10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 30, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 001-14335

DEL MONTE FOODS COMPANY

(Exact name of registrant as specified in its charter)

Delaware	13-3542950
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

One Market @ The Landmark, San Francisco, California 94105

(Address of Principal Executive Offices including Zip Code)

(415) 247-3000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

As of February 28, 2005, there were 211,048,385 shares of Del Monte Foods Company Common Stock, par value $0.01 per share, outstanding.

Table of Contents

PART I.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	CONDENSED CONSOLIDATED BALANCE SHEETS
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.	CONTROLS AND PROCEDURES
PART II.	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5.	OTHER INFORMATION
ITEM 6.	EXHIBITS
SIGNATURES

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

	January 30, 2005			May 2, 2004
ASSETS
Cash and cash equivalents	$	8.6		$	36.3
Trade accounts receivable, net of allowance		228.0			222.3
Inventories		1,000.6			823.5
Deferred tax assets		12.7			8.3
Prepaid expenses and other current assets		118.6			132.8
Assets of discontinued operations		2.6			2.5
TOTAL CURRENT ASSETS		1,371.1			1,225.7
Property, plant and equipment, net		801.8			820.9
Goodwill		769.2			770.9
Intangible assets, net		586.9			585.1
Other assets, net		50.5			57.1
TOTAL ASSETS	$	3,579.5		$	3,459.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	401.3		$	427.2
Short-term borrowings		14.9			0.8
Current portion of long-term debt		6.3			6.3
TOTAL CURRENT LIABILITIES		422.5			434.3
Long-term debt		1,363.9			1,369.5
Deferred tax liabilities		244.7			226.2
Other non-current liabilities		304.9			300.8
TOTAL LIABILITIES		2,336.0			2,330.8
Stockholders’ equity:
Common stock ($0.01 par value per share, shares authorized: 500,000,000; issued and outstanding: 211,022,992 at January 30, 2005 and 209,691,132 at May 2, 2004)	$	2.1		$	2.1
Additional paid-in capital		958.2			943.6
Accumulated other comprehensive loss		(0.3	)		(1.7	)
Retained earnings		283.5			184.9
TOTAL STOCKHOLDERS’ EQUITY		1,243.5			1,128.9
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,579.5		$	3,459.7

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

	Three Months Ended					Nine Months Ended
	January 30, 2005			January 25, 2004		January 30, 2005			January 25, 2004
Net sales	$	861.3		$	811.1	$	2,333.9		$	2,214.0
Cost of products sold		629.1			583.9		1,732.5			1,621.1
Gross profit		232.2			227.2		601.4			592.9
Selling, general and administrative expense		127.8			112.1		362.8			334.8
Operating income		104.4			115.1		238.6			258.1
Interest expense		25.9			31.4		76.4			92.3
Other income (expense)		(0.1	)		0.5		(2.6	)		2.1
Income from continuing operations before income taxes		78.4			84.2		159.6			167.9
Provision for income taxes		29.8			32.0		60.6			61.5
Income from continuing operations		48.6			52.2		99.0			106.4
Income (loss) from discontinued operations before income taxes		—			3.4		(0.7	)		4.9
Provision (benefit) for income taxes		0.1			2.1		(0.3	)		3.3
Income (loss) from discontinued operations		(0.1	)		1.3		(0.4	)		1.6
Net income	$	48.5		$	53.5	$	98.6		$	108.0
Earnings per common share
Basic:
Continuing operations	$	0.23		$	0.25	$	0.47		$	0.51
Discontinued operations		—			0.01		—			0.01
Total	$	0.23		$	0.26	$	0.47		$	0.52
Diluted:
Continuing operations	$	0.23		$	0.25	$	0.47		$	0.50
Discontinued operations		—			—		—			0.01
Total	$	0.23		$	0.25	$	0.47		$	0.51

See Accompanying Notes to Condensed Consolidated Financial Statements.

4

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Nine Months Ended
	January 30, 2005			January 25, 2004
OPERATING ACTIVITIES:
Net income	$	98.6		$	108.0
(Income) loss from discontinued operations		0.4			(1.6	)
Income from continuing operations		99.0			106.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		68.2			64.7
Deferred taxes		14.1			(2.1	)
Stock compensation expense		6.0			2.9
Other non-cash items, net		5.0			0.8
Changes in operating assets and liabilities		(197.7	)		(170.1	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(5.4	)		2.6
INVESTING ACTIVITIES:
Capital expenditures		(42.5	)		(58.3	)
Proceeds from disposal of assets		8.5			0.1
Acquisition		(7.2	)		—
NET CASH USED IN INVESTING ACTIVITIES		(41.2	)		(58.2	)
FINANCING ACTIVITIES:
Proceeds from short-term borrowings		373.6			292.8
Payments on short-term borrowings		(359.5	)		(258.5	)
Principal payments on long-term debt		(4.6	)		(5.5	)
Issuance of common stock		7.9			0.6
NET CASH PROVIDED BY FINANCING ACTIVITIES		17.4			29.4
Effect of exchange rate changes on cash and cash equivalents		1.9			1.8
NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS		(0.4	)		2.0
NET CHANGE IN CASH AND CASH EQUIVALENTS		(27.7	)		(22.4	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		36.3			42.7
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	8.6		$	20.3

See Accompanying Notes to Condensed Consolidated Financial Statements.

5

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

Note 1. Business and Basis of Presentation

Del Monte Foods Company and its consolidated subsidiaries (“Del Monte” or the “Company”) is one of the country’s largest producers, distributors and marketers of premium quality, branded and private label food and pet products for the U.S. retail market. The Company’s leading food brands include Del Monte, StarKist, Contadina, S&W and College Inn. In addition, the Company has pet food and pet snacks including 9Lives, Kibbles ‘n Bits, Pup-Peroni, Snausages, Pounce and other brand names. 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.

On December 20, 2002, the Company acquired various businesses from H.J. Heinz Company (“Heinz”), including Heinz’s U.S. and Canadian pet food and pet snacks, North American tuna, U.S. retail private label soup and U.S. infant feeding businesses (the “Merger”).

For reporting purposes, the Company’s businesses are aggregated into two reportable segments: Consumer Products and Pet Products. The Consumer Products reportable segment includes the Del Monte Brands, StarKist Seafood and Private Label Soup operating segments, which manufacture, market and sell shelf-stable products, including fruit, vegetable, tomato, broth, infant feeding, tuna and soup products. The Pet Products reportable segment includes the Pet Products operating segment, which manufactures, markets and sells dry and wet pet food and pet snacks. During the second quarter of fiscal 2005, the StarKist Brands operating segment was split into the StarKist Seafood and Private Label Soup operating segments due to changes in management responsibilities related to these product groupings. This operating segment change did not affect the Company’s reportable segments.

The Company operates on a 52 or 53-week fiscal year ending on the Sunday closest to April 30. The results of operations for the three months ended January 30, 2005 and January 25, 2004 each reflect periods that contain 13 weeks. The results of operations for the nine months ended January 30, 2005 and January 25, 2004 each reflect periods that contain 39 weeks.

The accompanying unaudited condensed consolidated financial statements of Del Monte as of January 30, 2005 and for the three and nine months ended January 30, 2005 and January 25, 2004 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles (“GAAP”) for annual financial statements. In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited condensed consolidated financial statements. Therefore, actual results could differ from those estimates. Furthermore, operating results for the three and nine months ended January 30, 2005 are not necessarily indicative of the results expected for the year ending May 1, 2005. These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the financial statements contained in the Company’s annual report on Form 10-K for the year ended May 2, 2004 (“2004 Annual Report”). All significant intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current presentation.

Note 2. Significant Accounting Policies

Stock-based Compensation: Effective at the beginning of fiscal 2004, the Company adopted the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Statement No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) to account for its stock-based compensation. The Company elected the prospective method of transition as permitted by FASB Statement No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure” (“SFAS 148”). Employee stock option grants and other stock-based compensation are expensed over the vesting period, based on the fair value at the time the stock-based compensation is granted. Prior to the adoption of SFAS 123, as amended by SFAS 148, the Company accounted for its stock-based compensation under Accounting Principles Board Opinion No. 25.

In accordance with SFAS 123 and SFAS 148, the following table presents pro forma information for the three and nine months ended January 30, 2005 and January 25, 2004 regarding net income and earnings per share as if the Company had accounted for all of its employee stock-based compensation under the fair value method of SFAS 123:

6

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

	Three Months Ended				Nine Months Ended
	January 30, 2005		January 25, 2004		January 30, 2005		January 25, 2004
Net income, as reported	$	48.5	$	53.5	$	98.6	$	108.0
Add: Stock-based employee compensation expense included in reported net income, net of tax		1.6		0.9		3.7		1.8
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of tax		2.0		1.4		4.7		3.3
Pro forma net income	$	48.1	$	53.0	$	97.6	$	106.5
Earnings per share:
Basic - as reported	$	0.23	$	0.26	$	0.47	$	0.52
Basic - pro forma	$	0.23	$	0.25	$	0.46	$	0.51
Diluted - as reported	$	0.23	$	0.25	$	0.47	$	0.51
Diluted - pro forma	$	0.23	$	0.25	$	0.46	$	0.51

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS 123. The accounting required by SFAS 123R is similar to that of SFAS 123, however, the choice between recognizing the fair value of stock options in the income statement or disclosing the pro forma income statement effect of the fair value of stock options in the notes to the financial statements allowed under SFAS 123 has been eliminated in SFAS 123R. SFAS 123R is effective for all interim and annual periods beginning after June 15, 2005, and early adoption is permitted. The adoption of SFAS 123R will increase compensation expense to the extent the requisite service has not yet been rendered for options granted prior to April 28, 2003 that are accounted for under the intrinsic value method. Management intends to use the modified prospective transition method to adopt SFAS 123R beginning in fiscal 2006 and expects that the implementation of SFAS 123R will increase the Company’s stock-based compensation expense by approximately $2.3 during the fiscal year ended 2006.

Note 3. Discontinued Operations

In April 2004, the Company sold certain assets formerly included in the Pet Products reportable segment, including its rights in the IVD and Medi-Cal brands, its rights in the Techni-Cal brand in the United States and Canada, and related inventories, for $82.5 (the “2004 Asset Sale”). During a transition period after the sale, the Company is manufacturing certain products for the buyer. The Company is also performing certain transition services for the buyer during agreed-upon post-closing periods. For all periods presented, the operating results, cash flows and assets related to the 2004 Asset Sale and other operating results from a related Canadian production facility have been classified as discontinued operations. On January 30, 2005, the remaining assets in discontinued operations primarily consisted of the Canadian production facility, which is being actively marketed for sale.

Net sales from discontinued operations was $7.9 and $21.0 for the three and nine months ended January 30, 2005, respectively, and $24.5 and $64.5 for the three and nine months ended January 25, 2004, respectively.

The following table sets forth the major categories of assets included in assets of discontinued operations:

	January 30, 2005		May 2, 2004
Property, plant and equipment, net	$	2.6	$	2.1
Other		—		0.4
Assets of discontinued operations	$	2.6	$	2.5

7

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

Note 4. Inventories

The Company’s inventories consist of the following:

	January 30, 2005		May 2, 2004
Inventories:
Finished products	$	836.0	$	622.1
Raw materials and in-process material		54.7		59.8
Packaging material and other		79.2		104.9
LIFO reserve		30.7		36.7
Total Inventories	$	1,000.6	$	823.5

Note 5. Assets Held For Sale

Included in prepaid and other current assets are certain real properties which were classified as assets held for sale. Assets held for sale totaled $33.8 and $39.7 for the periods ended January 30, 2005 and May 2, 2004, respectively. During the nine months ended January 30, 2005, the Company sold $5.9 of assets held for sale and recognized an immaterial gain on the sale.

Note 6. Earnings Per Share

The following tables set forth the computation of basic and diluted earnings per share from continuing operations:

	Three Months Ended				Nine Months Ended
	January 30, 2005		January 25, 2004		January 30, 2005		January 25, 2004
Basic earnings per common share:
Numerator:
Net income from continuing operations	$	48.6	$	52.2	$	99.0	$	106.4
Denominator:
Weighted average shares		210,956,990		209,584,143		210,329,324		209,469,808
Basic earnings per common share	$	0.23	$	0.25	$	0.47	$	0.51
Diluted earnings per common share:
Numerator:
Net income from continuing operations	$	48.6	$	52.2	$	99.0	$	106.4
Denominator:
Weighted average shares		210,956,990		209,584,143		210,329,324		209,469,808
Effect of dilutive securities		1,751,254		1,884,543		1,825,872		1,396,956
Weighted average shares and equivalents		212,708,244		211,468,686		212,155,196		210,866,764
Diluted earnings per common share	$	0.23	$	0.25	$	0.47	$	0.50

The computation of diluted earnings per share calculates the effect of dilutive securities on weighted average shares. Dilutive securities include stock options, restricted stock units and other deferred stock compensation.

Options and performance shares outstanding in the aggregate amounts of 7,737,693 and 7,700,205 were not included in the computation of diluted earnings per share for the three and nine months ended January 30, 2005, respectively, because their inclusion would be antidilutive. Options outstanding in the amounts of 1,537,940 and 1,779,406 were not included in the computation of diluted earnings per share for the three and nine months ended January 25, 2004, respectively, because their inclusion would be antidilutive.

8

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

Note 7. Debt

At January 30, 2005 and May 2, 2004, the Company’s debt consisted of the following:

	January 30, 2005		May 2, 2004
Short-term borrowings:
Revolver	$	13.3	$	—
Other		1.6		0.8
	$	14.9	$	0.8
Current portion of long-term debt	$	6.3	$	6.3
Long-term debt:
Term B Loan	$	607.6	$	612.1
9.25% senior subordinated notes		309.0		310.1
8.625% senior subordinated notes		450.0		450.0
Other		3.6		3.6
		1,370.2		1,375.8
Less current portion		6.3		6.3
	$	1,363.9	$	1,369.5

On December 20, 2002, in connection with the Merger, the Company established a $300.0 six-year floating rate revolving credit facility (the “Revolver”) with several institutions as part of its senior credit facility. During the three months ended January 30, 2005, the Company borrowed $105.8 and repaid $232.9. During the nine months ended January 30, 2005, the Company borrowed $372.4 and repaid $359.1. As of January 30, 2005, the net availability under the Revolver, adjusted for $55.3 of outstanding letters of credit, was $231.4. The interest rate on the Revolver, which is a floating rate, was approximately 6.75% on January 30, 2005.

During the three and nine months ended January 30, 2005, the Company made scheduled repayments of $1.5 and $4.6, respectively of Term B Loan principal. The Term B Loan is part of the senior credit facility.

The 9.25% senior subordinated notes had a face value of $300.0 when they were sold on May 15, 2001. On the date of the Merger, these notes were recorded at fair value, which was $312.0. The $12.0 premium was scheduled to be amortized over the life of the notes at $1.4 per year. For the three and nine months ended January 30, 2005 and January 25, 2004, $0.4 and $1.1, respectively of the recorded premium was amortized through earnings as a reduction to interest expense.

The Company made cash interest payments of $91.6 and $109.0 during the nine months ended January 30, 2005 and January 25, 2004, respectively.

As of January 30, 2005, agreements relating to the Company’s long term debt, including the credit agreement governing the senior credit facility and the indentures governing the senior subordinated notes, contained covenants that restrict the Company’s ability and the ability of its subsidiaries to incur additional indebtedness, issue capital stock, pay dividends on and redeem its capital stock, make other restricted payments, including investments, sell its assets, incur liens, transfer all or substantially all of its assets and enter into consolidations or mergers. The Company’s credit facilities also required it to meet certain financial tests, including minimum fixed charge coverage, minimum interest coverage and maximum total debt ratios. These financial requirements and ratios generally became more restrictive over time. The Company believes that it was in compliance with all such financial covenants as of January 30, 2005.

Subsequent Event

On February 8, 2005, the Company completed the refinancing of a significant portion of its outstanding indebtedness (the “Refinancing”). The Refinancing was initiated to reduce the applicable interest rate spread under the Company’s senior credit facility debt (revolver and term loans), to reduce the coupon rate on a portion of its senior subordinated debt, and to

9

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

provide the Company with enhanced operational flexibility. The Refinancing included the consummation of a cash tender offer and consent solicitation (the “Offer”) with respect to its outstanding 9 ¹/4% senior subordinated notes due 2011 (the “9 ¹/4% Notes”), the private placement offering of $250.0 principal amount of new 6 ³/4% senior subordinated notes due 2015 (the “6 ³/4% Notes”) and the consummation of a new $950.0 senior credit facility (the “New Credit Facility”). The Company used the proceeds from the sale of the 6 ³/4% Notes and borrowings under the New Credit Facility to fund the payment of consideration and costs related to the Offer and to repay amounts outstanding under its previous senior credit facility. The New Credit Facility is comprised of a $350.0 revolving credit facility with a term of six years, a $450.0 term loan A with a term of six years, and a $150.0 term loan B with a term of seven years.

