and extraordinary items, third quarter net income was $78 million, or $.29 per diluted share, down 33 percent from $.43 per diluted share in the third quarter last year. Special items in this year’s third quarter include expenses totaling $.11 per share related to the pending sale of Nabisco; in the prior year third quarter, special and extraordinary items consisted of a $.13 per share benefit primarily related to a net credit from 1998 restructurings.
For NGH, net income in the third quarter was $82 million, or $.25 per diluted share, up 32 percent from $.19 per diluted share reported in the same quarter last year. Results from both periods exclude special items and the 1999 third quarter results also exclude an extraordinary loss due to the early redemption of debt.
Nabisco President and CEO James M. Kilts said: “Our businesses continue to deliver exceptional results with strong gains in sales, market share, and earnings. We move into the fourth quarter with considerable momentum behind a strong line-up of exciting new products and holiday promotions. We will be delivering to Philip Morris businesses that continue to lead the food industry in performance and growth.”
Mr. Kilts noted that third quarter reported income, as expected, was reduced by costs associated with the pending sales of Nabisco Holdings Corp. to Philip Morris Companies and Nabisco Group Holdings Corp. to R.J. Reynolds Tobacco Holdings. (Costs include investment banking fees, other advisor fees and expenses associated with the cash buyout of exercised NA stock options.) The transactions are expected to close during the fourth quarter, following shareholder approval and regulatory review.
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By GlobalDataU.S. Biscuit Highlights
Nabisco Biscuit Company delivered another quarter of very strong performance, with gains in sales, earnings, and market share. Biscuit sales for the quarter increased 4 percent to $962 million, compared to $924 million in the same period last year. Operating company contribution (OCC) for the quarter advanced 18 percent to $161 million, and OCC margin expanded to 16.7 percent of sales, compared to 14.7 percent in the year-ago period.
Driving the gain in sales were strong cookie and cracker volumes, which collectively advanced more than 3 percent in the quarter. Double-digit gains for Oreo, which benefited from the highly-successful introduction of Mini Oreo, led the strong results. Also posting impressive growth for the quarter were Ritz, Wheat Thins, and Triscuit crackers. Overall cookie and cracker market share continued its growth in the quarter, advancing by half a share point to 40.1 percent.
Nabisco Foods Company Highlights
Third quarter sales for Nabisco Foods Company increased 37 percent to $748 million from $545 million last year. Driving the growth was above-plan performance by Favorite Brands, acquired in November 1999, and continued solid core business growth. Excluding Favorite Brands, sales were up 4 percent, led by the LifeSavers division. OCC rose 35 percent to $100 million from $74 million last year.
The integration of Favorite Brands continues with improvements to both the product portfolio and manufacturing operations. Both sales and earnings are ahead of schedule.
International Highlights
On an ongoing basis, International sales for the quarter were $537 million, up 4 percent from the same quarter last year. Both periods exclude the contribution of Nabisco’s European businesses, which were transferred during the current year quarter to the new United Biscuits investment venture. On a reported basis, third quarter sales were $543 million, down 8 percent from $588 million in the prior year.
OCC on an ongoing basis, was up 3 percent to $40 million for the third quarter. Particularly strong performances were posted in Canada, Asia and Venezuela, offset by softness in other markets, including Brazil and Argentina. Reported OCC for the quarter declined 18 percent to $40 million.
Nabisco is a major international manufacturer of biscuits, snacks, and premium grocery products, including such well-known U.S. brands as Oreo, SnackWell’s, and Chips Ahoy!; Ritz crackers; A.1. steak sauces; Grey Poupon mustards; Life Savers confections; and Planters nuts and snacks. International products include Christie, Peek Freans, Terrabusi cookies and crackers; Yemina pastas, Royal dessert mixes, Fleischmann’s yeast; and several Nabisco global brands – Oreo, Ritz and Chips Ahoy!. Nabisco markets products in the United States, Canada and more than 85 other countries around the world.
