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Case and Internet Research

2.25 Del Monte Foods Case
The following are excerpts from Del Monte Foods’ 2007 Form 10-K Notes to
the Consolidated Financial Statements:
Business
Del Monte Foods Company and its consolidated subsidiaries (”Del Monte,” or the
Company”) is one of the country’s la_rg<_istproducers, distributors and marketers of
premium quality, branded food and pet products for the U.S. retail market, with
leading food brands, such as Del Monte, StarKist, SEEW, Contadina, College Inn and
other brand names and premier foods and snacks for pets, with brands including
Meow Mix, Kibbles ’n Bits, Nine Lives, Milk-Bone, Pup-Peroni, Meaty Bone, Snausages,
Pounce and other brand names. The Company acquired Meow Mix and Milk-Bone
brands during the three months ended July 30, 2006, in connection with the acquisi-
tions discussed in Note 4. The Company also produces private label food and pet
products. The majority of its products are sold nationwide in all channels serving
retail markets, mass merchandisers, the U.S. military, certain export markets, the
foodservice industry and food processors.
Note 4. Acquisitions
The acquisitions were accounted for under the purchase method of accounting.
The purchase prices were allocated to the net assets acquired based upon estimat-
ed fair markg values at the respective dates of acquisition. The Company utilized
independent valuation firms to assist in estimating the fair value of the acquired
businesses’ real estate, machinery and equipment and identifiable intangible as-
sets. The Company’s allocation of purchase price to the net tangible and intangi-
ble assets acquired and liabilities assumed is as follows as of April 29, 2007:
Meow Mix Milk-Bone
Cash and cash equivalents $ 3.6 33
Trade accounts receivable, net 18.8
Inventories 25.9 18-0
Prepaid expenses and other current assets 11.0 9.8
Property, plant and equipment, net 34.3 37.3
Goodwill 420.8 219.5
Intangible assets, net 307.0 330.0
Other assets, net 1.3
Total assets, acquired 822.7 614.6
Accounts payable and accrued expenses 28.3 10.9
Deferred tax liabilities 69.5 5.8
Other noncurrent liabilities 3.3 4.9
Total liabilities assumed 101.1 21.6
Net assets acquired $ 721.6 $ 593.0

Required
1. Using the Consolidated Balance Sheets for Del Monte Foods for April 29,
2007, and April 30, 2006, prepare a common-sjze balance sheet.
2. Evaluate the asset, debt, and equity structure of Del Monte Foods, as well as
trends and changes found on the common-size balance sheet.
3. What conce investors and cr_§gi_.j,tors have based on only this infor-
mation?
4. What additional financial and no finan ‘al information would investors
and creditors nee to make mve endmg decisions for Del Monte
Foods?

:)

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