The Offer expired on February 7, 2005 (the “Expiration Time”). As of the Expiration Time of the Offer, $297.5 aggregate principal amount of the 9 ¹/4% Notes had been validly tendered and not withdrawn, representing approximately 99.2% of the outstanding aggregate principal amount of the 9 ¹/4% Notes. The Company accepted for payment and paid for all 9 ¹/4% Notes validly tendered and not validly withdrawn on or prior to the expiration time.

The following table reflects the debt balances affected by the February 8, 2005 Refinancing, as compared to the balances at January 30, 2005:

	February 8, 2005		January 30, 2005
Short-term borrowings:
Revolver	$	91.4	$	13.3
Long-term debt:
Term A Loan		450.0		—
Term B Loan		150.0		607.6
9.25% senior subordinated notes		2.6		309.0
6.75% senior subordinated notes		250.0		—
	$	852.6	$	916.6

Prior to February 8, 2005, the Company repaid the $13.3 Revolver balance. On February 8, 2005, in connection with the Refinancing, the Company borrowed $91.4, from the $350.0 six-year floating rate revolving credit facility under the New Credit Agreement (the “New Revolver”). Additionally the Company used $9.5 of cash on hand in connection with the closing of the Refinancing. A total of $55.3 in existing standby letters of credit under the Company’s previous credit facility were deemed issued under the New Credit Facility, and accordingly, the total availability under the New Revolver on February 8, 2005 after the consummation of the Refinancing was approximately $203.3. The interest rate on the New Revolver, which is a floating rate, was approximately 6.00% on February 8, 2005. The reduction in the interest rate from January 30, 2005 to February 8, 2005 is primarily due to a reduction in the applicable interest rate spread as a result of the Refinancing. In connection with the Refinancing, the Company expects to recognize approximately $33.5 of expense from fees and write-offs of premium related to the 9 ¹/4% Notes and write-offs of deferred fees in the fourth quarter of fiscal 2005.

The Company is scheduled to repay $0.2 of its long-term debt during the remainder of fiscal 2005. As of February 8, 2005, reflecting the consummation of the Refinancing, scheduled payments of long-term debt for each of the five succeeding fiscal years are as follows:

2006	$	1.7
2007		12.9
2008		24.2
2009		35.4
2010		46.7

At February 8, 2005, agreements relating to the Company’s long-term debt, including the credit agreement governing the New Credit Facility and the indentures governing the senior subordinated notes (including the 6 ³/4% Notes), contained covenants that restrict the ability of Del Monte Corporation and its subsidiaries, among other things, to incur or guarantee indebtedness, issue capital stock, pay dividends on and redeem capital stock, prepay certain indebtedness, enter into transactions with affiliates, make other restricted payments, including

10

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

investments, incur liens, consummate asset sales and enter into consolidations or mergers. Certain of these covenants are also applicable to Del Monte Foods Company. The Company’s credit agreement governing the New Credit Facility also requires compliance with certain financial tests, including a maximum total debt ratio and a minimum fixed charge coverage ratio. The maximum total debt ratio becomes more restrictive over time.

Note 8. Merger-Related Employee Severance Costs

During the nine months ended January 30, 2005 and the fiscal year ended May 2, 2004, the Company communicated to affected employees that their employment would be terminated as part of the Merger-related integration of certain business functions. Termination benefits and severance costs are expensed as part of selling, general and administrative expense. The Company may incur additional severance costs as it continues to integrate its businesses.

The following table reconciles the beginning and ending accrued merger-related termination and severance costs by reportable segment:

	Consumer Products			Pet Products			Corporate (a)			Total Company
Accrued termination and severance costs - May 2, 2004	$	4.9		$	0.1		$	—		$	5.0
Termination and severance costs incurred		0.1			—			1.7			1.8
Amounts utilized		(1.3	)		(0.1	)		—			(1.4	)
Accrued termination and severance costs - August 1, 2004		3.7			—			1.7			5.4
Termination and severance costs incurred		0.2			—			0.9			1.1
Amounts utilized		(2.0	)		—			(0.8	)		(2.8	)
Accrued termination and severance costs - October 31, 2004		1.9			—			1.8			3.7
Termination and severance costs incurred		0.6			0.3			—			0.9
Amounts utilized		(0.2	)		(0.3	)		(0.1	)		(0.6	)
Accrued termination and severance costs - January 30, 2005	$	2.3		$	—		$	1.7		$	4.0

(a) Corporate represents expenses not directly attributable to reportable segments.

Note 9. Comprehensive Income

The following table reconciles net income to comprehensive income:

	Three Months Ended					Nine Months Ended
	January 30, 2005		January 25, 2004			January 30, 2005			January 25, 2004
Net income	$	48.5	$	53.5		$	98.6		$	108.0
Other comprehensive income (loss):
Foreign currency translation adjustments		—		(0.1	)		1.9			9.5
Gain (loss) on cash flow hedging instruments, net of tax		1.6		(0.8	)		(0.5	)		0.3
Total other comprehensive income (loss):		1.6		(0.9	)		1.4			9.8
Comprehensive income	$	50.1	$	52.6		$	100.0		$	117.8

11

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

Note 10. Retirement Benefits

Defined Benefit Plans.

Del Monte sponsors three defined benefit pension plans and several unfunded defined benefit postretirement plans providing certain medical, dental and life insurance benefits to eligible retired, salaried, non-union hourly and union employees. The components of net periodic benefit cost of such plans are as follows:

	Three Months Ended						Three Months Ended						Nine Months Ended						Nine Months Ended
	Defined Benefit Pension Benefits						Other Benefits						Defined Benefit Pension Benefits						Other Benefits
	January 30, 2005			January 25, 2004			January 30, 2005			January 25, 2004			January 30, 2005			January 25, 2004			January 30, 2005			January 25, 2004
Service cost	$	2.2		$	2.0		$	1.5		$	1.3		$	5.9		$	5.9		$	4.4		$	4.0
Interest cost		5.7			5.7			2.3			2.7			17.1			17.2			7.0			8.0
Expected return on plan assets		(6.3	)		(5.9	)		—			—			(18.8	)		(17.6	)		—			—
Amortization of prior service cost		0.3			0.3			(1.5	)		(0.1	)		0.9			0.9			(4.5	)		(0.3	)
Loss due to curtailment, settlement and special termination benefits		—			0.1			0.3			—			—			0.4			0.8			—
Net periodic benefit cost	$	1.9		$	2.2		$	2.6		$	3.9		$	5.1		$	6.7		$	7.8		$	11.7

The Company made planned cash contributions of $2.2 to the defined benefit pension plans during the second quarter of fiscal 2005. No other cash contributions were made by the Company during the nine months ended January 30, 2005.

Other Plans.

The Company has various other nonqualified plans including supplemental retirement plans for executives, designed to provide benefits in excess of those otherwise permitted under the Company’s qualified retirement plans. These plans comply with IRS rules for nonqualified plans. During the quarter ended January 30, 2005, as part of an effort to harmonize employee benefits, the Company expanded certain supplemental executive retirement plans to include additional executives within the Company. The effect of this change was an increase of $4.7 to both the benefit obligation and the related intangible asset.

Note 11. Commitments and Contingencies

Legal Contingencies.

Except as set forth below, there have been no material developments in the legal proceedings reported in the Company’s 2004 Annual Report.

The Company is a defendant in an action brought by Kal Kan Foods, Inc., which was a subsidiary of Mars, Inc., in the U.S. District Court for the Central District of California on December 19, 2001. The plaintiff alleged infringement of U.S. Patent No. 6,312,746 (the “746 Patent”). Specifically, the plaintiff alleged that the technology used in the production of Pounce Purr-fections, Pounce Delectables (currently named Pounce Delecta-bites), Meaty Bones Savory Bites (currently named Snausages Scooby Snack Stuffers) and certain other pet treats infringes the 746 Patent. The plaintiff is seeking compensatory damages in the amount of $2.3 for alleged infringement of its patent and a permanent injunction against further sales of products made with the allegedly infringing technology. Although the plaintiff had originally been seeking the award of treble damages and attorneys’ fees for alleged willful infringement of its patent, the plaintiff is no longer seeking such damages or fees following a February 2005 agreement between the parties to narrow the issues at trial. On July 21, 2003, the court granted the Company’s motion for summary judgment, which was entered as a final judgment on July 29, 2003. On August 27, 2003, the plaintiff filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit. On July 29, 2004, the Court of Appeals issued its decision which overturned the district court’s decision on summary judgment and remanded the case to the district court for further proceedings. On August 6, 2004, the Company filed a petition with the Court of Appeals for rehearing of its decision. On August 30, 2004, the Court of Appeals denied the Company’s petition for rehearing and remanded the case to the district court for further proceedings. In a ruling served on January 25, 2005, the court granted the plaintiff’s motion for summary judgment and ruled that the Company infringed the plaintiff’s patent. This trial began on February 22, 2005. See Note 13 for a discussion of a subsequent event related to this litigation.

The Company is a defendant in an action brought by the Public Media Center in the Superior Court in San Francisco, California, on December 31, 2001 pursuant to the Separation Agreement. The plaintiff alleged violations of California Health & Safety Code sections 25249.5, et seq (commonly known as “Proposition 65”) and California’s unfair competition law for alleged failure to properly warn consumers of the presence of methylmercury in canned tuna. The plaintiff filed this suit against the three major producers of canned tuna in the U.S. The plaintiff seeks civil penalties of two thousand five hundred

12

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

dollars per day and a permanent injunction against the defendants from offering canned tuna for sale in California without providing clear and reasonable warnings of the presence of methylmercury. The Company disputes the plaintiff’s allegations. This case has been consolidated with the California Attorney General case described below and has been set for trial on October 18, 2005. The Company cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

The Company is a defendant in an action brought by the California Attorney General in the Superior Court in San Francisco, California, on June 21, 2004. The Attorney General alleged violations of California Health & Safety Code sections 25249.5, et seq (commonly known as “Proposition 65”) and California’s unfair competition law for alleged failure to properly warn consumers of the presence of methylmercury in canned tuna. The Attorney General filed this suit against the three major producers of canned tuna in the U.S., including Del Monte. The Attorney General seeks civil penalties of two thousand five hundred dollars per day and a permanent injunction against the defendants from offering canned tuna for sale in California without providing clear and reasonable warnings of the presence of methylmercury. The Company disputes the Attorney General’s allegations. This case has been consolidated with the Public Media Center case described above and has been set for trial on October 18, 2005. The Company cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

The Company is a defendant in an action brought by PPI Enterprises (U.S.), Inc. in the U.S. District Court for the Southern District of New York on May 25, 1999 pursuant to the Merger Agreement. The plaintiff alleged that Del Monte breached certain purported contractual and fiduciary duties, made misrepresentations and failed to disclose material information to the plaintiff about the Company’s value and the Company’s prospects for sale. The plaintiff also alleges that it relied on the Company’s alleged statements when the plaintiff sold its shares of Del Monte preferred and common stock to a third party at a price lower than that which the plaintiff asserts it could have received absent the Company’s alleged conduct. The complaint seeks compensatory damages of at least $22.0, plus punitive damages. On December 9, 2004, the Company agreed to a settlement with PPI Enterprises. The settlement must be approved by the court in PPI Enterprises’ bankruptcy proceeding. Counter-claims against the Company by third parties in the amount of $1.4 remain outstanding. The Company believes it has accrued adequate reserves to cover any material liability that may result from these counterclaims. The Company disputes these counterclaims.

On September 11, 2003, the Allegheny County Health Department (“ACHD”) issued a notice of violation alleging violations of rules governing air emissions from the power plant at our Pittsburgh, Pennsylvania facility. The alleged violations occurred prior to the Company’s acquisition of this facility in December 2002. The ACHD threatened to impose civil fines and penalties of up to $0.9. The power plant is operated by a third-party operator under contract with the Company. In December 2004, the Company entered into a consent agreement with ACHD under which the Company agreed to pay a civil penalty of approximately $0.2. The Company expects to be indemnified by the third-party operator for a portion of this penalty.

The Company was a defendant in an action brought by David Pafford in the California Superior Court for the County of San Francisco on July 25, 2003. The plaintiff alleged that the Company was responsible for personal injuries sustained as a result of an accident that occurred at the Company’s manufacturing facility in Modesto, California. On December 23, 2003, the plaintiff served an initial offer to compromise, pursuant to California Code of Civil Procedure section 998, on Del Monte for compensatory and punitive damages in the amount of $10.0. The Company settled this case on January 28, 2005.

The Company was a defendant in an action brought by Fleming Companies, Inc., et al., in the United States Bankruptcy Court for the District of Delaware on February 1, 2004. Fleming was seeking a total of $18.0 in alleged preferential transfers, alleged payments due and payable under the terms of the military distribution agreements between the parties, alleged duplicate and overpayments made by Fleming, and deductions to which Fleming alleged it was entitled under various trade promotion programs. The Company previously filed claims against Fleming in the underlying bankruptcy proceeding for amounts owed by Fleming to the Company. The Company and Fleming settled these respective claims, effective February 23, 2005. The Company had accrued adequate reserves to cover the settlement of these proceedings.

The settlements described above, in aggregate, did not have a material impact on the Company’s results of operations.

Other Commitments.

On November 1, 2004, the Company signed an agreement with a packaging supplier to guarantee up to $1.0 of purchases made by a co-packer for the production of certain Del Monte products. The purchases include packaging materials that Del

13

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

Monte had been purchasing on behalf of the co-packer. The co-packer has been producing certain Del Monte products for more than five years. The Company has a supply agreement with the co-packer through July 2006. The guarantee can be terminated in writing by the Company.

Note 12. Segment Information

During the second quarter of fiscal 2005, the Company made changes in its management and reporting of certain product groupings, which resulted in changes to one of the Company’s operating segments. The StarKist Brands operating segment has been divided into two separate operating segments: StarKist Seafood and Private Label Soup. This operating segment change did not affect the Company’s reportable segments.

The Company has the following reportable segments:

• The Consumer Products reportable segment includes the Del Monte Brands, StarKist Seafood and Private Label Soup operating segments, which manufacture, market and sell shelf-stable products, including fruit, vegetable, tomato, broth, infant feeding, tuna and soup products.

• The Pet Products reportable segment includes the Pet Products operating segment, which manufactures, markets and sells dry and wet pet food and pet snacks.

The Company’s chief operating decision-maker, its Chief Executive Officer, reviews financial information presented on a consolidated basis accompanied by disaggregated information on net sales and operating income, by operating segment, for purposes of making decisions and assessing financial performance. The chief operating decision-maker reviews assets of the Company on a consolidated basis only. The accounting policies of the individual operating segments are the same as those of the Company.

The following table presents financial information about the Company’s reportable segments:

	Three Months Ended						Nine Months Ended
	January 30, 2005			January 25, 2004			January 30, 2005			January 25, 2004
Net Sales:
Consumer Products	$	638.3		$	608.8		$	1,714.4		$	1,657.2
Pet Products		223.0			202.3			619.5			556.8
Total Company	$	861.3		$	811.1		$	2,333.9		$	2,214.0
Operating Income:
Consumer Products	$	74.2		$	78.7		$	183.3		$	177.2
Pet Products		37.8			44.4			86.1			105.2
Corporate (a)		(7.6	)		(8.0	)		(30.8	)		(24.3	)
Total Company	$	104.4		$	115.1		$	238.6		$	258.1

(a) Corporate represents expenses not directly attributable to reportable segments.

As of January 30, 2005, the Company’s goodwill was comprised of $213.5 related to the Consumer Products reportable segment and $555.7 related to the Pet Products reportable segment. As of May 2, 2004, the Company’s goodwill was comprised of $215.4 related to the Consumer Products reportable segment and $555.5 related to the Pet Products reportable segment. Goodwill in the Consumer Products reportable segment decreased by $1.3 for the three months ended January 30, 2005 and decreased by $1.9 during the nine months ended January 30, 2005, as a result of adjustments to the Company’s current tax liabilities relating to periods prior to December 20, 2002, the date of the Merger. Goodwill in the Pet Products reportable segment remained unchanged for the three months ended January 30, 2005 and increased by $0.2 during the nine months ended January 30, 2005, respectively, as a result of foreign exchange fluctuations related to goodwill associated with the Company’s Canadian retail pet operations.

14

DEL MONTE FOODS COMPANY AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

For the three and nine months ended January 30, 2005

(In millions, except share and per share data)

Note 13. Subsequent Event

As discussed in Note 11, the trial for the Kal Kan litigation began on February 22, 2005. On March 2, 2005, a jury returned a verdict in favor of Mars and awarded Mars damages in the amount of $3.6. Mars has filed a motion requesting a permanent injunction against further sales of the pet products named in this litigation. Total fiscal 2005 net sales and net income of the products involved in this litigation are expected to be insignificant in light of the Company’s total expected net sales and net income. The Company recognized the effect of the jury verdict in the financial results for the three and nine months ended January 30, 2005. The Company is considering an appeal.