NABISCO HOLDINGS CORP. (NA)
Third Quarter Results Excluding Special Items and Extraordinary Items:
---------------------------------------------------------------------
- Net sales increased 10 percent to $2.25 billion from $2.06
billion
- Operating company contribution increased 16 percent to $301
million from $259 million
- Net income rose 33 percent to $108 million from $81 million
- Net income per diluted share was up 33 percent to $.40 from $.30
- Cash net income increased 22 percent to $152 million from $125
million
Third Quarter Reported Results:
------------------------------
- Net sales increased 10 percent to $2.25 billion from $2.06
billion
- Operating company contribution increased 22 percent to $301
million
- Operating income decreased 22 percent to $197 million from $252
million
- Net income decreased 32 percent to $78 from $114 million
- Net income per diluted share decreased 33 percent to $.29 versus
$.43
- Cash net income decreased 23 percent to $122 million from $158
million
Nine Month Results Excluding Special Items and Extraordinary Items:
------------------------------------------------------------------
- Net sales increased 11 percent to $6.58 billion from $5.94
billion
- Operating company contribution increased 16 percent to $822
million from $711 million
- Net income increased 32 percent to $266 million from $202 million
- Net income per diluted share was up 30 percent to $.99 from $.76
- Cash net income increased 19 percent to $399 million from $334
million
Nine Month Reported Results:
---------------------------
- Net sales increased 11 percent to $6.58 billion from $5.94
billion
- Operating company contribution increased 24 percent to $822
million
- Operating income increased 10 percent to $617 million from $563
million
- Net income was $236 million versus $215 million last year
- Net income per diluted share was $.88 versus $.81
- Cash net income was $369 million versus $347 million
(2000 and 1999 special items are covered in the accompanying notes at
the end of the press release. Definitions for the terms operating
company contribution and cash net income are covered in the
accompanying notes section of the Consolidated Condensed Statements of
Income.)
NABISCO GROUP HOLDINGS CORP. (NGH)
The following earnings reflect NGH's share of Nabisco Holdings Corp.'s
results and are reduced by NGH's administrative and financing costs.
Third Quarter Results Excluding Special Items and Extraordinary Items:
---------------------------------------------------------------------
- Net sales increased 10 percent to $2.25 billion from $2.06
billion
- Operating company contribution increased 14 percent to $294
million from $257 million
- Net income rose 30 percent to $82 million from $63 million
- Net income per diluted share was up 32 percent to $.25 from $.19
- Cash net income increased 20 percent to $118 million from $98
million
Third Quarter Reported Results:
------------------------------
- Net sales increased 10 percent to $2.25 billion from $2.06
billion
- Operating company contribution increased 20 percent to $294
million
- Operating income decreased 25 percent to $188 million from $250
million
- Net income decreased 39 percent to $56 million from $92 million
- Net income per diluted share decreased 39 percent to $.17 versus
$.28
- Cash net income decreased 28 percent to $92 million from $127
million
Nine Month Results Excluding Special Items, Discontinued Operations
-------------------------------------------------------------------
and Extraordinary Items:
-----------------------
- Net sales increased 11 percent to $6.58 billion from $5.94
billion
- Operating company contribution increased 14 percent to $805
million from $709 million
- Net income increased 28 percent to $203 million from $159 million
- Net income per diluted share was up 27 percent to $.62 from $.49
- Cash net income increased 17 percent to $310 million from $265
million
Nine Month Reported Results:
---------------------------
- Net sales increased 11 percent to $6.58 billion from $5.94
billion
- Operating company contribution increased 21 percent to $805
million
- Operating income increased 7 percent to $598 million from $561
million
- Net income was $179 million versus $2.86 billion last year
- Net income per diluted share was $.55 versus $8.76
- Cash net income was $286 million versus $2.96 billion
(2000 and 1999 special items are covered in the accompanying notes at
the end of the press release. Definitions for the terms operating
company contribution and cash net income are covered in the
accompanying notes section of the Consolidated Condensed Statements of
Income.)
Discontinued operations reflect the 1999 results from the former
tobacco businesses and RJR Nabisco corporate headquarters' expenses.
