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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended April 30, 2006

OR

For the transition period from                    to                    .

Commission file number 001-14335

DEL MONTE FOODS COMPANY

(Exact name of registrant as specified in its charter)

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)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark if the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes ¨ No x

The aggregate market value of the common equity held by non-affiliates of the Registrant on October 28, 2005 was $2,111,339,672 based on the number of shares held by non-affiliates of the Registrant and the reported last sale price of common stock on October 28, 2005 ($10.60), which was the last business day of the Registrant’s most recently completed second fiscal quarter. This calculation does not reflect a determination that persons are affiliates for any other purposes. The Registrant does not have non-voting common stock outstanding.

The number of shares outstanding of Common Stock, par value $0.01, as of close of business on June 28, 2006 was 200,238,648.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant has incorporated by reference in Part III of this report on Form 10-K portions of its definitive Proxy Statement for the 2006 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant’s fiscal year.

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DEL MONTE FOODS COMPANY

For the Fiscal Year Ended April 30, 2006

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Special Note Regarding Forward Looking Statements

This annual report on Form 10-K, including the sections entitled “Item 1. Business,” “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain 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; integration of the Meow Mix and Milk-Bone businesses; cost and availability of inputs, commodities, ingredients and other raw materials, including without limitation, energy, fuel, steel and other packaging, grains, meat by-products and tuna; logistics and other transportation-related costs; our debt levels and ability to service and reduce our debt; efforts and ability to increase prices and reduce costs; costs and results of efforts to improve the performance and market share of our businesses; reduced sales, disruptions, costs or other charges to earnings that may be generated by our strategic plan and transformation efforts; effectiveness of marketing, pricing and trade promotion programs; changing consumer and pet preferences; timely launch and market acceptance of new products; competition, including pricing and promotional spending levels by competitors; acquisitions, if any, including identification of appropriate targets and successful integration of any acquired business; product liability claims; weather conditions; crop yields; changes in U.S., foreign or local tax laws and effective rates; interest rate fluctuations; the loss of significant customers or a substantial reduction in orders from these customers or the bankruptcy of any such customers; 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; changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations; litigation; industry trends, including changes in buying, inventory and other business practices by customers; public safety and health issues; and other factors. See also “Item 1A. Risk Factors.”

Our declaration and payment of future dividends, if any, is subject to final determination of our Board of Directors each quarter after its review of our then current strategy, applicable debt covenants and financial performance and position, among other things.

All forward-looking statements in this annual report on Form 10-K 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.

Helpful Information

As used throughout this Form 10-K, unless the context otherwise requires, “DMFC” means Del Monte Foods Company, and “Del Monte” or “the Company” means DMFC and its consolidated subsidiaries. “DMC” means Del Monte Corporation, which refers to (i) for periods before the 2002 Merger, a wholly-owned subsidiary of DMFC that merged with and into SKF Foods, Inc. (“SKF”)

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on December 20, 2002 and (ii) for periods after the 2002 Merger, a wholly-owned subsidiary of DMFC, which represents the combined operations of pre-merger DMC and SKF. See below for further discussion of the 2002 Merger.

Del Monte’s fiscal year ends on the Sunday closest to April 30, and its fiscal quarters typically end on the Sunday closest to the end of July, October and January. As used throughout this Form 10-K, “fiscal 2007” means Del Monte’s fiscal year ending April 29, 2007; “fiscal 2006” means Del Monte’s fiscal year ending April 30, 2006, “fiscal 2005” means Del Monte’s fiscal year ending May 1, 2005; “fiscal 2004” means Del Monte’s fiscal year ended May 2, 2004; and “fiscal 2003” means Del Monte’s fiscal year ended April 27, 2003.

On December 20, 2002, DMFC completed the acquisition of certain 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 “2002 Acquired Businesses”). Del Monte acquired these businesses through the merger (the “2002 Merger”) of DMC, a subsidiary of DMFC, with and into SKF, previously a wholly-owned subsidiary of Heinz. Prior to the 2002 Merger, Heinz transferred the 2002 Acquired Businesses to SKF and distributed all of the issued and outstanding shares of SKF common stock on a pro rata basis (the “Spin-off”) to the holders of record of the outstanding common stock of Heinz on December 19, 2002. The 2002 Merger has been accounted for as a reverse acquisition in which SKF is treated as the acquirer and DMC, the acquiree, primarily because Heinz shareholders owned a majority of DMFC’s common stock upon completion of the 2002 Merger. As a result, the historical financial statements of SKF, which reflect the operations of the 2002 Acquired Businesses while under the management of Heinz, became the historical financial statements of Del Monte as of the completion of the 2002 Merger. Therefore, any financial information and numerical data provided for fiscal years prior to 2003 reflect the operations of SKF only and does not reflect the pre-Merger operations of Del Monte for these periods. Any financial information and numerical data provided for fiscal 2003 reflects the operations of SKF for the period from May 2, 2002 to December 20, 2002 and reflects the combined operations of SKF and the existing Del Monte businesses for the period from December 21, 2002 to April 27, 2003.

The results of operations of all periods presented have been reclassified to reflect discontinued operations related to the sale of our private label soup and infant feeding businesses. See “Item 1. Business – History of Del Monte Foods Company” for a description of the sale.