15

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion is intended to further the reader’s understanding of the consolidated financial condition and results of operations of our company. It should be read in conjunction with the financial statements included in this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended May 2, 2004 (the “2004 Annual Report”). These historical financial statements may not be indicative of our future performance. Certain prior period amounts have been reclassified to conform to the current period presentation.

Corporate Overview

Our Business. Del Monte Foods Company and its consolidated subsidiaries (“Del Monte” or the “Company”) is one of the country’s largest producers, distributors and marketers of premium quality, branded and private label food and pet products for the U.S. retail market, with leading food brands such as Del Monte, StarKist, S&W, Contadina and College Inn, and food and snack brands for dogs and cats such as 9Lives, Kibbles ‘n Bits, Pup-Peroni, Snausages and Pounce.

On December 20, 2002, we acquired various businesses from H.J. Heinz Company (“Heinz”), including Heinz’s U.S. and Canadian pet food and pet snacks, North American tuna, U.S. retail private label soup and U.S. infant feeding businesses (the “Merger”).

Del Monte Corporation (“DMC”) is a direct, wholly-owned subsidiary of DMFC. For reporting purposes, our businesses are aggregated into two reportable segments: Consumer Products and Pet Products. The Consumer Products reportable segment includes the Del Monte Brands, StarKist Seafood and Private Label Soup operating segments, which manufacture, market and sell shelf-stable products, including fruit, vegetable, tomato, broth, infant feeding, tuna and soup products. The Pet Products reportable segment includes the Pet Products operating segment, which manufactures, markets and sells dry and wet pet food and pet snacks. See Note 12 of our condensed consolidated financial statements in this Form 10-Q for a discussion of changes in our operating segments during the current fiscal year.

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Key Performance Indicators

The following is a summary of some of our key performance indicators that we utilize to assess results of operations:

	Three Months Ended
	January 30, 2005			January 25, 2004			Change			% Change		Volume (a)		Rate (b)
	(In millions, except percentages)
Net Sales	$	861.3		$	811.1		$	50.2		6.2	%	3.1	%	3.1	%
Cost of Products Sold		629.1			583.9			45.2		7.7	%	3.8	%	3.9	%
Gross Profit		232.2			227.2			5.0		2.2	%
Selling, General and
Administrative Expense (“SG&A”)		127.8			112.1			15.7		14.0	%
Operating Income	$	104.4		$	115.1		$	(10.7	)	(9.3	)%
Gross Margin		27.0	%		28.0	%
SG&A as a % of net sales		14.8	%		13.8	%
	Nine Months Ended
	January 30, 2005			January 25, 2004			Change			% Change		Volume (a)		Rate (b)
	(In millions, except percentages)
Net Sales	$	2,333.9		$	2,214.0		$	119.9		5.4	%	2.7	%	2.7	%
Cost of Products Sold		1,732.5			1,621.1			111.4		6.9	%	3.1	%	3.8	%
Gross Profit		601.4			592.9			8.5		1.4	%
SG&A		362.8			334.8			28.0		8.4	%
Operating Income	$	238.6		$	258.1		$	(19.5	)	(7.6	)%
Gross Margin		25.8	%		26.8	%
SG&A as a % of net sales		15.5	%		15.1	%

(a) This column represents the change, as compared to the prior year period, due to volume and mix. Volume represents the change resulting from the number of units sold, exclusive of any change in price. Mix represents the change attributable to shifts in volume across products or channels.

(b) This column represents the change, as compared to the prior year period, attributable to per unit changes in net sales or cost of products sold.

Executive Overview

Our third quarter results include net sales of $861.3 million, which represent strong growth of 6.2% over the third quarter of fiscal 2004. This growth reflects strong marketplace execution in each of our operating segments. As in the second quarter, we continued to leverage our competitive strengths through our diverse portfolio, strong brand equities, product innovation capabilities and go-to-market platform.

We delivered earnings per share of twenty-three cents, compared to earnings per share of twenty-five cents for the same period last year. This decline was primarily due to continued inflationary pressures in steel, as well as energy, logistics and other transportation-related costs. Increased fish costs also negatively impacted our results. We partially offset these cost pressures through our ability to take pricing actions, combined with our continued cost reduction efforts. Despite cost pressures, we continued to increase our marketing investment for our new products and our brands believing that these investments will enable us to remain competitively strong and will position us well for future growth.

Similar to the second quarter, we continued to experience year-over-year cost increases—primarily in steel, fish, energy, logistics and other transportation-related costs. While we have been able to mitigate a substantial portion of these inflationary pressures and higher fish costs through our pricing actions and cost reduction efforts, we expect that this situation will continue to put pressure on our margins. We believe that certain of these costs will continue to be affected by inflationary pressures for the next 12 to 18 months, taking us through fiscal 2006. Accordingly we continue to seek out alternative ways to improve our financial position. For example, we recently refinanced a substantial portion of our outstanding indebtedness. This refinancing, which was completed on February 8, 2005, was initiated to take advantage of the favorable credit environment and lower the interest rate spread on our senior credit facility debt (revolver and term loans), to reduce the coupon rate on certain of our senior subordinated debt, to

17

extend the maturities and to provide greater operational flexibility. Although the refinancing is expected to negatively impact earnings per share in fiscal 2005 by approximately ten cents, we expect that this refinancing will benefit the Company in the years ahead. We believe that the refinancing is an important investment in our future.

Critical Accounting Policies and Estimates

Our discussion and analysis of the financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we re-evaluate our estimates, including those related to trade promotions, coupon redemption, retirement benefits, valuation of brands and goodwill, and retained-insurance liabilities. Estimates in the assumptions used in the valuation of our stock compensation expense are updated at the time of each new issuance of stock-based compensation. We base estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and the best estimates routinely require adjustment.

Management has discussed the selection of critical accounting policies and estimates with the Audit Committee of the Board of Directors of DMFC and the Audit Committee has reviewed our disclosure relating to critical accounting policies and estimates in this quarterly report on Form 10-Q. Our significant accounting policies are more fully described in Note 2 to our 2004 Annual Report.

Trade Promotions

Trade promotions are an important component of the sales and marketing of our products, and are critical to the support of our business. Trade promotion costs include amounts paid to encourage retailers to offer temporary price reductions for the sale of our products to consumers, to advertise our products in their circulars, to obtain favorable display positions in their stores, and to obtain shelf space. We accrue for trade promotions, primarily at the time products are sold to customers, by reducing sales and recording a corresponding accrued liability. The amount we accrue is based on an estimate of the level of performance of the trade promotion, which is dependent upon factors such as historical trends with similar promotions, expectations regarding customer and consumer participation, and sales and payment trends with similar previously offered programs. Our original estimated costs of trade promotions are reasonably likely to change in the future as a result of changes in trends with regard to customer and consumer participation, particularly for new programs and for programs related to the introduction of new products. We perform monthly and quarterly evaluations of our outstanding trade promotions, making adjustments, where appropriate, to reflect changes in our estimates. The ultimate cost of a trade promotion program is dependent on the relative success of the events and the actions and level of deductions taken by our customers for amounts they consider due to them. Final determination of the permissible trade promotion amounts due to a customer may take up to eighteen months from the product shipment date. Our evaluations during the three months ended January 30, 2005 and January 25, 2004 resulted in net reductions to the trade promotion liability and increases in net sales of approximately $5.8 million and $4.1 million, respectively, which related to prior year activity. The nine month impact from these evaluations resulted in net reductions to the trade promotions liability and increases in net sales of approximately $4.3 million and $0.9 million for the nine months ended January 30, 2005 and January 25, 2004 respectively, which related to prior year activity.

Coupon Redemption

We offer coupons to consumers in the normal course of our business. Costs associated with this activity, which we refer to as coupon redemption costs, are accrued in the period in which the coupons are offered. We rely on independent coupon redemption clearing houses to determine the amount to initially accrue for each coupon offering. The initial estimates made by the independent clearinghouses are based upon historical redemption experience rates for similar products or coupon amounts. We perform subsequent estimates that compare our actual redemption rates to the original estimates. We review the assumptions used in the valuation of the estimates and determine an appropriate accrual amount. Adjustments to our initial accrual may be required if our estimated redemption rates vary from our actual redemption rates. During the three and nine months ended January 30, 2005, we experienced no significant adjustments to our estimates relating to coupon redemption.

Retirement Benefits

We sponsor non-contributory defined benefit pension plans (“DB plans”), defined contribution plans, multi-employer plans and certain other unfunded retirement benefit plans for our eligible employees. The amount of DB plans benefits eligible retirees receive is based on their earnings and age. Retirees may also be eligible for medical, dental and life insurance benefits (“other benefits”) if they meet certain age and service requirements at retirement. Generally, other benefit costs are subject to plan maximums, such that the Company and retiree both share in the cost of these benefits.

We utilize independent third party actuaries to calculate the expense and liabilities related to the DB plans benefits and other benefits. DB plans benefits or other benefits, which are expected to be paid, are expensed over the employees’ expected service period. The

18

actuaries measure our annual DB plans benefits and other benefits expense by relying on certain assumptions made by us. Such assumptions include: the discount rate used to determine projected benefit obligation; the expected long-term rate of return on assets; the rate of increase in compensation levels; and other factors including employee turnover, retirement age, mortality and health care cost trend rates.

These assumptions reflect our historical experience and our best judgment regarding future expectations. Measurement of our annual DB plans benefits expense and other benefits expense utilizes the assumptions, plan assets and plan obligations, determined as of the end of the prior fiscal year (the “measurement date”). Since the DB plans benefits and other benefits liabilities are measured on a discounted basis, the discount rate is a significant assumption. This rate is determined based on an analysis of interest rates for high-quality, long-term corporate debt at each measurement date. The discount rate was 6.25% as of May 2, 2004, the most recent measurement date. The long-term rate of return assumption for DB plans’ assets is based on our historical experience, our DB plans’ investment guidelines and our expectations for long-term rates of return. The long-term rate of return was 8.75% as of May 2, 2004, the most recent measurement date. Our DB plans’ investment guidelines are established based upon an evaluation of market conditions, tolerance for risk, and cash requirements for benefit payments.

During the three and nine months ended January 30, 2005, we recognized DB plans benefits expense of $1.9 million and $5.1 million, respectively, and other benefits expense of $2.6 million and $7.8 million, respectively. Our remaining fiscal 2005 DB plans benefits expense is currently estimated to be approximately $3.1 million and other benefits expense is estimated to be approximately $2.6 million. These estimates incorporate our 2004 assumptions as well as the impact of an amendment to our retiree medical and dental benefit plans, which eliminates benefits for those who are eligible for Medicare Part D, beginning in calendar year 2006. The remaining fiscal 2005 DB plans expense includes the impact of an amendment to our DB plans, which will provide benefits to salaried employees that will transition from a defined contribution plan. The increase in expense under the DB plans associated with the transition of additional salaried employees will be largely offset by the elimination of this expense under the defined contribution plan that was terminated on December 31, 2004. Our actual future DB plans benefits and other benefits expense amounts may vary depending upon various factors, including the accuracy of our original assumptions and future assumptions.

Valuation of Brands and Goodwill

Del Monte produces, distributes and markets products under many different brand names. Although each of our brand names has value, only those that have been purchased have a carrying value on our balance sheet. During an acquisition, the purchase price is allocated to identifiable assets and liabilities, including brand names, based on estimated fair value, with any remaining purchase price recorded as goodwill.

We have evaluated our acquired brand names and determined that some have useful lives that range from 15 to 40 years (“Amortizing Brands”) and others have indefinite useful lives (“Non-Amortizing Brands”). Non-Amortizing Brands typically have significant market share and a history of strong earnings and cash flow, which we expect to continue into the foreseeable future.

Amortizing Brands are amortized over their estimated useful lives. Non-Amortizing Brands and goodwill are not amortized, but are instead tested for impairment at least annually to ensure that projected future cash flows continue to exceed the asset carrying value. Non-Amortizing Brands are considered impaired if the carrying value exceeds the estimated fair value. Goodwill is considered impaired if the book value of the reporting unit containing the goodwill exceeds its estimated fair value. If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.

The estimated fair value of our Non-Amortizing Brands is determined using the relief from royalty method, which is based upon the rent or royalty we would pay for the use of a brand name if we did not own it. For goodwill, the estimated fair value of a reporting unit is determined using the income approach, which is based on the cash flows that the unit is expected to generate over its remaining life, and the market approach, which is based on market multiples of similar businesses. Annually, we engage third-party valuation experts to assist in this process.

Considerable management judgment is necessary in estimating future cash flows, market interest rates and discount factors, including the operating and macroeconomic factors that may affect them. We use historical financial information and internal plans and projections in making such estimates.

We did not recognize any impairment charges for our Amortizing Brands, Non-Amortizing Brands or goodwill during the three and nine months ended January 30, 2005 and January 25, 2004, respectively. While we currently believe the fair value of all of our intangible assets exceeds carrying value, materially different assumptions regarding future performance and discount rates could result in impairment losses.

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Stock Compensation Expense

We believe an effective way to align the interests of our employees with those of our stockholders is through employee stock-based incentives. We typically issue two types of employee stock-based incentives: stock options and restricted stock type incentives (“Restricted Shares”).

Stock options are stock incentives in which employees benefit to the extent our stock price exceeds the strike price of the stock option before expiration. A stock option is the right to purchase a share of our common stock at a predetermined exercise price. For the stock options that we grant, the employee’s exercise price is typically equivalent to our stock price on the date of the grant. Typically, our employees vest in stock options in equal annual installments over a four or five year period and such options generally have a ten-year term until expiration.

Restricted Shares are stock incentives in which employees receive the rights to own shares of our common stock and do not require the employee to pay an exercise price. Restricted Shares include restricted stock units, performance shares and performance accelerated restricted stock units. Restricted stock units vest over a period of time. Performance shares vest at predetermined points in time if certain corporate performance goals are achieved or are forfeited if such goals are not met. Performance accelerated shares vest at a point in time, which may accelerate if certain stock performance measures are achieved.

During fiscal years prior to 2004, we accounted for our employee stock-based incentives using the intrinsic value method. This method measures expense as the amount by which the market price of the stock exceeds the exercise price on the date of grant. Generally, we did not recognize stock option expense under this method because stock options granted had an exercise price equal to the market price of the stock on the date of the grant.

Effective at the beginning of fiscal 2004, we voluntarily adopted the fair value recognition provisions of Financial Accounting Standards Board (“FASB”) Statement No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) to account for our stock-based compensation. We elected the prospective method of transition as described in FASB Statement No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure” (“SFAS 148”). Under this method, all employee stock-based compensation granted post adoption is expensed over the vesting period, based on fair value at the time the stock-based compensation is granted. Stock-based compensation granted to our directors is considered employee stock-based compensation for purposes of SFAS 123.

The fair value of stock options granted during the three and nine months ended January 30, 2005 was $0.1 million and $15.1 million respectively, which is expected to be expensed over the four year vesting period. During the third quarter of fiscal 2005 and fiscal 2004, we recognized $2.1 million and $0.8 million of stock compensation expense related to stock options. During the nine months ended January 30, 2005 and January 25, 2004, we recognized $4.8 million and $1.4 million of stock compensation expense related to stock options. We expect to recognize approximately $1.6 million of compensation expense related to stock options during the remainder of fiscal 2005.

Retained-Insurance Liabilities

Our business exposes us to the risk of liabilities arising out of our operations. For example, liabilities may arise out of claims of employees, customers or other third parties for personal injury or property damage occurring in the course of our operations. We manage these risks through various insurance contracts from third party insurance carriers. We, however, retain an insurance risk for the deductible portion of each claim. The deductible under our loss-sensitive worker’s compensation insurance policy is up to $0.5 million per claim. Our general and automobile insurance policy has a deductible of up to $0.25 million per claim. An independent, third-party actuary is engaged to estimate the ultimate costs of these retained insurance risks. Actuarial determination of our estimated retained-insurance liability is based upon the following factors: losses which have been reported and incurred by us; losses which we have knowledge of but have not yet been reported to us; losses which we have no knowledge of but are projected based on historical information from both our Company and our industry; and the projected costs to resolve these estimated losses. Our estimate of retained-insurance liabilities is subject to change as new events or circumstances develop which might materially impact the ultimate cost to settle these losses. During the three and nine months ended January 30, 2005, we experienced no significant adjustments to our estimates.