These results have been segregated and reported as discontinued
operations in the attached Consolidated Condensed Statements of
Income. In 1999, the former RJR Nabisco International tobacco business
was sold and the domestic tobacco operations of R.J. Reynolds Tobacco
Co., which now trades as RJR, was subsequently spun-off to
shareholders. The results from these businesses are excluded from
Sales, Operating Company Contribution and Operating Income.
Note to the press release on NA special items:
NABISCO HOLDINGS CORP. (NA)
---------------------------
Special items for the first nine months of 2000 totaled $40 million
expense ($30 million after tax or $.11 per share) due to the
following:
- Second quarter special items included in Other Items include a
restructuring credit of $27 million ($18 million after tax)
offset by a loss on the sale of businesses which were included as
part of the previously announced agreement to invest in a
consortium associated with the purchase of United Biscuits. The
loss on the sale of these businesses amounted to $18 million on
both a pre-tax and after-tax basis, which included a write-off of
previously recorded cumulative translation adjustments of $51
million.
- Third quarter special items included in Other Items consists of
$49 million expense ($30 million after tax or $.11 per share)
associated with the pending sales of Nabisco Holdings Corp. to
Philip Morris Companies Inc. and Nabisco Group Holdings Corp. to
RJ Reynolds Tobacco Holdings, Inc. ($28 million due to the
exercise of NA stock options and $21 million of financial, legal
and other advisor fees).
Special items for the first nine months of 1999 totaled $13 million
income ($16 million income after tax or $.06 per share) as follows:
- First quarter special items include restructuring-related
expenses of $15 million ($9 million after tax or $.03 per share).
- Second quarter special items include restructuring-related
expenses of $19 million ($11 million after tax or $.04 per
share).
- Third quarter special items consist of a credit to the 1998
restructuring programs of $59 million ($44 million after tax or
$.16 per share) partially offset by restructuring related
expenses of $12 million ($8 million after tax or $.03 per share).
Note to the press release on NGH special items:
NABISCO GROUP HOLDINGS CORP. (NGH)
----------------------------------
Special items for the first nine months of 2000 totaled $40 million
expense ($24 million after tax, net of minority interest in Nabisco,
or $.07 per share) as follows:
- First quarter special items include $2 million of interest income
($1 million after tax or $.01 per share) included in Other Income
(Expense), Net on the investment of funds transferred from RJR
Nabisco, Inc. in satisfaction of certain liabilities assumed by
Nabisco Group Holdings Corp. prior to the spin-off to
shareholders of domestic tobacco operations.
- Second quarter special items of $9 million income ($0 after tax,
net of minority interest) included in Other Items include a
restructuring credit of $27 million ($14 million after tax, net
of minority interest) offset by a loss on the sale of businesses
which were included as part of the United Biscuits. The loss on
the sale of these businesses amounted to $18 million ($14 million
after tax, net of minority interest) which included a write-off
of previously recorded cumulative translation adjustments of $51
million.
- Third quarter special items included in Other Items consists of
$51 million expense ($25 million after tax, net of minority
interest or $.08 per share) associated with the pending sale of
Nabisco Group Holdings Corp. and Nabisco Holdings Corp. to R.J.
Reynolds Tobacco Holdings, Inc. and to Philip Morris Companies
Inc., respectively ($28 million due to the exercise of NA stock
options and $23 million of financial, legal and other advisor
fees).
Special items for the first nine months of 1999 totaled $35 million
expense ($16 million after tax, net of minority interest in Nabisco or
$.06 per diluted share) as follows:
- First quarter special items include restructuring-related
expenses of $15 million ($7 million after tax, net of minority
interest or $.02 per share) and $31 million of interest expense
($18 million after tax or $.06 per share) related to Trust
Originated Preferred Securities redeemed in the second quarter of
1999.
- Second quarter special items include restructuring-related
expenses of $19 million ($9 million after tax, net of minority
interest or $.03 per share), $24 million of interest expense ($15
million after tax or $.05 per share) related to Trust Originated
Preferred Securities redeemed in the second quarter of 1999
partially offset by $5 million of interest income ($3 million
after tax or $.01 per share) on the investment of funds
transferred from RJR Nabisco, Inc. in satisfaction of certain
liabilities assumed by Nabisco Group Holdings Corp. prior to the
spin-off to shareholders of domestic tobacco operations.
