Del Monte reduces debt by about $270 million in fiscal 2004

By Sara Rosenberg

New York, June 24 - Del Monte Foods Co. used free cash flow to reduce debt to $1.3766 billion at the end of fiscal 2004 from $1.6474 billion at the end of fiscal 2003, according to a company news release.

"We're comfortable with [debt levels] today," company officials said during a conference call Thursday. "We always said we'd like debt to EBITDA to be between two and three and I think we're in that ballpark."

"We are pleased with our year-end results and the progress we have made in the first full year of operations as the new Del Monte Foods," chairman, president and chief executive officer Rick Wolford said in the release. "We drove strong sales growth, delivered earnings on target, reduced our debt by $271 million with our strong cash flow and completed key integration milestones without disruption of our business."

Looking ahead, the company anticipates generating about $200 million of free cash flow in 2005. The company may use this cash flow to pay down debt, officials said in a conference call Thursday. However, it is not definite that this money will be used for debt reduction, company officials cautioned, explaining that Del Monte will consider other options, such as dividends and/or strategic acquisition, if they appear to be more favorable to the company.

If the 2005 free cash flow is used toward debt reduction, debt to EBITDA will come in at around 2.5x.

Del Monte is a San Francisco producer, distributor and marketer of branded and private-label food and pet products.

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