Recent Accounting Pronouncements

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS 123. The accounting required by SFAS 123R is similar to that of SFAS 123, however, the choice between recognizing the fair value of stock options in the income statement or disclosing the pro forma income statement effect of the fair value of stock options in the notes to the financial statements allowed under SFAS 123 has been eliminated in SFAS 123R. SFAS 123R is effective for all interim and annual periods beginning after June 15, 2005, and early adoption is permitted. The adoption of SFAS 123R will increase compensation expense to the extent the requisite service has not yet been rendered for options granted prior to April 28, 2003 that are accounted for under the intrinsic value method. We intend to use the modified prospective transition method to adopt SFAS 123R beginning in fiscal 2006 and expect that the implementation of SFAS 123R will increase our stock-based compensation expense by approximately $2.3 million during the fiscal year ended 2006.

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Results of Operations

The following discussion provides a summary of results for the three and nine months ended January 30, 2005, compared to the results for the three and nine months ended January 25, 2004.

	Three Months Ended
	January 30, 2005		January 25, 2004		Change		% Change		Volume (a)		Rate (b)
	(In millions, except percentages)
Net Sales:
Consumer Products	$	638.3	$	608.8	$	29.5	4.8	%	1.1	%	3.7	%
Pet Products		223.0		202.3		20.7	10.2	%	9.2	%	1.0	%
Total Company	$	861.3	$	811.1	$	50.2	6.2	%	3.1	%	3.1	%
	Nine Months Ended
	January 30, 2005		January 25, 2004		Change		% Change		Volume (a)		Rate (b)
	(In millions, except percentages)
Net Sales:
Consumer Products	$	1,714.4	$	1,657.2	$	57.2	3.5	%	0.2	%	3.3	%
Pet Products		619.5		556.8		62.7	11.3	%	10.2	%	1.1	%
Total Company	$	2,333.9	$	2,214.0	$	119.9	5.4	%	2.7	%	2.7	%

(a) This column represents the change, as compared to the prior year period, due to volume and mix. Volume represents the change resulting from the number of units sold, exclusive of any change in price. Mix represents the change attributable to shifts in volume across products or channels.

(b) This column represents the change, as compared to the prior year period, attributable to per unit changes in net sales or cost of products sold.

Net sales. Net sales for the three months ended January 30, 2005 was $861.3 million, an increase of $50.2 million, or 6.2%, compared to $811.1 million for the three months ended January 25, 2004. For the nine months ended January 30, 2005, net sales was $2,333.9 million, an increase of $119.9 million, or 5.4%, compared to $2,214.0 million for the nine months ended January 25, 2004.

Net sales in our Consumer Products reportable segment was $638.3 million for the three months ended January 30, 2005, an increase of 4.8% compared to the three months ended January 25, 2004. Increased pricing drove 3.7% of net sales growth during the quarter, with pricing gains reflected throughout the reportable segment. The remainder of the increase was due to increased volume in the Del Monte Brands and Private Label Soup operating segments, partially offset by decreased volume in the StarKist Seafood operating segment. The Del Monte Brands operating segment had sales of $449.0 million for the quarter, an increase of $20.4 million, or 4.8%, compared to the same period a year ago. We benefited from recent price increases in vegetables and tomatoes combined with recent merchandising events, particularly in fruit. These increases were partially offset by volume declines in vegetables, resulting from price elasticity and reduced promotional activities, and increased competitive activity in infant feeding. The Private Label Soup operating segment had sales of $62.6 million for the quarter, an increase of $4.9 million, or 8.5%, compared to the same period a year ago. Soup sales were higher primarily due to increased volume resulting from effective merchandising programs and lower levels of merchandising from our primary competitor. The StarKist Seafood operating segment had sales of $126.7 million for the quarter, an increase of $4.2 million compared to the same period a year ago. This increase was due to the combined effect of higher pricing partially offset by a volume decline driven by the higher pricing.

Net sales in our Consumer Products reportable segment was $1,714.4 million for the nine months ended January 30, 2005, an increase of 3.5% compared to the nine months ended January 25, 2004. Increased pricing drove 3.3% of net sales growth, with pricing gains reflected throughout the reportable segment. The remainder of the increase was due to increased volume in the Del Monte Brands and Private Label Soup operating segments, partially offset by decreased volume in the StarKist Seafood operating segment. The Del Monte Brands operating segment had sales of $1,163.5 million for the first nine months of fiscal 2005, an increase of $48.4 million, or 4.3%, compared to the same period a year ago. We benefited from price increases in vegetables and tomatoes along with merchandising events, particularly in vegetables. These increases were partially offset by price elasticity, primarily in vegetables, lower infant feeding and tomato sales volume driven by increased competitive activities. The Private Label Soup operating segment had sales of $154.4 million for the first nine months of fiscal 2005, an increase of $11.4 million, or 8.0%, compared to the same period

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a year ago. Soup sales were higher primarily due to increased volume resulting from effective merchandising programs along with slightly lower trade promotion expenses. The StarKist Seafood operating segment had sales of $396.5 million for the first nine months of fiscal 2005, a decrease of $2.6 million, or 0.7%, compared to the same period a year ago. Volume decreases resulted from increased competitive activity in canned tuna, the existence of an early May merchandising event which moved some sales into late fiscal 2004 and the effect of higher pricing, partially offset by volume growth in tuna pouch. The impact of these volume decreases was almost entirely offset by price increases.

Net sales in our Pet Products reportable segment was $223.0 million for the three months ended January 30, 2005, an increase of 10.2% compared to $202.3 million for the three months ended January 25, 2004. Volume accounted for 9.2% of the increase in pet products sales. The primary volume driver was our pet foods products, driven primarily by the continued growth of our recently introduced Kibbles ‘n Bits wet dog food, the ability of our private label pet food products to further penetrate the mass-merchandising channels and club stores, and the strength of our 9Lives cat food from re-launch activities.

For the nine months ended January 30, 2005, net sales in our Pet Products reportable segment was $619.5 million, an increase of $62.7 million, or 11.3%, compared to $556.8 million for the nine months ended January 25, 2004. Volume and rate increases accounted for 10.2% and 1.1%, respectively, of the increase in pet products sales. Pet food was also the primary driver for this period, with the majority of the sales increase driven by further penetration of our private label pet food products, in the mass-merchandising channels and club stores, by the continued growth of our recently introduced Kibbles ‘n Bits wet dog food, and by the re-launch of 9Lives cat food.

Cost of products sold. Cost of products sold for the three months ended January 30, 2005 was $629.1 million, an increase of $45.2 million, or 7.7%, compared to $583.9 million for the three months ended January 25, 2004. For the nine months ended January 30, 2005, cost of products sold was $1,732.5 million, an increase of $111.4 million, or 6.9%, compared to the cost of products sold of $1,621.1 million for the nine months ended January 25, 2004. The increases in cost of products sold in both the three and nine month periods were due to cost increases and increased sales volume. Our cost increases were primarily due to higher steel; fish; energy, logistics and other transportation-related costs; commodity and ingredient costs.

Gross margin. Our gross margin percentage for the three months ended January 30, 2005 declined by 1.0 margin point, to 27.0% from 28.0% for the three months ended January 25, 2004. Price increases increased gross margin by 3.0 margin points. This increase was offset by declines of 2.8 margin points related to higher steel, fish, energy, logistics and other transportation-related costs. In addition, we experienced a decline of 1.2 margin points related to an unfavorable product mix primarily resulting from our Pet Products reportable segment product mix shift towards pet foods, which generally have lower gross margins than our pet snack products.

For the nine months ended January 30, 2005, our gross margin percentage declined by 1.0 margin points, to 25.8% from 26.8% for the nine months ended January 25, 2004. Gross margin increased by 2.7 margin points due to price increases. This increase was offset by declines of 2.8 margin points due to cost increases, which primarily related to increased fish, steel, commodity, ingredient, energy, logistics and other transportation-related costs. In addition, we experienced a decline of 0.9 margin points due to an unfavorable product mix due primarily to our Pet Products reportable segment product mix shift towards pet foods, which generally have lower gross margins than our pet snack products.

Selling, general and administrative expense. Selling, general and administrative (“SG&A”) expense for the three months ended January 30, 2005 was $127.8 million, an increase of $15.7 million, or 14.0%, compared to SG&A of $112.1 million for the three months ended January 25, 2004. Our increase in SG&A expense was primarily driven by a $10.0 million increase in customer transportation costs and a greater than 40% increase in marketing investments across all of our reportable segments. Increase in SG&A expense was also due the unfavorable verdict related to the Kal Kan litigation that we received on March 2, 2005. The jury returned a verdict in favor of Mars, awarding them total damages in the amount of $3.6 million. Although we are currently evaluating an appeal of this matter, we have recognized the effect of the jury verdict in the financial results for the three months ended January 30, 2005. These increases were partially offset by lower overhead costs, primarily due to the absence of an accrual related to our Annual Incentive Plan (“AIP”). These increases were also offset by a reduction in information technology (“IT”) costs due to the phase-out of third-party IT services, and a decrease in other benefit costs resulting from the elimination of certain benefits to eligible retirees under Medicare Part D. We believe that it is unlikely that the criteria for bonus payments to employees under the AIP for fiscal 2005 will be achieved. We therefore do not expect to recognize AIP expense for the remainder of fiscal 2005, whereas, the related bonus expense recognized and paid to employees for services rendered during fiscal 2004 was $20.4 million. We had accrued $5.6 million relating to our AIP during the three months ended January 25, 2004.

For the nine months ended January 30, 2005, our SG&A expense was $362.8 million, an increase of $28.0 million, or 8.4%, compared to SG&A expense of $334.8 million for the nine months ended January 25, 2004. Our increase in SG&A expense was primarily driven by a $21.9 million increase in transportation costs, primarily in Del Monte Brands operating segment and Pet Products reportable segment, and a greater than 30% increase in marketing investments across all of our reportable segments. Increase in SG&A expense was also due to the unfavorable verdict related to the Kal Kan litigation that we received on March 2, 2005. The jury returned a verdict in favor of Mars, awarding them total damages in the amount of $3.6 million. Although we are currently evaluating an appeal of this matter,

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we have recognized the effect of the jury verdict in the financial results for the nine months ended January 30, 2005. This increase was partially offset by the absence of an accrual related to our AIP plan. Additionally, a decrease in other benefit costs, and phase-out of third-party IT services also partially offset the increase. We accrued $15.8 million for AIP during the nine months ended January 25, 2004.

	Three Months Ended
	January 30, 2005			January 25, 2004			Change			% Change
	(In millions, except percentages)
Operating Income:
Consumer Products	$	74.2		$	78.7		$	(4.5	)	(5.7	)%
Pet Products		37.8			44.4			(6.6	)	(14.9	)%
Corporate (a)		(7.6	)		(8.0	)		0.4		(5.0	)%
Total Company	$	104.4		$	115.1		$	(10.7	)	(9.3	)%
	Nine Months Ended
	January 30, 2005			January 25, 2004			Change			% Change
	(In millions, except percentages)
Operating Income:
Consumer Products	$	183.3		$	177.2		$	6.1		3.4	%
Pet Products		86.1			105.2			(19.1	)	(18.2	)%
Corporate (a)		(30.8	)		(24.3	)		(6.5	)	26.7	%
Total Company	$	238.6		$	258.1		$	(19.5	)	(7.6	)%

(a) Corporate represents expenses not directly attributable to reportable segments.

Operating income. Operating income for the three months ended January 30, 2005 was $104.4 million, a decrease of $10.7 million, or 9.3%, compared to operating income of $115.1 million for the three months ended January 25, 2004. During the three months ended January 30, 2005 and January 25, 2004, costs related to the integration of our operations were $3.2 million and $7.2 million, respectively. There was no corporate-related integration expense for the three months ended January 30, 2005, while $1.5 million represented corporate-related integration expenses for the three months ended January 25, 2004. For the nine months ended January 30, 2005, our operating income was $238.6 million, a decrease of $19.5 million, or 7.6%, compared to operating income of $258.1 million for the nine months ended January 25, 2004. During the nine months ended January 30, 2005 and January 25, 2004, costs related to the integration of our operations were $16.0 million and $21.0 million, respectively. Of these amounts, $4.6 million and $4.2 million represented corporate-related integration expenses, respectively.

Our Consumer Products reportable segment operating income declined by $4.5 million, or 5.7%, to $74.2 million for the three months ended January 30, 2005 from $78.7 million for the three months ended January 25, 2004. This decline occurred despite our ability to increase net sales by 4.8% during this period. Higher inflationary costs, primarily energy, logistics and other transportation-related costs, fish costs and steel costs, along with increased marketing investments are the primary causes for the decline. This decline was partially offset by higher product pricing and reduction in compensation-related expenses.

For the nine months ended January 30, 2005, our Consumer Products reportable segment’s operating income was $183.3 million, an increase of $6.1 million, or 3.4%, compared to $177.2 million for the nine months ended January 25, 2004. The increase for the nine months ended January 30, 2005 primarily resulted from higher product pricing and reduction in compensation and benefit expenses. This increase was partially offset by higher inflationary costs, primarily fish costs, energy, logistics and other transportation-related costs, and steel costs, along with increased marketing investments.

Our Pet Products reportable segment operating income declined by $6.6 million, or 14.9%, to $37.8 million for the three months ended January 30, 2005 from $44.4 million for the three months ended January 25, 2004. While our sales growth was significant, unfavorable product mix shift towards pet foods, along with inflationary pressures, the Kal Kan verdict and marketing investments resulted in our earnings decline.

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Our Pet Products reportable segment operating income for the nine months ended January 30, 2005, declined by $19.1 million, or 18.2%. This decline occurred despite Pet Products net sales growth of 11.3% during this period. The earnings impact from our net sales growth was largely offset by an unfavorable product mix shift towards pet foods, which generally have lower gross margins than our pet snack products. We also experienced inflationary pressures, primarily from higher commodity, ingredient, steel, and energy, logistics and other transportation-related costs. In addition, we made significantly higher marketing investments. The decline in operating income was partially offset by continued strong sales volume in Kibbles ‘n Bits wet dog food, private label pet foods and 9Lives cat food, higher product pricing and a reduction in compensation-related expenses.

Our corporate expenses declined by $0.4 million during the three months ended January 30, 2005 compared to the prior year period primarily driven by a $1.5 million decrease in integration expense, which was partially offset by higher overall corporate overhead expenses.

The $6.5 million increase in corporate expenses for the nine months ended January 30, 2005 compared to the prior year period was primarily due to an increase in stock-based compensation expense related to the prospective method of accounting for expensing of stock-based compensation. In fiscal 2004, we began expensing stock-based compensation, in accordance with SFAS 123. Options were granted during the second quarter last year and as a result expense incurred during the first quarter of fiscal 2004 was not significant. Increase in corporate expenses was also due to higher legal fees, Sarbanes-Oxley compliance costs and overall corporate overhead expenses.

Interest expense and other expense. Interest expense for the three and nine months ended January 30, 2005 declined by $5.5 million and $15.9 million, respectively, as compared to the three and nine months ended January 25, 2004. This reduction was due to substantial principal payments made during fiscal 2004 along with the repricing of our credit facilities in January 2004, which reduced our effective interest rate. On February 8, 2005, we completed the refinancing of a significant portion of our outstanding indebtedness to further reduce the applicable interest rate spread on our senior credit facility debt (revolver and term loans), to reduce the coupon rate on a portion of our senior subordinated debt, and to provide us with enhanced operational flexibility. In addition, during the three and nine months ended January 30, 2005, other expense increased by $0.6 million and $4.7 million, respectively which primarily resulted from a decline associated with the fair value of our derivative contracts. As previously discussed, we completed a refinancing of a substantial portion of our debt on February 8, 2005. In connection with the refinancing, we expect that we will recognize approximately $33.5 million of expense from fees and write-offs of premium related to our 9 ¹/4% Notes and write-offs of deferred fees in the fourth quarter of fiscal 2005. We expect that interest expense in fiscal 2006 will be approximately $9 million lower than it would have been had we not completed the refinancing.

Provision for Income Taxes. The effective tax rate for the three months ended January 30, 2005 and January 25, 2004 was 38.0% for both periods. For the nine months ended January 30, 2005 and January 25, 2004, the effective tax rates were 38.0% and 36.6%, respectively. The rate for the nine months ended January 30, 2005 was higher than the rate for the nine months ended January 25, 2004 primarily due to an increase in state taxes and larger non-deductible charges during fiscal 2005 associated with higher employee stock-based compensation expense.

The American Jobs Creation Act of 2004 (the “Act”) was signed into law on October 22, 2004. One of the provisions in the Act provides for a tax deduction relating to income attributable to U.S. production activities. Although we qualify for the deduction beginning in fiscal 2006, we cannot at this time reasonably estimate the amount of additional deductions which will arise from the Act.