- Third quarter special items include a credit to Nabisco Holdings
Corp.'s 1998 restructuring programs of $59 million ($35 million
after tax, net of minority interest or $.11 per share) partially
offset by restructuring related expenses of $12 million ($6
million after taxes, net of minority interest or $.02 per share),
and $2 million of interest income ($1 million after tax) on the
investment of funds transferred from RJR Nabisco, Inc. in
satisfaction of certain liabilities assumed by Nabisco Group
Holdings Corp. prior to the spin off to shareholders of domestic
tobacco operations
NABISCO HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Millions, Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
---- ---- ---- ----
NET SALES:
Nabisco Biscuit Company $ 962 $ 924 $ 2,779 $ 2,688
Nabisco Foods Company 748 545 2,112 1,527
International 543 588 1,689 1,720
-------- -------- -------- --------
Total 2,253 2,057 6,580 5,935
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of products sold 1,231 1,133 3,594 3,249
Selling, advertising,
administrative, and
general expenses 721 677 2,164 2,021
-------- -------- -------- --------
Total 1,952 1,810 5,758 5,270
-------- -------- -------- --------
OPERATING COMPANY CONTRIBUTION:
Nabisco Biscuit Company 161 136 439 386
Nabisco Foods Company 100 74 271 196
International 40 49 112 129
Restructuring related
expenses - (12)(A) - (46)(B)
-------- -------- -------- --------
Total 301 247 822 665
Amortization of trademarks
and goodwill (55) (54) (165) (161)
Other items (49)© 59 (D) (40)(E) 59 (D)
-------- -------- -------- --------
Operating income 197 252 617 563
Interest and debt expense (71) (64) (213) (193)
Other income (expense), net 1 (7) (10) (22)
-------- -------- -------- --------
Income before income taxes 127 181 394 348
Provision for income taxes 49 64 158 130
-------- -------- -------- --------
Net income before
extraordinary item 78 117 236 218
Extraordinary item - loss
on early extinguishment
of debt, net of $2
million income taxes - (3) - (3)
-------- -------- -------- --------
Net income $ 78 $ 114 $ 236 $ 215
======== ======== ======== ========
Basic net income (loss)
per share:
Income before
extraordinary item $ 0.29 $ 0.44 $ 0.89 $ 0.82
Extraordinary item - (0.01) - (0.01)
-------- -------- -------- --------
Net income $ 0.29 $ 0.43 $ 0.89 $ 0.81
======== ======== ======== ========
Diluted net income (loss)
per share:
Income before
extraordinary item $ 0.29 $ 0.44 $ 0.88 $ 0.82
Extraordinary item - (0.01) - (0.01)
-------- -------- -------- --------
Net income $ 0.29 $ 0.43 $ 0.88 $ 0.81
======== ======== ======== ========
Cash net income $ 122 $ 158 $ 369 $ 347
======== ======== ======== ========
Average number of common
shares outstanding
(in thousands):
Basic 265,070 264,627 264,843 264,676
======== ======== ======== ========
Diluted 269,441 266,665 268,001 266,867
======== ======== ======== ========
(A) Consists of $12 million expense ($8 million after tax or $.03 per
share) associated with the implementation of the June 1998 and
December 1998 restructuring programs.
(B) Consists of $46 million expense ($28 million after tax or $.10
per share) associated with the implementation of the June 1998
and December 1998 restructuring programs.
(C) Consists of $49 million expense ($30 million after tax or $.11
per share) associated with the pending sale of Nabisco Group
Holdings Corp. and Nabisco Holdings Corp. to R.J. Reynolds
Tobacco Holdings Inc. and Philip Morris Companies Inc.,
respectively ($28 million due to the cash buyout of exercised
stock options and $21 million of financial, legal and other
advisor fees).
(D) Consists of a credit to the June and December 1998 restructuring
programs of $59 million ($44 million after tax or $.16 per share)
related to the Biscuit, Nabisco Foods Company and International
businesses of $29 million, $13 million and $17 million,
respectively.
(E) Consists of $49 million expense ($30 million after tax or $.11
per share) associated with the pending sale of Nabisco Group
Holdings Corp. and Nabisco Holdings Corp. to R.J. Reynolds
Tobacco Holdings Inc. and Philip Morris Companies Inc.,
respectively ($28 million due to the cash buyout of exercised
stock options and $21 million of financial, legal and other
advisor fees) and a net loss of $18 million (before and after tax
or $.07 per share) from businesses sold partially offset by
credit to the 1998 restructuring programs of $27 million ($18
million after tax or $.07 per share).
Terms:
Cash net income - net income after adding back the after-tax
amortization of trademarks and goodwill.
Operating company contribution - operating income before
amortization of trademarks and goodwill and exclusive of other
items.
NABISCO GROUP HOLDINGS CORP.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Millions, Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
---- ---- ---- ----
NET SALES:
Nabisco Biscuit Company $ 962 $ 924 $ 2,779 $ 2,688
Nabisco Foods Company 748 545 2,112 1,527
International 543 588 1,689 1,720
-------- -------- -------- --------
Total 2,253 2,057 6,580 5,935
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of products sold 1,231 1,133 3,594 3,249
Selling, advertising,
administrative and
general expenses 728 679 2,181 2,023
-------- -------- -------- --------
Total 1,959 1,812 5,775 5,272
-------- -------- -------- --------
OPERATING COMPANY CONTRIBUTION:
Nabisco Biscuit Company 161 136 439 386
Nabisco Foods Company 100 74 271 196
International 40 49 112 129
Restructuring related
expenses - (12)(A) - (46)(B)
-------- -------- -------- --------
301 247 822 665
Headquarters (7) (2) (17) (2)
-------- -------- -------- --------
Total 294 245 805 663
Amortization of trademarks
and goodwill (55) (54) (165) (161)
Other items (51)© 59 (D) (42)(E) 59 (D)
-------- -------- -------- --------
Operating income 188 250 598 561
Interest and debt expense (73) (66) (220) (254)(F)
Other income (expense), net 4 (4)(G) - (H) (14)(I)
-------- -------- -------- --------
Income before income taxes 119 180 378 293
Provision for income taxes 48 64 153 109
-------- -------- -------- --------
Income before minority
interest in income of
Nabisco Holdings 71 116 225 184
Less minority interest in
Nabisco Holdings 15 22 46 42
-------- -------- -------- --------
Income from continuing
operations 56 94 179 142
Income from operations
of discontinued businesses,
net of income taxes - - - 24 (J)
Gain on sale of R.J. Reynolds
International, net of $1.9
billion of income taxes - - - 2,970
-------- -------- -------- --------
Income before
extraordinary items 56 94 179 3,136
Extraordinary items - loss
on early extinguishment
of debt, net of income
taxes and minority interest - (2)(K) - (281)(L)
-------- -------- -------- --------
Net income 56 92 179 2,855
Less preferred stock
dividends - - - 8
-------- -------- -------- --------
Net income applicable to
common stock $ 56 $ 92 $ 179 $ 2,847
======== ======== ======== ========
Basic net income (loss) per share:
Continuing operations $ 0.17 $ 0.29 $ 0.55 $ 0.43
Discontinued operations - - - 9.21
Extraordinary items - (0.01) - (0.87)
-------- -------- -------- --------
Net income $ 0.17 $ 0.28 $ 0.55 $ 8.77
======== ======== ======== ========
Diluted net income (loss) per share:
Continuing operations $ 0.17 $ 0.29 $ 0.55 $ 0.42
Discontinued operations - - - 9.21
Extraordinary items - (0.01) - (0.87)
-------- -------- -------- --------
Net income $ 0.17 $ 0.28 $ 0.55 $ 8.76
======== ======== ======== ========
Cash net income $ 92 $ 127 $ 286 $ 2,961
======== ======== ======== ========
Average number of common
shares outstanding
(in thousands):
Basic 326,203 325,190 325,939 324,671
======== ======== ======== ========
Diluted 331,438 325,453 328,344 324,957
======== ======== ======== ========
(A) Consists of $12 million expense ($6 million after tax, net of
minority interest or $.02 per share) associated with the
implementation of the June 1998 and December 1998 restructuring
programs.