Net Income. Net income for the three months ended January 30, 2005 decreased by $5.0 million to $48.5 million from $53.5 million for the three months ended January 25, 2004. For the nine months ended January 30, 2005, net income decreased by $9.4 million to $98.6 million from $108.0 million for the nine months ended January 25, 2004.

Financial Condition

We have cash requirements that vary significantly based primarily on the timing of our inventory production for fruit, vegetable and tomato items. Typically inventory production relating to these items peaks during the first and second fiscal quarters. Our most significant cash needs relate to this seasonal inventory production, as well as to continuing cash requirements related to the production of our other products. In addition, our cash is used for the repayment, including interest and fees, of our primary debt obligations (i.e. our revolver, term loans, senior subordinated notes and, if necessary, letters of credit), expenditures for capital assets, lease payments for some of our equipment and properties, and other general business purposes. Our primary sources of cash are funds we receive as payment for the products we produce and sell and from our revolving credit facility.

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During the three and nine months ended January 30, 2005, we repaid a net amount of $127.1 million and borrowed a net amount of $14.1 million, respectively, under our revolving credit facility and other short-term borrowings. During these same periods, we also made scheduled principal repayments of $1.5 million and $4.6 million, respectively, toward our then-existing Term B Loan. During the remainder of fiscal 2005, as a result of the refinancing consummated on February 8, 2005, we have no scheduled repayment of our senior credit facility.

On February 8, 2005, we completed the refinancing of a significant portion of our outstanding indebtedness. The refinancing was initiated to reduce the applicable interest rate spread, on our senior credit facility debt (revolver and term loans), to reduce the coupon rate on a portion of our senior subordinated debt, and to provide us with enhanced operational flexibility. The refinancing included the consummation of a cash tender offer and consent solicitation (the “Offer”) with respect to our outstanding 9 ¹/4% senior subordinated notes due 2011 (the “9 ¹/4% Notes”), the private placement offering of $250.0 million principal amount of new 6 ³/4% senior subordinated notes due 2015 (the “6 ³/4% Notes”) and the consummation of a new $950.0 million senior credit facility (the “New Credit Facility”). We used the proceeds from the sale of the 6 ³/4% Notes, borrowings under the New Credit Facility, and cash on hand to fund the payment of consideration and costs related to the Offer and to repay amounts outstanding under our previous senior credit facility. The New Credit Facility is comprised of a $350.0 million revolving credit facility with a term of six years, a $450.0 million term loan A with a term of six years, and a $150.0 million term loan B with a term of seven years.

The Offer expired on February 7, 2005 (the “Expiration Time”). As of the expiration time of the Offer, $297.5 million aggregate principal amount of the 9 ¹/4% Notes had been validly tendered and not withdrawn, representing approximately 99.2% of the outstanding aggregate principal amount of the 9 ¹/4% Notes. We accepted for payment and paid for all 9 ¹/4% Notes validly tendered and not validly withdrawn on or prior to the expiration time.

The following table reflects the debt balances affected by the February 8, 2005 refinancing, as compared to the balances at January 30, 2005 (in millions):

	February 8, 2005		January 30, 2005
Short-term borrowings:
Revolver	$	91.4	$	13.3
Long-term debt:
Term A Loan		450.0		—
Term B Loan		150.0		607.6
9.25% senior subordinated notes		2.6		309.0
6.75% senior subordinated notes		250.0		—
	$	852.6	$	916.6

We are scheduled to repay $0.2 of our long-term debt during the remainder of fiscal 2005. As of February 8, 2005, reflecting the consummation of the refinancing, scheduled payments of long-term debt for each of the five succeeding fiscal years are as follows (in millions):

2006	$	1.7
2007		12.9
2008		24.2
2009		35.4
2010		46.7

We believe that cash provided by operations and availability under our new revolving credit facility will provide adequate funds for our working capital needs, planned capital expenditures and debt service obligations for at least the next 12 months. Our current intention is to utilize cash provided by operations to continue to make long-term debt principal prepayments during the remainder of fiscal 2005. However, we may consider alternative uses for our cash provided by operations, including acquisition opportunities, payment of dividends and/or common stock buyback plans.

Restrictive and Financial Covenants

At February 8, 2005, agreements relating to our long-term debt including the credit agreement governing the New Credit Facility and the indentures governing the senior subordinated notes (including the 6 ³/4% Notes), contained covenants that restrict the ability of Del Monte Corporation and its subsidiaries, among other

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things, to incur or guarantee indebtedness, issue capital stock, pay dividends on and redeem capital stock, prepay certain indebtedness, enter into transactions with affiliates, make other restricted payments, including investments, incur liens, consummate asset sales and enter into consolidations or mergers. Certain of these covenants are also applicable to Del Monte Foods Company. Our credit agreement governing the New Credit Facility also requires compliance with certain financial tests, including a maximum total debt ratio and a minimum fixed charge coverage ratio. The maximum total debt ratio becomes more restrictive over time. Compliance with these covenants will be monitored periodically in order to assess the likelihood of continued compliance. Our ability to continue to comply with these covenants may be affected by events beyond our control. If we are unable to comply with the covenants under the New Credit Facility or the indentures governing our senior subordinated notes, there would be a default, which, if not waived, could result in the acceleration of a significant portion of our indebtedness.

Obligations and Commitments

Contractual and Other Cash Obligations

The following table summarizes our contractual and other cash obligations at January 30, 2005, except for Long-term Debt which reflects the February 8, 2005 refinancing:

	Payments due by period (In millions)
	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Long-term Debt	$	1,306.2	$	1.4	$	31.5	$	76.5	$	1,196.8
Capital Lease Obligations		—		—		—		—		—
Operating Leases		338.7		59.9		100.9		78.2		99.7
Purchase Obligations (1)		1,218.7		390.0		372.1		302.9		153.7
Other Long-term Liabilities Reflected on the Balance Sheet		304.9		—		47.2		38.4		219.3
Total Contractual Obligations	$	3,168.5	$	451.3	$	551.7	$	496.0	$	1,669.5

(1) Purchase obligations consist primarily of fixed commitments under supply, ingredient, packaging, co-pack, grower commitments and other agreements. The amounts presented in the table do not include items already recorded in accounts payable or other current liabilities as of January 30, 2005, nor does the table reflect obligations we are likely to incur based on our plans, but are not currently obligated to pay. Many of our contracts are requirement contracts and currently do not represent a firm commitment to purchase from our suppliers. Therefore, requirement contracts are not reflected in the above table. Certain of our suppliers commit resources based on our planned purchases and we would likely be liable for a portion of their expenses if we deviated from our communicated plans. In the above table, we have included estimates of the probable “breakage” expenses we would incur with these suppliers if we stopped purchasing from them as of January 30, 2005. Aggregate future payments for our grower commitments are estimated based on January 30, 2005 pricing and volume. Aggregate future payments under employment agreements are estimated generally assuming that each such employee will continue providing services for the next five fiscal years, that salaries remain at fiscal year 2005 levels, that no bonuses will be paid with respect to fiscal 2005, and that bonuses paid in each fiscal year after fiscal 2005 shall be equal to the amounts actually paid with respect to fiscal 2004, the most recent period for which bonuses were paid.

Cash Flows

During the nine months ended January 30, 2005, our cash and cash equivalents decreased by $27.7 million primarily due to the net impact of $5.4 million used in operating activities, $41.2 million used in investing activities, and $17.4 million provided by financing activities.

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	Nine Months Ended
	January 30, 2005			January 25, 2004
	(In millions)
Net Cash (Used in) Provided by Operating Activities	$	(5.4	)	$	2.6
Net Cash Used in Investing Activities		(41.2	)		(58.2	)
Net Cash Provided by Financing Activities		17.4			29.4

Operating Activities. Cash used in operating activities for the nine months ended January 30, 2005 was $5.4 million, which was $8.0 million more than the $2.6 million provided by operating activities for the nine months ended January 25, 2004. This increase was primarily due to lower operating earnings and higher taxes paid which were partially offset by lower interest expense. The cash requirements of the Del Monte Brands operating segment vary significantly during the year to coincide with the seasonal growing cycles of fruit, vegetables and tomatoes. The vast majority of the Del Monte Brands’ inventories are produced during the packing season, from June through October then depleted during the remaining months of the fiscal year. As a result, the vast majority of our total cash flow is generated during the second half of the fiscal year.

Investing Activities. Cash used in investing activities for the nine months ended January 30, 2005 was $41.2 million compared to $58.2 million for the nine months ended January 25, 2004. Capital spending during the first nine months of fiscal 2005 was $15.8 million lower than it was during the first nine months of fiscal 2004 primarily due to lower integration-related capital projects during the current year. We received net proceeds of $8.5 million from the sale of certain real property and other long-term assets during the first nine months of fiscal 2005. In addition, during the second quarter of fiscal 2005, we spent $7.2 million in connection with the acquisition of a packing business, located in Mexico, and related assets, which contributed to the use of cash for investing activities for the period.

Financing Activities. Cash provided by financing activities for the nine months ended January 30, 2005 was $17.4 million compared to $29.4 million for the nine months ended January 25, 2004. During the first nine months of fiscal 2005, we borrowed a net of $14.1 million in short-term borrowings, which was $20.2 million lower than net short-term borrowings of $34.3 million during the first nine months of fiscal 2004. During the nine months ended January 30, 2005 and January 25, 2004, we made scheduled repayments of $4.6 million and $5.5 million, respectively, towards our Term B Loan principal. Additionally, as a result of an increased number of stock options exercised by employees and former employees, we had a $7.3 million increase in the issuance of common stock in the nine months ended January 30, 2005 compared to the prior year period.

Related Parties

Transactions with Texas Pacific Group. Through affiliated entities, Texas Pacific Group (“TPG”), a private investment group, was a majority stockholder of DMFC common stock prior to the Merger. During the three months ended July 27, 2003, these affiliated entities, TPG Partners, L.P. and TPG Parallel I, L.P., exercised their right pursuant to the Stockholder Rights Agreement (“Stockholder Rights Agreement”), dated as of June 12, 2002, to request the filing of a shelf registration of DMFC common stock. Under the terms of the Stockholder Rights Agreement, TPG had the right, subject to certain restrictions, to demand that we file up to two registration statements to register the resale of DMFC common stock owned by them. On September 9, 2003, we filed a shelf registration statement on Form S-3 in accordance with the TPG request, covering 24,341,385 shares of our common stock held by TPG Partners, L.P. and TPG Parallel I, L.P. On November 21, 2003, we filed an amendment to the shelf registration statement on Form S-3, which incorporated our quarterly report on Form 10-Q for the quarter ended July 27, 2003. On November 25, 2003, the shelf registration statement was declared effective by the Securities and Exchange Commission. On January 14, 2004, Del Monte, TPG Partners, L.P., TPG Parallel I, L.P. and Goldman, Sachs & Co. entered into an Underwriting Agreement in connection with the sale by TPG Partners, L.P. and TPG Parallel I, L.P. of 12,000,000 shares of our common stock covered by the shelf registration statement for $10.08 per share. We did not receive any proceeds from the sale. On September 10, 2004, Del Monte, TPG Partners, L.P., TPG Parallel I, L.P. and Lehman Brothers Inc. entered into an Underwriting Agreement in connection with the sale by TPG Partners, L.P. and TPG Parallel I, L.P. of the remaining 12,341,385 shares of our common stock covered by the shelf registration statement for $132,052,820 in aggregate. We did not receive any proceeds from the sale. To date, we have incurred expenses of approximately $0.3 million in connection with performing our obligations under the Stockholder Rights Agreement.

Compensation earned by Mr. William Price as a member of the Board of Directors of DMFC, excluding options, was paid to TPG Partners, L.P. Mr. Price is an officer of TPG. On September 30, 2004, Mr. Price ceased being a member of the Company’s Board of Directors. For the nine months ended January 30, 2005, Mr. Price earned a $0.02 million as well as 1,666 shares of Del Monte Foods Company common stock.

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Factors That May Affect Our Future Results

This quarterly report on Form 10-Q, including the section entitled “Item 1. Financial Statements” and this section entitled “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Act of 1934. Statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. These statements are based on our plans, estimates and projections at the time we make the statements, and you should not place undue reliance on them. In some cases, you can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terms.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in or suggested by any forward-looking statement. These factors include, among others:

• general economic and business conditions;

• cost and availability of commodities, ingredients and other raw materials, including without limitation, steel, grains, meat by-products, fish and energy, logistics and other transportation-related costs;

• continuation of or further increases in current high prices of certain ingredients, commodities and other raw materials, including without limitation, steel, grains, meat by-products, fish and energy, logistics and other transportation-related costs;

• ability to increase prices and reduce costs;

• high leverage and ability to service and reduce our debt;

• costs and results of efforts to improve the performance and market share of the businesses we acquired from Heinz;

• effectiveness of marketing and trade promotion programs;

• changing consumer and pet preferences;

• timely launch and market acceptance of new products;

• implementation of our trade promotion spending improvement project and of our distribution network improvement project;

• competition, including pricing and promotional spending levels by competitors;

• transportation costs;

• insurance coverage;

• product liability claims;

• weather conditions;

• crop yields;

• changes in U.S., foreign or local tax laws and rates;

• foreign currency exchange and interest rate fluctuations;

• the loss of significant customers or a substantial reduction in orders from these customers or the bankruptcy of any such customer;

• acquisitions, including identification of appropriate targets and successful integration of any acquired business;

• changes in business strategy or development plans;

• availability, terms and deployment of capital;

• dependence on co-packers, some of whom may be competitors or sole-source suppliers;

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• changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including environmental regulations;

• industry trends, including changes in buying, inventory and other business practices by customers; and

• public safety and health issues.

Certain aspects of these factors are described in more detail in our filings with the Securities and Exchange Commission, including the section entitled “Factors That May Affect Our Future Results and Stock Price” in our 2004 Annual Report. In addition to the foregoing, other economic, industry and business conditions may affect our future results, for example:

A substantial portion of our retail tuna pouch products are produced by a third-party co-packer in Ecuador. This co-packer was required to comply with new environmental regulations regarding the treatment and disposal of wastewater generated by the facility by February 28, 2005. The co-packer did not achieve compliance by that date but has informed us that it believes it will be able to obtain an extension from the government. There can be no assurance that such an extension will be granted. If our co-packer does not obtain an extension, production by such co-packer could be interrupted. Any interruption of supply from such co-packer or steps that may be taken by the Company to mitigate any such supply disruption, including an increase in inventory in anticipation of this possible production interruption, could adversely affect our results of operations.

All forward-looking statements in this quarterly report on Form 10-Q are qualified by these cautionary statements and are made only as of the date of this report. We undertake no obligation, other than as required by law, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the three and nine months ended January 30, 2005, we were primarily exposed to the risk of loss resulting from adverse changes in interest rates and commodity prices, which affect interest on our floating-rate obligations and the cost of our raw materials, respectively.

Interest Rates. Our debt primarily consists of fixed rate notes and floating rate term loans. We also use a floating rate revolving credit facility to fund seasonal working capital needs. Interest expense on our floating rate debt is typically calculated based on a fixed spread over a reference rate (i.e. LIBOR). Therefore, fluctuation in market interest rates will cause interest expense increases or decreases on a given amount of floating rate debt. The market value of our fixed rate notes fluctuates as interest rates rise or fall; however, because debt is recorded at historical cost these changes have no impact on our earnings.

We manage a portion of our interest rate risk related to floating interest expense by entering into interest rate swaps in which we receive floating rate payments and make fixed rate payments. We currently have six pay-fixed interest rate swaps with a combined notional amount of $300.0 million. Two interest rate swaps with a combined notional amount of $125.0 million matured on September 30, 2004. All of our remaining interest rate swaps have been formally designated as cash flow hedges. During the three months ended January 30, 2005, our interest rate cash flow hedges resulted in a $1.3 million increase to other comprehensive income (“OCI”), a $0.8 million increase to deferred tax liabilities. During the three months ended January 25, 2004, our interest rate cash flow hedges resulted in a $0.7 million increase to OCI and a $0.5 million increase to deferred tax liabilities.

During the nine months ended January 30, 2005, our interest rate cash flow hedges resulted in a $1.6 million increase to OCI, a $1.0 million increase to deferred tax liabilities and a $0.3 million decrease in other expense. During the nine months ended January 25, 2004, our interest rate cash flow hedges resulted in a $1.2 million decrease to OCI, a $0.7 million decrease in deferred tax liabilities and a $0.3 million decrease in other income.

During the nine months ended January 30, 2005, we reduced interest expense by $1.4 million to reflect the amortization of a $6.9 million swap liability that existed prior to formal hedge designation of two interest rate swaps on December 31, 2002. At January 30, 2005, the swap liability was fully amortized in conjunction with the maturity of the $125.0 million swaps that matured on September 30, 2004. During the three and nine months ended January 25, 2004, we reduced interest expense by $1.0 million and $3.2 million, respectively, to reflect the amortization of the $6.9 million swap liability.