(B) Consists of $46 million expense ($22 million after tax, net of
minority interest or $.07 per share) associated with the
implementation of the June 1998 and December 1998 restructuring
programs.
(C) Consists of $51 million expense ($25 million after tax, net of
minority interest or $.08 per share) associated with the pending
sale of Nabisco Group Holdings Corp. and Nabisco Holdings Corp.
to R.J. Reynolds Tobacco Holdings, Inc. and Philip Morris
Companies Inc., respectively ($28 million due to the cash buyout
of exercised Nabisco Holdings Corp. stock options and $23 million
of financial, legal and other advisor fees).
(D) Consists of a credit to Nabisco Holdings Corp.'s June and
December 1998 restructuring programs of $59 million ($35 million
after tax, net of minority interest or $.11 per share) related to
the Biscuit, Nabisco Foods Company and International businesses
of $29 million, $13 million and $17 million, respectively.
(E) Consists of $51 million expense ($25 million after tax, net of
minority interest or $.08 per share) associated with the pending
sale of Nabisco Group Holdings Corp. and Nabisco Holdings Corp.
to R.J. Reynolds Tobacco Holdings, Inc. and Philip Morris
Companies Inc., respectively ($28 million due to the cash buyout
of exercised Nabisco Holdings Corp. stock options and $23 million
of financial, legal and other advisor fees) and a $18 million
loss on sale of businesses ($14 million after tax, net of
minority interest or $.04 per share) partially offset by a $27
million credit ($14 million after tax, net of minority interest
or $.04 per share) to Nabisco Holdings Corp.'s 1998 restructuring
programs.
(F) Includes $55 million expense ($34 million after tax or $.10 per
share) related to Trust Originated Preferred Securities redeemed
in the second quarter of 1999 ($276 million of a total of $374
million 9.5 percent Trust Originated Preferred Securities and all
of the $949 million 10 percent Trust Originated Preferred
Securities).
(G) Includes $2 million of interest income ($1 million after tax) on
the investment of funds transferred from RJR Nabisco, Inc. in
satisfaction of certain liabilities assumed by Nabisco Group
Holdings Corp.
(H) Includes $2 million of interest income ($1 million after tax or
$.01 per share) on the investment of funds transferred from RJR
Nabisco, Inc. in satisfaction of certain liabilities assumed by
Nabisco Group Holdings Corp.
(I) Includes $7 million of interest income ($4 million after tax or
$.01 per share) on the investment of funds transferred from RJR
Nabisco, Inc. in satisfaction of certain liabilities assumed by
Nabisco Group Holdings Corp.
(J) Includes the pre-sale results of R.J. Reynolds International
through May 12, 1999, the results of RJR Nabisco. Inc.'s
corporate headquarters, including a restructuring charge of $143
million, ($93 million after tax), and the results of R.J.
Reynolds Tobacco Company through June 14, 1999. On June 14, 1999,
Nabisco Group Holdings completed the spin-off of its domestic
tobacco business through a stock dividend to its common
shareholders.
(K) Consists of an extraordinary after-tax loss, net of minority
interest of $2 million or $.01 per share associated with the
early extinguishment of debt at Nabisco Holdings Corp.
(L) Includes a $250 million after-tax loss for RJR Nabisco, Inc., a
$29 million after-tax loss for Nabisco Group Holdings, and a loss
of $2 million after tax, net of minority interest at Nabisco
Holdings Corp.
Terms:
Cash net income - net income after adding back the after-tax
amortization of trademarks and goodwill.
Operating company contribution - operating income before
amortization of trademarks and goodwill and exclusive of other
items.