On January 30, 2005, the fair values of our interest rate swaps were recorded as assets of $2.9 million in other non-current assets. On January 25, 2004, the fair value of the interest rate swaps was recorded as a liability of $5.4 million in other non-current liabilities.

On February 8, 2005, we completed the refinancing of a significant portion of our outstanding indebtedness. The refinancing included the consummation of a cash tender offer and consent solicitation (the “Offer”) with respect to our outstanding 9 ¹/4% senior subordinated notes due 2011 (the “9 ¹/4% Notes”), the private placement offering of $250.0 million principal amount of new 6 ³/4% senior subordinated notes due 2015 (the “6 ³/4% Notes”) and the consummation of a new $950.0 million senior credit facility (the “New Credit Facility”). We used the proceeds from the sale of the 6 ³/4% Notes and borrowings under the New Credit Facility to fund

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the payment of consideration and costs related to the Offer and to repay amounts outstanding under our previous credit facility. The New Credit Facility is comprised of a $350.0 million revolving credit facility with a term of six years, a $450.0 million term loan A with a term of six years, and a $150.0 million term loan B with a term of seven years.

Due to the refinancing of a significant portion of our outstanding indebtedness on February 8, 2005, we presented in the table below our market risk associated with debt obligations and interest rate derivatives as of February 8, 2005. Fair values are based on quoted market prices as of February 8, 2005. Variable interest rates represent the weighted average rates in effect on February 8, 2005.

	Maturity
	Remainder of Fiscal 2005			Fiscal 2006			Fiscal 2007			Fiscal 2008			Fiscal 2009			After Fiscal 2009			Total			Fair Value
	($ in millions)
Interest Rate Risk:
Debt
Fixed Rate	$	0.2		$	0.2		$	0.2		$	0.2		$	0.2		$	705.3		$	706.2		$	761.0
Average Interest Rate		5.02	%		5.67	%		5.74	%		6.61	%		6.61	%		7.96	%		7.95	%
Variable Rate	$	—		$	1.5		$	12.8		$	24.0		$	35.3		$	526.5		$	600.0		$	600.0
Average Interest Rate		—			4.27	%		4.27	%		4.27	%		4.27	%		4.27	%		4.27	%
Interest Rate Swaps
Notional Amount	$	—		$	—		$	300.0		$	—		$	—		$	—		$	300.0		$	2.9
Average Rate Receivable		—			—			2.71	%		—			—			—			2.71	%
Average Rate Payable		—			—			2.51	%		—			—			—			2.51	%

Commodities Prices. Certain commodities such as corn, wheat, soybean meal and soybean oil are used in the production of our products. Generally these commodities are purchased at current market prices. We use futures or options contracts, as deemed appropriate to reduce the effect of price fluctuations on anticipated purchases. We account for these commodities derivatives as either cash flow or economic hedges. For cash flow hedges, the effective portion of gains and losses is recognized as part of cost of products sold and the ineffective portion is recognized as other income or expense. Changes in the fair value of economic hedges are recorded directly as other income or expense. These contracts generally have a term of less than eighteen months.

During the nine months ended January 30, 2005, the prices of commodities, such as soybean meal, corn and wheat, decreased from substantial highs experienced towards the end of fiscal 2004. As futures contract rates for these commodities have declined, we have elected to increase our hedge positions to cover substantially all of our remaining projected requirements for fiscal 2005 along with a significant portion of our projected requirements for fiscal 2006. Our commodities hedges were recorded as a liability of $2.7 million on January 30, 2005. The fair value of our commodity hedge positions was $1.5 million at January 25, 2004.

The table below presents the changes in the following balance sheet account and the impact on income statement accounts:

	Three Months Ended						Nine Months Ended
	January 30, 2005			January 25, 2004			January 30, 2005			January 25, 2004
	(In millions)
Change in other comprehensive income (a)	$	0.2		$	—		$	(2.1	)	$	0.6
Cost of products sold		1.9			(0.3	)		1.8			(0.3	)
Other income (expense)		(0.3	)		0.5			(2.2	)		2.3

(a) The change in other comprehensive income is net of related taxes.

The table below presents our commodity derivative contracts as of January 30, 2005. The fair values included are based on quoted market prices.

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	Soybean Meal (Short Tons)			Soybean Oil (Pounds)			Corn (Bushels)			Hard Wheat (Bushels)			Soft Wheat (Bushels)
Futures Contracts
Contract Volumes		63,900			8,820,000			5,100,000			1,190,000			65,000
Weighted Average Price	$	173.69		$	0.22		$	2.38		$	3.44		$	3.40
Contract Amount ($ in Millions)	$	11.1		$	1.9		$	12.2		$	4.1		$	0.2
Fair Value ($ in Millions)	$	(1.0	)	$	(0.2	)	$	(1.1	)	$	(0.3	)	$	—
Options
Calls (Long)
Contract Volumes		—			—			250,000			—			—
Weighted Average Strike Price	$	—		$	—		$	0.14		$	—		$	—
Weighted Average Price Paid	$	—		$	—		$	0.14		$	—		$	—
Fair Value ($ in Millions)	$	—		$	—		$	—		$	—		$	—
Puts (Written)
Contract Volumes		—			—			385,000			—			—
Weighted Average Strike Price	$	—		$	—		$	0.10		$	—		$	—
Weighted Average Price Received	$	—		$	—		$	0.25		$	—		$	—
Fair Value ($ in Millions)	$	—		$	—		$	(0.1	)	$	—		$	—

Foreign Currency Rates. During the period from December 20, 2002 through January 30, 2004, we had Euro-denominated term loan obligations. We also had a US Dollar/Euro currency swap, which we entered into as an economic hedge of the periodic principal and interest payments related to our Euro-denominated term loan obligations. During the three and nine months ended January 30, 2005, we had no exposure to fluctuations in the US Dollar/Euro exchange rate. During the three and nine months ended January 25, 2004, an increase in the fair value of the currency swap resulted in an increase in other assets and a corresponding increase in other income of $3.6 million and $7.4 million, respectively.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We evaluated the effectiveness of the design and operation of our disclosure controls and procedures, or “Disclosure Controls,” as of the end of the period covered by this quarterly report on Form 10-Q. This evaluation, or “Controls Evaluation” was performed under the supervision and with the participation of management, including our Chairman of the Board, President, Chief Executive Officer and Director (our “CEO”) and our Executive Vice President, Administration and Chief Financial Officer (our “CFO”).

CEO and CFO Certifications

The certifications of the CEO and the CFO required by Rule 13a-14 of the Securities Exchange Act of 1934, or the “Rule 13a-14 Certifications” are filed as Exhibits 31.1 and 31.2 of this quarterly report on Form 10-Q. This “Controls and Procedures” section of the quarterly report includes the information concerning the Controls Evaluation referred to in the Rule 13a-14 Certifications and it should be read in conjunction with the Rule 13a-14 Certifications for a more complete understanding of the topics presented.

Disclosure Controls and Internal Controls

Disclosure Controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure Controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to

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permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our Disclosure Controls or our internal controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Del Monte have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Conclusions

Based on the Controls Evaluation, and in light of the foregoing discussion, our CEO and CFO have concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our Disclosure Controls were effective and were operating at the reasonable assurance level. There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Except as set forth below, there have been no material developments in the legal proceedings reported in our annual report on Form 10-K for the year ended May 2, 2004.

We are a defendant in an action brought by Kal Kan Foods, Inc., which was a subsidiary of Mars, Inc., in the U.S. District Court for the Central District of California on December 19, 2001. The plaintiff alleged infringement of U.S. Patent No. 6,312,746 (the “746 Patent”). Specifically, the plaintiff alleged that the technology used in the production of Pounce Purr-fections, Pounce Delectables (currently named Pounce Delecta-bites), Meaty Bones Savory Bites (currently named Snausages Scooby Snack Stuffers) and certain other pet treats infringes the 746 Patent. The plaintiff is seeking compensatory damages in the amount of $2.3 million for alleged infringement of its patent and a permanent injunction against further sales of products made with the allegedly infringing technology. Although the plaintiff had originally been seeking the award of treble damages and attorneys’ fees for alleged willful infringement of its patent, the plaintiff is no longer seeking such damages or fees following a February 2005 agreement between the parties to narrow the issues at trial. On July 21, 2003, the court granted us motion for summary judgment, which was entered as a final judgment on July 29, 2003. On August 27, 2003, the plaintiff filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit. On July 29, 2004, the Court of Appeals issued its decision which overturned the district court’s decision on summary judgment and remanded the case to the district court for further proceedings. On August 6, 2004, we filed a petition with the Court of Appeals for rehearing of its decision. On August 30, 2004, the Court of Appeals denied our petition for rehearing and remanded the case to the district court for further proceedings. In a ruling served on January 25, 2005, the court granted the plaintiff’s motion for summary judgment and ruled that we infringed the plaintiff’s patent. This trial began on February 22, 2005. On March 2, 2005, a jury returned a verdict in favor of Mars and awarded Mars damages in the amount of $3.6 million. Mars has filed a motion requesting a permanent injunction against further sales of the pet products named in this litigation. Total fiscal 2005 net sales and net income of the products involved in this litigation are expected to be insignificant in light of our total expected net sales and net income. We have recognized the effect of the jury verdict in the financial results for the three and nine months ended January 30, 2005. We are considering an appeal.

We are a defendant in an action brought by the Public Media Center in the Superior Court in San Francisco, California, on December 31, 2001 pursuant to the Separation Agreement. The plaintiff alleged violations of California Health & Safety Code sections 25249.5, et seq (commonly known as “Proposition 65”) and California’s unfair competition law for alleged failure to properly warn consumers of the presence of methylmercury in canned tuna. The plaintiff filed this suit against the three major producers of canned tuna in the U.S. The plaintiff seeks civil penalties of two thousand five hundred dollars per day and a permanent injunction against the defendants

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from offering canned tuna for sale in California without providing clear and reasonable warnings of the presence of methylmercury. We dispute the plaintiff’s allegations. This case has been consolidated with the California Attorney General case described below and has been set for trial on October 18, 2005. We cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

We are a defendant in an action brought by the California Attorney General in the Superior Court in San Francisco, California, on June 21, 2004. The Attorney General alleged violations of California Health & Safety Code sections 25249.5, et seq (commonly known as “Proposition 65”) and California’s unfair competition law for alleged failure to properly warn consumers of the presence of methylmercury in canned tuna. The Attorney General filed this suit against the three major producers of canned tuna in the U.S., including Del Monte. The Attorney General seeks civil penalties of two thousand five hundred dollars per day and a permanent injunction against the defendants from offering canned tuna for sale in California without providing clear and reasonable warnings of the presence of methylmercury. We dispute the Attorney General’s allegations. This case has been consolidated with the Public Media Center case described above and has been set for trial on October 18, 2005. We cannot at this time reasonably estimate a range of exposure, if any, of the potential liability.

We are a defendant in an action brought by PPI Enterprises (U.S.), Inc. in the U.S. District Court for the Southern District of New York on May 25, 1999 pursuant to the Merger Agreement. The plaintiff alleged that Del Monte breached certain purported contractual and fiduciary duties, made misrepresentations and failed to disclose material information to the plaintiff about our value and our prospects for sale. The plaintiff also alleges that it relied on our alleged statements when the plaintiff sold its shares of Del Monte preferred and common stock to a third party at a price lower than that which the plaintiff asserts it could have received absent our alleged conduct. The complaint seeks compensatory damages of at least $22.0 million, plus punitive damages. On December 9, 2004, we agreed to a settlement with PPI Enterprises. The settlement must be approved by the court in PPI Enterprises’ bankruptcy proceeding. Counter-claims against us by third parties in the amount of $1.4 million remain outstanding. We believe we have accrued adequate reserves to cover any material liability that may result from these counterclaims. We dispute these counterclaims.

On September 11, 2003, the Allegheny County Health Department (“ACHD”) issued a notice of violation alleging violations of rules governing air emissions from the power plant at our Pittsburgh, Pennsylvania facility. The alleged violations occurred prior to our acquisition of this facility in December 2002. The ACHD threatened to impose civil fines and penalties of up to $0.9 million. The power plant is operated by a third-party operator under contract with us. In December 2004, we entered into a consent agreement with ACHD under which we agreed to pay a civil penalty of approximately $0.2 million. We expect to be indemnified by the third-party operator for a portion of this penalty.

We were a defendant in an action brought by David Pafford in the California Superior Court for the County of San Francisco on July 25, 2003. The plaintiff alleged that we were responsible for personal injuries sustained as a result of an accident that occurred at our manufacturing facility in Modesto, California. On December 23, 2003, the plaintiff served an initial offer to compromise, pursuant to California Code of Civil Procedure section 998, on Del Monte for compensatory and punitive damages in the amount of $10.0 million. We settled this case on January 28, 2005.

We were a defendant in an action brought by Fleming Companies, Inc., et al., in the United States Bankruptcy Court for the District of Delaware on February 1, 2004. Fleming was seeking a total of $18.0 million in alleged preferential transfers, alleged payments due and payable under the terms of the military distribution agreements between the parties, alleged duplicate and overpayments made by Fleming, and deductions to which Fleming alleged it was entitled under various trade promotion programs. We previously filed claims against Fleming in the underlying bankruptcy proceeding for amounts owed by Fleming to us. We settled these respective claims with Fleming, effective February 23, 2005. We had accrued adequate reserves to cover the settlement of these proceedings.

The settlements described above, in aggregate, did not have a material impact on our results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) NONE.

(b) NONE.

(c) NONE.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

NONE.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE.

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ITEM 5. OTHER INFORMATION

(a) On December 31, 2004, Marc D. Haberman’s employment with the Company terminated and accordingly the Employment Agreement between Mr. Haberman and Del Monte Corporation, filed as an exhibit to the current report on Form 8-K filed by the Company on November 17, 2004, terminated in accordance with its terms. Mr. Haberman was Senior Vice President and Managing Director of Del Monte Brands.

(b) NONE.

ITEM 6. EXHIBITS

(a) Exhibits.

Exhibit Number	Description
4.1	Third Supplemental Indenture among Del Monte Corporation, the guarantors party thereto and Deutsche Bank Trust Company Americas, as Trustee, dated January 24, 2005 (incorporated by reference to Exhibit 4.1 to a Current Report on Form 8-K as filed on January 25, 2005)
4.2	Indenture, dated as of February 8, 2005, among Del Monte Corporation, Del Monte Foods Company, Mike Mac IHC, Inc., Star-Kist Samoa, Inc., Marine Trading Pacific, Inc., Star-Kist Mauritius, Inc. and Deutsche Bank Trust Company Americas, as trustee. (incorporated by reference to Exhibit 4.1 to a Current Report on Form 8-K as filed on February 11, 2005 (the “February 2005 Form 8-K))
4.3	Form of 6 3/4% Senior Subordinated Note due 2015. (incorporated by reference to Exhibit 4.2 to the February 2005 Form 8-K)
4.4	Registration Rights Agreement, dated as of February 8, 2005, among Del Monte Corporation, Del Monte Foods Company, Mike Mac IHC, Inc., Star-Kist Samoa, Inc., Marine Trading Pacific, Inc., Star-Kist Mauritius, Inc., and Morgan Stanley & Co. Incorporated, Banc of Americas Securities LLC, Lehman Brothers Inc., and J.P. Morgan Securities, Inc. (incorporated by reference to Exhibit 4.3 to the February 2005 Form 8-K)
10.1	Third Amendment to Employment Agreement by and between Del Monte Foods Company and Richard G. Wolford, executed as of November 11, 2004. (incorporated by reference to Exhibit 10.1 to a Current Report on Form 8-K as filed on November 17, 2004 (the “November 2004 Form 8-K”) **
10.2	Employment Agreement by and between Del Monte Corporation and David L. Meyers, executed as of November 11, 2004. (incorporated by reference to Exhibit 10.2 to the November 2004 Form 8-K) **
10.3	Employment Agreement by and between Del Monte Corporation and Nils Lommerin, executed as of November 11, 2004. (incorporated by reference to Exhibit 10.3 to the November 2004 Form 8-K) **
10.4	Employment Agreement by and between Del Monte Corporation and Marc D. Haberman, executed as of November 11, 2004. (incorporated by reference to Exhibit 10.4 to the November 2004 Form 8-K) **
10.5	Employment Agreement by and between Del Monte Corporation and Todd Lachman, executed as of November 11, 2004. (incorporated by reference to Exhibit 10.5 to the November 2004 Form 8-K) **
10.6	Form of Del Monte Foods Company 2002 Stock Incentive Plan Stand-Alone Stock Appreciation Right Agreement, adopted as of December 7, 2004. (incorporated by reference to Exhibit 10.1 to a Current Report on Form 8-K as filed on December 10, 2004) **
10.7	Del Monte Corporation Additional Benefits Plan, effective January 1, 2005. (incorporated by reference to Exhibit 10.1 to a Current Report on Form 8-K as filed on December 21, 2004) **
10.8	Del Monte Foods Company 2003 Non-Employee Director Deferred Compensation Plan, as amended on December 16, 2004. (incorporated by reference to Exhibit 10.1 to a Current Report on Form 8-K as filed on December 21, 2004 (the “December 2004 Form 8-K”)) **
10.9	Del Monte Foods Company 2005 Non-Employee Director Deferred Compensation Plan, adopted as of December 16, 2004. (incorporated by reference to Exhibit 10.2 to the December 2004 Form 8-K) **

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10.10	Del Monte Foods Company 2005 Non-Employee Director Deferred Compensation Plan – Form of Plan Agreement – 2005. (incorporated by reference to Exhibit 10.3 to the December 2004 Form 8-K) **
10.11	Form of Del Monte Foods Company Performance Shares Agreement, adopted as of January 20, 2005 (incorporated by reference to Exhibit 10.1 to a Current Report on Form 8-K as filed on January 26, 2005) **
10.12	Credit Agreement, dated as of February 8, 2005, among Del Monte Corporation, as borrower, Del Monte Foods Company, as guarantor, certain lenders, Morgan Stanley Senior Funding, Inc., as Syndication Agent, JPMorgan Chase Bank, N.A., Harris Trust and Savings Bank and Suntrust Bank, as Co-Documentation Agents, Banc of America Securities LLC, Morgan Stanley Senior Funding Inc. and JPMorgan Securities, Inc. as Joint Lead Arrangers and Joint Book Managers and Bank of America, N.A., as Administrative Agent. (incorporated by reference to Exhibit 10.1 to the February 2005 Form 8-K)
10.13	Security Agreement, dated as of February 8, 2005, among Del Monte Corporation, Del Monte Foods Company, Mike Mac IHC, Inc., Star-Kist Samoa, Inc., Marine Trading Pacific, Inc., Star-Kist Mauritius, Inc. and Bank of America, N.A., as Administrative Agent. (incorporated by reference to Exhibit 10.2 to the February 2005 Form 8-K)
10.14	Subsidiary Guaranty, dated as of February 8, 2005, by Mike Mac IHC, Inc., Star-Kist Samoa, Inc., Marine Trading Pacific, Inc. and Star-Kist Mauritius, Inc. in favor of the Secured Parties named therein (incorporated by reference to Exhibit 10.3 to the February 2005 Form 8-K)
*10.15	Placement Agreement for Del Monte Corporation 6 3/4% Senior Subordinated Notes Due 2015, dated as of January 25, 2005
*31.1	Certification of the Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*31.2	Certification of the Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*32.1	Certification of the Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*32.2	Certification of the Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* filed herewith

** indicates a compensatory plan or arrangement

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DEL MONTE FOODS COMPANY
By:	/S/ RICHARD G. WOLFORD
	Richard G. Wolford Chairman of the Board, President and Chief Executive Officer; Director
By:	/S/ DAVID L. MEYERS
	David L. Meyers Executive Vice President, Administration and Chief Financial Officer

Dated: March 9, 2005

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EX-10.15

Exhibit 10.15

EXECUTION COPY

$250,000,000

DEL MONTE CORPORATION

6¾% SENIOR SUBORDINATED NOTES DUE 2015

PLACEMENT AGREEMENT

January 25, 2005

January 25, 2005

Morgan Stanley & Co. Incorporated

Banc of America Securities LLC

Lehman Brothers Inc.

J.P. Morgan Securities Inc.

c/o	Morgan Stanley & Co. Incorporated
	1585 Broadway
	New York, New York 10036

Dear Sirs and Mesdames:

Del Monte Corporation, a Delaware corporation (the “Company”), proposes to sell to the several purchasers named in Schedule I hereto (the “Placement Agents”) an aggregate of $250,000,000 principal amount of the Company’s 6¾% Senior Subordinated Notes due 2015 (the “Securities”) to be issued pursuant to the provisions of an Indenture to be dated on or about February 8, 2005 (the “Indenture”) among the Company, Del Monte Foods Company, a Delaware corporation (“Holdings”), the Guarantors (as defined below), and Deutsche Bank Trust Company Americas, as Trustee (the “Trustee”). In connection with the sale of the Securities to the Placement Agents, the Company and Holdings will enter into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Placement Agents, substantially in the form attached hereto as Exhibit A.

The Securities will be guaranteed by (1) Holdings, (2) the subsidiaries of the Company listed in Schedule II herein (the “Company Subsidiary Guarantors”), (3) any subsidiary of the Company formed or acquired after the Closing Date (as defined in Section 4 hereof) that executes an additional guarantee in accordance with the terms of the Indenture and (4) the respective successors and assigns of the entities referred to in (1), (2) and (3) above (the entities referred to in (1), (2), (3) and (4) above, collectively, the “Guarantors”) pursuant to their guarantees (the “Guarantees”).

The Securities will be offered without being registered under the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers in compliance with the exemption from registration provided by Rule 144A under the Securities Act and in offshore transactions in reliance on Regulation S under the Securities Act (“Regulation S”).

In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum (the “Preliminary Memorandum”) and will prepare a final offering memorandum to be used by the Placement Agents to confirm sales of the Securities (the “Final Memorandum” and, with the Preliminary Memorandum, each a “Memorandum”), including or incorporating by reference a description of the terms of the Securities, the terms of the offering and a description of the Company and Holdings. As used herein, the term “Memorandum” shall include in each case the documents incorporated by reference therein and shall include amendments and supplements thereto. The terms “supplement”, “amendment” and “amend” as used herein with respect to a Memorandum shall include all documents incorporated by reference in the Preliminary Memorandum or Final Memorandum, as the case may be, that are filed by Holdings with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) subsequent to the date of such Memorandum until all of the Securities have been sold.

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1. Representations and Warranties of the Company and Holdings. The Company and Holdings, jointly and severally, represent and warrant to, and agree with, you that:

(a) (i) Each document, if any, filed or to be filed by Holdings pursuant to the Exchange Act and incorporated or deemed to be incorporated by reference in either Memorandum complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder and (ii) the Preliminary Memorandum at its date did not contain, and the Final Memorandum at its date and on the Closing Date will not contain, any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in either Memorandum based upon information relating to any Placement Agent that is furnished to Holdings or the Company in writing by such Placement Agent expressly for use therein.

(b) Each of the Company and Holdings has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in each Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on Holdings, the Company and each of their direct and indirect subsidiaries, taken together as a whole (“Material Adverse Effect”). As of the date hereof, Holdings does not have any direct subsidiaries other than the Company, and on the Closing Date, Holdings will not have any direct subsidiaries other than the Company.

(c) Each material subsidiary of the Company (the “Company Subsidiaries”) has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in each Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect; all of the issued shares of capital stock of the Company and each Company Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company or Holdings, as the case may be, free and clear of all liens, encumbrances, equities or claims, except to the extent that the shares of capital stock of the Company and each Company Subsidiary secure or will secure obligations under the Company’s Credit Agreement (as defined in the Indenture).

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(d) This Agreement has been duly authorized, executed and delivered by the Company and Holdings.

(e) The Securities have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Placement Agents in accordance with the terms of this Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity, and will be entitled to the benefits of the Indenture.

(f) On or prior to the Closing Date, the Guarantees by Holdings and the Company Subsidiary Guarantors will be duly authorized and, when such Guarantees and the Securities have been executed and assuming the Securities have been authenticated, all in accordance with the provisions of the Indenture, and the Securities have been delivered to and paid for by the Placement Agents in accordance with the terms of this Agreement, the Guarantees by Holdings and the Company Subsidiary Guarantors will be valid and binding obligations of Holdings and each Company Subsidiary Guarantor, as the case may be, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity, and will be entitled to the benefits of the Indenture.

(g) On or prior to the Closing Date, (i) the Indenture will be duly authorized, executed and delivered by, and will be a valid and binding agreement of, the Company, Holdings and each Company Subsidiary Guarantor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity; and (ii) the Registration Rights Agreement will be duly authorized, executed and delivered by, and will be a valid and binding agreement of, the Company, Holdings and each Company Subsidiary Guarantor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and general principles of equity and except as rights to indemnification and contribution under the Registration Rights Agreement may be limited by applicable law.

(h) The execution and delivery by the Company, Holdings and each Company Subsidiary Guarantor of, and the performance by the Company, Holdings and each Company Subsidiary Guarantor of its respective obligations under, this Agreement, the Indenture, the Registration Rights Agreement, the Guarantees and the Securities (collectively, the “Transaction Documents”) to which it is a party will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company, Holdings or such Company Subsidiary Guarantor, as the case may be, or any agreement or other instrument binding upon the Company, Holdings or any of the Company Subsidiaries, the contravention of which agreement or instrument would be expected to have a Material Adverse Effect, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over Holdings, the Company or any of the Company Subsidiaries, as the case may be, the contravention of which judgment, order or decree would be expected to have a Material Adverse Effect, and no

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consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company, Holdings or such Company Subsidiary Guarantor of its respective obligations under the Transaction Documents to which it is a party, except (A) as already have been obtained and (B) such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities or (C) such as may be required under the Securities Act in connection with the performance by the Company and Holdings of their obligations under the Registration Rights Agreement.

(i) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of Holdings, the Company and the Company Subsidiaries, taken together as a whole, from that set forth in the Memorandum.

(j) There are no legal or governmental proceedings pending or, to the knowledge of the Company and Holdings, threatened to which Holdings, the Company or any of the Company Subsidiaries is a party or to which any of the properties of Holdings, the Company or any of the Company Subsidiaries is subject, other than proceedings described in the Memorandum or any proceedings that would not have (i) a Material Adverse Effect or (ii) a material adverse effect on the power or ability of the Company, Holdings and each Company Subsidiary Guarantor to perform its respective obligations under the Transaction Documents to which it is a party or to consummate the transactions contemplated by the Memorandum.

(k) The Company, Holdings and the Company Subsidiaries (i) are in compliance with all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse Effect or as described in the Memorandum.

(l) There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for cleanup, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a Material Adverse Effect, except as described in the Memorandum.

(m) The Company, Holdings and the Company Subsidiaries are in compliance with all laws, ordinances or regulations of any governmental authority applicable to any of them or their respective operations, except where such noncompliance would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect or as described in the Memorandum.

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(n) None of Holdings, the Company or any Company Subsidiary Guarantor is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Memorandum, none of Holdings, the Company or any Company Subsidiary Guarantor will be required to register as, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(o) None of the Company, Holdings, the Company Subsidiary Guarantors or their respective affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act, an “Affiliate”) has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) that is or will be integrated with the sale of the Securities or the Guarantees in a manner that would require the registration under the Securities Act of the Securities or the Guarantees or (ii) engaged in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Securities or the Guarantees or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

(p) None of the Company, Holdings, the Company Subsidiary Guarantors or their respective Affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities or the Guarantees, and the Company, Holdings, the Company Subsidiary Guarantors and their respective Affiliates and, to the knowledge of Holdings and the Company, any person acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S.

(q) Assuming the accuracy of the representations and warranties and the performance of the agreements of the Placement Agents contained in this Agreement, it is not necessary in connection with the offer, sale and delivery of the Securities or the Guarantees to the Placement Agents in the manner contemplated by this Agreement to register the Securities or the Guarantees under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

(r) The Securities and the Guarantees satisfy the requirements set forth in Rule 144A(d)(3) under the Securities Act.

(s) Subsequent to the respective dates as of which information is given in the Memorandum, (1) none of Holdings, the Company nor any of the Company Subsidiaries has incurred any liability or obligation, direct or contingent, or entered into any transaction not in the ordinary course of business, in either case that is material to Holdings, the Company and their direct and indirect subsidiaries, taken together as a whole; (2) neither the Company nor Holdings has purchased any of its outstanding capital stock, or declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (3) there has not been any

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material adverse change in the capital stock, short-term debt or long-term debt of Holdings, the Company or the Company Subsidiaries, except in each case as described in the Memorandum.

(t) None of the Company, Holdings or any of the Company Subsidiaries is a party to or bound by any non-competition agreement or any other agreement or obligation that materially limits or will materially limit the Company, Holdings or any of the Company Subsidiaries from engaging in their respective businesses, except as would not reasonably be expected to have a Material Adverse Effect or as described in the Memorandum.

(u) Holdings, the Company and the Company Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them that is material to the business of Holdings, the Company and the Company Subsidiaries, taken together as a whole, in each case free and clear of all liens, encumbrances and defects, except such as are described in the Memorandum or such as do not materially affect the value of such property and do not materially interfere with the use made and currently proposed to be made of such property by Holdings, the Company and the Company Subsidiaries. Any real property and buildings held under lease by Holdings, the Company or the Company Subsidiaries are held by them under valid, subsisting and enforceable leases, except as are not material and do not interfere with the use made and currently proposed to be made of such property and buildings by Holdings, the Company or the Company Subsidiaries and except as described in the Memorandum.

(v) Except as described in the Memorandum, Holdings, the Company and the Company Subsidiaries own or possess, or can acquire on reasonable terms, all material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by them. None of Holdings, the Company or any of the Company Subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect, except as described in the Memorandum.

(w) No labor dispute with the employees of Holdings, the Company or any of the Company Subsidiaries exists that is material to Holdings, the Company and their direct and indirect subsidiaries, taken together as a whole, except as described in the Memorandum, or, to the knowledge of Holdings, the Company or any of the Company Subsidiaries, is imminent. None of Holdings, the Company or any of the Company Subsidiaries is aware of any existing, threatened or imminent labor disturbance by the employees of any of its or their principal suppliers, manufacturers or contractors that would result in a Material Adverse Effect.

(x) Holdings, the Company and each of the Company Subsidiaries are insured by insurers believed by Holdings and the Company to be of recognized financial

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responsibility against such losses and risks and in such amounts as are believed to be reasonable for the businesses in which they are engaged; none of Holdings, the Company or any of the Company Subsidiaries has been refused any insurance coverage sought or applied for; and none of Holdings, the Company or any of the Company Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain substantially similar coverage from substantially similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect, except in each case as described in the Memorandum.

(y) Holdings, the Company and the Company Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign authorities necessary to conduct their respective businesses, except to the extent that the failure to possess such certificates, authorizations or permits would not have a Material Adverse Effect. None of Holdings, the Company or any of the Company Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect, except as described in the Memorandum.

(z) Holdings, the Company and each of the Company Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (1) transactions are executed in accordance with management’s general or specific authorizations; (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (3) access to assets is permitted only in accordance with management’s general or specific authorization; and (4) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several Placement Agents, and each Placement Agent, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth in Schedule I hereto opposite its name at a purchase price of 98.00% of the principal amount thereof.

The Company and Holdings hereby agree that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Placement Agents, they will not, and the Company and Holdings will cause the Company Subsidiary Guarantors to not, during the period beginning on the date hereof and continuing through and including the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company or any Guarantor or warrants to purchase debt securities of the Company or any Guarantor substantially similar to the Securities (other than the sale of the Securities under this Agreement).

3. Terms of Offering. You have advised the Company that the Placement Agents will make an offering of the Securities purchased by the Placement Agents hereunder on the terms set forth in the Final Memorandum, as soon as practicable after this Agreement is entered into as in your judgment is advisable.

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4. Payment and Delivery. Payment for the Securities shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Securities for the respective accounts of the several Placement Agents at 10:00 a.m., New York City time, on February 8, 2005, or at such other time on the same or such other date, not later than February 22, 2005, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the “Closing Date.”

Certificates for the Securities shall be in definitive form or global form, as specified by you, and registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the Closing Date. The certificates evidencing the Securities shall be delivered to you on the Closing Date for the respective accounts of the several Placement Agents, with any transfer taxes payable in connection with the transfer of the Securities to the Placement Agents duly paid by Holdings or the Company.

5. Conditions to the Placement Agents’ Obligations. The several obligations of the Placement Agents to purchase and pay for the Securities on the Closing Date are subject to the following conditions (any of which may be waived by the Placement Agents in writing):

(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date:

(i) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded the Company and Holdings, taken individually or taken together, or any of the Company’s or Holdings’ securities by any “nationally recognized statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and

(ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of Holdings, the Company and the Company Subsidiaries, taken together as a whole, from that set forth in the Final Memorandum (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Securities on the terms and in the manner contemplated in the Final Memorandum.

(b) The Placement Agents shall have received on the Closing Date a certificate, dated the Closing Date and signed by either two executive officers or an executive officer and an assistant treasurer of each of the Company and Holdings, to the effect set forth in Section 5(a)(i) and to the effect that the representations and warranties of the Company and Holdings contained in this Agreement are true and correct as of the Closing Date and that the Company and Holdings have complied in all material respects

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with all of the agreements and satisfied all of the conditions on their part to be performed or satisfied hereunder on or before the Closing Date. The officers signing and delivering such certificate may rely upon the best of their knowledge as to proceedings threatened.

(c) The Placement Agents shall have received on the Closing Date an opinion of Gibson, Dunn & Crutcher LLP, outside counsel for the Company and Holdings, dated the Closing Date, to the effect set forth in Exhibit B. Such opinion shall be rendered to the Placement Agents at the request of the Company and shall so state therein.

(d) The Placement Agents shall have received on the Closing Date an opinion of James Potter, General Counsel of Holdings, dated the Closing Date, to the effect set forth in Exhibit C. Such opinion shall be rendered to the Placement Agents at the request of Holdings and shall so state therein.

(e) The Placement Agents shall have received on the Closing Date an opinion of Shearman & Sterling LLP, counsel for the Placement Agents, dated the Closing Date, in form and substance reasonably satisfactory to the Placement Agents.

(f) The Placement Agents shall have received on each of (i) the date not later than the date the Final Memorandum is furnished to the Placement Agents pursuant to Section 6(a) hereof and (ii) the Closing Date a letter, dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Placement Agents, from KPMG LLP, an independent registered public accounting firm, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information of the Company and Holdings contained in or incorporated by reference into the Final Memorandum; provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof.

(g) The Placement Agents shall have received on each of (i) the date not later than the date the Final Memorandum is furnished to the Placement Agents pursuant to Section 6(a) hereof and (ii) the Closing Date a letter, dated the date hereof or of the Closing Date, as the case may be, in form and substance satisfactory to the Placement Agents, from PricewaterhouseCoopers LLP, an independent registered public accounting firm, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information of the Company contained in or incorporated by reference into the Final Memorandum.

(h) The Placement Agents shall have received on each of the date hereof and the Closing Date a certificate, dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Placement Agents, from the Company, signed by the principal financial or accounting officer of or for the Company, to the effect that the signer of such certificate has performed (or members of his or her staff acting under his or her supervision have performed) certain specified procedures as a result of which such signer has determined that certain numerical and statistical information set forth in the Final Memorandum, specified by the Placement Agents, has been derived from, and agrees with, the records of the Company.

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(i) The issuance of the Securities will not cause a default or event of default under the Credit Agreement (as defined in the Indenture).

(j) Concurrently with the Closing Date, the Company and the Guarantors shall have executed and delivered the Indenture to the Trustee.

(k) The Placement Agents shall have received signed counterparts of the Registration Rights Agreement.

6. Covenants of the Company and Holdings. In further consideration of the agreements of the Placement Agents contained in this Agreement, the Company and Holdings covenant with each Placement Agent as follows:

(a) To furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the third business day prior to the Closing Date and during the period mentioned in Section 6(c), as many copies of the Final Memorandum, any documents incorporated by reference therein and any supplements and amendments thereto as you may reasonably request.

(b) Before amending or supplementing either Memorandum, to furnish to you a copy of each such proposed amendment or supplement and not to use any such proposed amendment or supplement to which you reasonably object.

(c) If, during such period after the date hereof and prior to the date on which all of the Securities shall have been sold by the Placement Agents, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Final Memorandum in order to make the statements therein, in the light of the circumstances when the Final Memorandum is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Placement Agents, it is necessary to amend or supplement the Final Memorandum to comply with applicable law, forthwith to prepare and furnish to the Placement Agents, either amendments or supplements to the Final Memorandum so that the statements in the Final Memorandum as so amended or supplemented will not, in the light of the circumstances when the Final Memorandum is delivered to a purchaser, be misleading or so that the Final Memorandum, as amended or supplemented, will comply with applicable law.

(d) To endeavor to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request.

(e) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its respective obligations under this Agreement, including: (i) the fees, disbursements and expenses of its respective counsel and respective accountants in connection with the issuance and sale of the Securities and all other fees or

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expenses in connection with the preparation of each Memorandum and all amendments and supplements thereto, including all printing costs associated therewith, and the delivering of copies thereof to the Placement Agents, in the quantities herein above specified, (ii) all costs and expenses related to the transfer and delivery of the Securities to the Placement Agents, including any transfer or other taxes payable thereon (other than as set forth in Section 4), (iii) the cost of printing or producing any Blue Sky or legal investment memorandum in connection with the offer and sale of the Securities under state securities laws and all expenses in connection with the qualification of the Securities for offer and sale under state securities laws as provided in Section 6(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Placement Agents in connection with such qualification and in connection with the Blue Sky or legal investment memorandum, (iv) any fees charged by rating agencies for the rating of the Securities, (v) the fees and expenses, if any, incurred in connection with the admission of the Securities for trading in PORTAL or any appropriate market system, (vi) the costs and charges of the Trustee and any transfer agent, registrar or depositary, (vii) the cost of the preparation, issuance and delivery of the Securities, (viii) the costs and expenses of the Company and Holdings relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Securities, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and Holdings and any such consultants, and the cost of any aircraft chartered in connection with the road show, and (ix) all other cost and expenses incident to the performance of the obligations of the Company and Holdings hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 8, and the last paragraph of Section 10, the Placement Agents will pay all of their costs and expenses, including fees and disbursements of their counsel, transfer taxes payable on resale of any of the Securities by them and any advertising expenses connected with any offers they may make.

(f) None of the Company, any Guarantor or any of their respective Affiliates will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which could be integrated with the sale of the Securities or the Guarantees in a manner which would require the registration under the Securities Act of the Securities or the Guarantees.

(g) Not to solicit any offer to buy or offer or sell the Securities or the Guarantees by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

(h) While any of the Securities or the Guarantees endorsed thereon remain “restricted securities” within the meaning of the Securities Act, to make available, upon request, to any seller or holder of such Securities or any prospective purchaser designated by such seller or holder the information specified in Rule 144A(d)(4) under the Securities Act, unless Holdings is then subject to Section 13 or 15(d) of the Exchange Act.

12

(i) If requested by you, to use its reasonable best efforts to permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in the PORTAL Market.

(j) None of the Company, its Affiliates or any person acting on its or their behalf (other than the Placement Agents) will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities or the Guarantees, and the Company and its Affiliates and each person acting on its or their behalf (other than the Placement Agents) will comply with the offering restrictions requirement of Regulation S.

(k) During the period of two years after the Closing Date, the Company and Holdings will not, and will not permit any of their respective “affiliates” (as defined in Rule 144 under the Securities Act) to resell any of the Securities which constitute “restricted securities” under Rule 144 that have been reacquired by any of them.

(l) Not to take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the Securities contemplated hereby.

7. Offering of Securities; Restrictions on Transfer.

(a) Each Placement Agent, severally and not jointly, represents and warrants that such Placement Agent is a qualified institutional buyer as defined in Rule 144A under the Securities Act (a “QIB”). Each Placement Agent, severally and not jointly, agrees with the Company that (i) it will not solicit offers for, or offer or sell, such Securities or Guarantees by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act and (ii) it will solicit offers for such Securities only from, and will offer such Securities only to, persons that it reasonably believes to be (A) in the case of offers inside the United States, QIBs and (B) in the case of offers outside the United States, to persons other than U.S. persons (“foreign purchasers,” which term shall include dealers or other professional fiduciaries organized in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act that, in each case, in purchasing such Securities are deemed to have represented and agreed as provided in the Final Memorandum under the caption “Transfer Restrictions”. As used in this Section 7(a), the terms “United States” and “U.S. person” have the meanings set forth in Regulation S under the Securities Act.

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(b) Each Placement Agent, severally and not jointly, represents, warrants, and agrees with respect to offers and sales outside the United States that:

(i) such Placement Agent understands that no action has been or will be taken in any jurisdiction by Holdings or the Company that would permit a public offering of the Securities or the Guarantees, or possession or distribution of either Memorandum or any other offering or publicity material relating to the Securities or the Guarantees, in any country or jurisdiction where action for that purpose is required;

(ii) such Placement Agent will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Securities or Guarantees or has in its possession or distributes either Memorandum or any such other material, in all cases at its own expense;

(iii) the Securities and the Guarantees have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Rule 144A or Regulation S under the Securities Act or pursuant to another exemption from the registration requirements of the Securities Act;

(iv) such Placement Agent has offered the Securities and the Guarantees and will offer and sell the Securities and the Guarantees (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 of Regulation S or as otherwise permitted in Section 7(a); accordingly, neither such Placement Agent, its Affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities or the Guarantees, and any such Placement Agent, its Affiliates and any such persons have complied and will comply with the offering restrictions requirement of Regulation S;

(v) such Placement Agent has (A) not offered or sold and, prior to the date six months after the Closing Date, will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, as amended, (B) complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (the “FSMA”) with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom, and (C) only communicated or caused to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of the Securities in circumstances in which section 21(1) of the FSMA does not apply to the Company;

(vi) such Placement Agent understands that the Securities and the Guarantees have not been and will not be registered under the Securities and

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Exchange Law of Japan, and represents that it has not offered or sold, and agrees not to offer or sell, directly or indirectly, any Securities or Guarantees in Japan or for the account of any resident thereof except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan and otherwise in compliance with applicable provisions of Japanese law; and

(vii) such Placement Agent agrees that, at or prior to confirmation of sales of the Securities, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect:

“The securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S.”

Except when the context otherwise requires, terms used in this Section 7(b) have the meanings given to them by Regulation S.

8. Indemnity and Contribution. (a) The Company and Holdings jointly and severally agree to indemnify and hold harmless each Placement Agent, each person, if any, who controls any Placement Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of any Placement Agent within the meaning of Rule 405 under the Securities Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in either Memorandum (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Placement Agent that is furnished to Holdings or the Company in writing by such Placement Agent expressly for use therein.

(b) Each Placement Agent agrees, severally and not jointly, to indemnify and hold harmless Holdings, the Company, their respective directors and officers and each person, if any, who controls Holdings or the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from Holdings and the Company to such Placement Agent, but only with reference to information relating to such Placement Agent that is furnished to Holdings or the Company in writing by such Placement Agent expressly for use in either Memorandum or any amendments or supplements thereto.

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(c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 90 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

(d) To the extent the indemnification provided for in Section 8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative

16

benefits received by the Company and Holdings on the one hand and the Placement Agents on the other hand from the offering of the Securities or (ii) if the allocation provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company and Holdings on the one hand and of the Placement Agents on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and Holdings on the one hand and the Placement Agents on the other hand in connection with the offering of the Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Securities (before deducting expenses) received by the Company and the total discounts and commissions received by the Placement Agents, in each case as set forth in the Final Memorandum, bear to the aggregate offering price of the Securities. The relative fault of the Company and Holdings on the one hand and of the Placement Agents on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and Holdings or by the Placement Agents and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Placement Agents’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amount of Securities they have purchased hereunder, and not joint.

(e) The parties agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Placement Agents were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(d) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Placement Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Securities resold by it in the initial placement of such Securities were offered to investors exceeds the amount of any damages that such Placement Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

(f) The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Company and Holdings contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of

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any Placement Agent, any person controlling any Placement Agent or any affiliate of any Placement Agent or by or on behalf of the Company, Holdings, their respective officers or directors or any person controlling the Company or Holdings and (iii) acceptance of and payment for any of the Securities.

9. Termination. The Placement Agents may terminate this Agreement by notice given by you to the Company and Holdings, if after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any securities of the Company or Holdings shall have been suspended on any exchange or in any over-the-counter market, (iii) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred, (iv) any moratorium on commercial banking activities shall have been declared by Federal or New York State authorities or (v) there shall have occurred any outbreak or escalation of hostilities, or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and which, singly or together with any other event specified in this clause (v), makes it, in your judgment, impracticable or inadvisable to proceed with the offer, sale or delivery of the Securities on the terms and in the manner contemplated in the Final Memorandum.

10. Effectiveness; Defaulting Placement Agents. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

If, on the Closing Date, any one or more of the Placement Agents shall fail or refuse to purchase Securities that it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Securities which such defaulting Placement Agent or Placement Agents agreed but failed or refused to purchase is not more than one-tenth of the aggregate principal amount of Securities to be purchased on such date, the other Placement Agents shall be obligated severally in the proportions that the principal amount of Securities set forth opposite their respective names in Schedule I bears to the aggregate principal amount of Securities set forth opposite the names of all such non-defaulting Placement Agents, or in such other proportions as you may specify, to purchase the Securities which such defaulting Placement Agent or Placement Agents agreed but failed or refused to purchase on such date; provided that in no event shall the principal amount of Securities that any Placement Agent has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of one-ninth of such principal amount of Securities without the written consent of such Placement Agent. If, on the Closing Date, any Placement Agent or Placement Agents shall fail or refuse to purchase Securities which it or they have agreed to purchase hereunder on such date and the aggregate principal amount of Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Placement Agent or of the Company. In any such case either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Final Memorandum or in any

18

other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Placement Agent from liability in respect of any default of such Placement Agent under this Agreement.

If this Agreement shall be terminated by the Placement Agents, or any of them, because of any failure or refusal on the part of the Company or Holdings to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company or Holdings shall be unable to perform their respective obligations under this Agreement, the Company or Holdings will reimburse the Placement Agents or such Placement Agents as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the reasonable fees and disbursements of their counsel) reasonably incurred by such Placement Agents in connection with this Agreement or the offering contemplated hereunder.

11. Counterparts. This Agreement may be signed in any number of counterparts, which may be delivered by facsimile, each of which shall be an original, with the same effect as if the actual signatures thereto and hereto were upon the same instrument.

12. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

13. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

[Remainder of Page Intentionally Left Blank]

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Very truly yours,
DEL MONTE CORPORATION
By:	/s/ Thomas E. Gibbons
Name:	Thomas E. Gibbons
Title:	Senior Vice President and Treasurer
DEL MONTE FOODS COMPANY
By:	/s/ Thomas E. Gibbons
Name:	Thomas E. Gibbons
Title:	Senior Vice President and Treasurer

Accepted as of the date hereof

Morgan Stanley & Co. Incorporated

Banc of America Securities LLC

Lehman Brothers Inc.

J.P. Morgan Securities Inc.

Acting severally on behalf of themselves and

        the several Placement Agents named in

        Schedule I hereto.

By: Morgan Stanley & Co. Incorporated

By:	/s/ Bryan Andrzejewski
Name:	Bryan Andrzejewski
Title:	Executive Director

SCHEDULE I

Placement Agent	Principal Amount of Securities to be Purchased
Morgan Stanley & Co. Incorporated	$	125,000,000
Banc of America Securities LLC		62,500,000
Lehman Brothers Inc.		31,250,000
J.P. Morgan Securities Inc.		31,250,000
Total:	$	250,000,000

SCHEDULE II

COMPANY SUBSIDIARY GUARANTORS

Star-Kist Samoa, Inc., a California corporation.

Mike Mac IHC, Inc., a Delaware corporation.

Marine Trading Pacific, Inc.

Star-Kist Mauritius, Inc.

C-1

EX-31.1

Exhibit 31.1

Certification

I, Richard G. Wolford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Del Monte Foods Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 9, 2005	/s/ RICHARD G. WOLFORD
	Richard G. Wolford Chairman of the Board, President and Chief Executive Officer; Director

EX-31.2

Exhibit 31.2

Certification

I, David L. Meyers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Del Monte Foods Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 9, 2005	/s/ DAVID L. MEYERS
	David L. Meyers Executive Vice President, Administration and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification

Pursuant to the requirements set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), the undersigned, in his capacity as the Chief Executive Officer of Del Monte Foods Company, hereby certifies that, to the best of his knowledge:

1. The quarterly report of Del Monte Foods Company on Form 10-Q for the period ended January 30, 2005, to which this certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Del Monte Foods Company at the end of and for the period covered by the Periodic Report.

Date: March 9, 2005

/s/ RICHARD G. WOLFORD

Richard G. Wolford

Chairman of the Board, President and

Chief Executive Officer; Director

This certification accompanies and is being “furnished” with this Periodic Report, shall not be deemed “filed” by Del Monte Foods Company (the “Company”) for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Periodic Report, irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 has been provided to Del Monte Foods Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification

Pursuant to the requirements set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), the undersigned, in his capacity as the Chief Financial Officer of Del Monte Foods Company, hereby certifies that, to the best of his knowledge:

1. The quarterly report of Del Monte Foods Company on Form 10-Q for the period ended January 30, 2005, to which this certification is attached as Exhibit 32.2 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Del Monte Foods Company at the end of and for the period covered by the Periodic Report.

Date: March 9, 2005

/s/ DAVID L. MEYERS

David L. Meyers

Executive Vice President, Administration and

Chief Financial Officer

This certification accompanies and is being “furnished” with this Periodic Report, shall not be deemed “filed” by Del Monte Foods Company (the “Company”) for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Periodic Report, irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 has been provided to Del Monte Foods Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.