Market Data

Unless otherwise indicated, all statements presented in this Form 10-K regarding Del Monte’s brands and market share are based on data obtained from ACNielsen. ACNielsen is an independent market research firm and makes its data available to the public at prescribed rates. We have not independently verified information obtained from ACNielsen. References to U.S. market share are based on equivalent case volume sold through retail grocery stores (excluding Wal-Mart Stores, Inc (“Wal-Mart”), and some supercenters and club stores which are not monitored by ACNielsen) with at least $2.0 million in sales, except references to U.S. market share for pet snacks, which are based on dollar share, which we believe is a more appropriate measure for that business. References to processed vegetables, fruit and tomato products do not include frozen products. Market share data for processed vegetables and solid tomato products include only those categories in which Del Monte competes. The data for processed fruit includes major fruit and single-serve categories in which Del Monte competes and excludes specialty and pineapple categories. The data for broth products includes the total broth category. The data for seafood represents the processed tuna category, which includes both canned and tuna pouch. The data for pet food reflects total U.S. food and mass merchandisers (excluding Wal-Mart) which includes the dry dog food, wet dog food, dry cat food,

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wet cat food, chewy dog snacks, biscuit crunchy dog snacks, and cat treat categories. References to fiscal 2006 market share refer to the 52-week period ended April 29, 2006. References to trends for the categories in which we compete are based on internal estimates of dollar sales calculated from data obtained through ACNielsen and Household Panel data and are intended to reflect estimates for all retail channels (which include grocery, Wal-Mart, club stores, and pet specialty stores).

Trademarks

Del Monte, Contadina, StarKist, S&W, SunFresh, Fruit Cup, Fruit Naturals, Orchard Select, Tropical Select, College Inn, Kibbles ‘n Bits, 9Lives, Pup-Peroni, Snausages, Pounce, Meow Mix, Alley Cat and Milk-Bone, among others, are registered or unregistered trademarks of Del Monte Corporation (including its subsidiaries).

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PART I

Overview

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 food and pet products for the U.S. retail market, generating $3.0 billion in net sales in fiscal 2006. Our leading food brands include Del Monte, StarKist, Contadina, S&W, College Inn and other brand names, and our pet food and pet snacks brands include 9Lives, Kibbles ‘n Bits, Pup-Peroni, Snausages, Pounce and other brand names. As a result of our recent acquisitions discussed below, we have added the Meow Mix, Alley Cat and Milk-Bone brands to our pet products portfolio. We also produce private label food and pet products. Our products are sold nationwide, in all channels serving retail markets, as well as to the U.S. military, certain export markets, the foodservice industry and other food processors. At April 30, 2006, our principal facilities consist of 15 production facilities and 11 distribution centers in the United States, as well as operating facilities in American Samoa, Mexico and Venezuela. Through strategic acquisitions, we have expanded our product offerings; further penetrated grocery chains, club stores, supercenters and mass merchandisers; improved market share; and leveraged our manufacturing capabilities.

We believe our diversified, multi-category product line provides us with a competitive advantage in selling to the retail grocery industry. We sell our products in the U.S. retail dry grocery market and produce sections, primarily through grocery chains, club stores, supercenters and mass merchandisers. We believe we have strong long-term relationships with our customers that provide a solid base for our business.

History of Del Monte Foods Company

Our predecessor was originally incorporated in 1916 and remained a publicly traded company until its acquisition in 1979 by the predecessor of RJR Nabisco, Inc. (“RJR Nabisco”). In December 1989, RJR Nabisco sold Del Monte’s fresh produce operations to Polly Peck International PLC. In January 1990, an investor group led by Merrill Lynch & Co. purchased Del Monte and certain of its subsidiaries from RJR Nabisco. Following this sale, we divested several of our non-core businesses and all of our foreign operations. In April 1997, we were recapitalized with an equity infusion from Texas Pacific Group and other investors. In February 1999, we again became a publicly traded company and are currently listed on the New York Stock Exchange under the symbol “DLM.”

From 1997 to 2001, we completed several acquisitions including: in 1997, the acquisition of assets comprising Nestle USA, Inc.’s U.S. business of manufacturing and marketing certain processed tomato products and the rights to Contadina processed tomato products; in 1998, the rights to the Del Monte brand in South America from Nabisco, Inc. and Nabisco’s processed vegetable and tomato business in Venezuela; in 2000, the rights to the SunFresh brand citrus and tropical fruits line of the UniMark Group. Inc.; and in 2001, the inventory and rights to the brand name of the S&W business from Tri Valley Growers, an agricultural cooperative association, which included processed fruits, tomatoes, vegetables, beans and specialty sauces.

On December 20, 2002, we acquired certain businesses from H.J. Heinz Company (the “2002 Merger”), including their 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 “2002 Acquired Businesses”). The 2002 Acquired Businesses included brand names such as StarKist, College Inn, 9Lives, Kibbles ‘n Bits, Pup-Peroni, Snausages and Pounce.

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The 2002 Merger was accounted for as a reverse acquisition in which SKF Foods Inc. (“SKF”) was treated as the acquirer and Del Monte Corporation (“DMC”) the acquiree, primarily because H. J. Heinz Company (“Heinz”) shareholders owned a majority, approximately 74.5 percent, of Del Monte Foods Company’s common stock upon completion of the 2002 Merger. As a result, the historical financial statements of SKF, which reflect the operations of the 2002 Acquired Businesses while under the management of Heinz, became the historical financial statements of Del Monte as of the completion of the 2002 Merger. For the fiscal 2003 reporting period, our financial statements reflect the combined operations of SKF and the existing Del Monte business for periods after December 20, 2002, and reflect solely the operations of SKF for periods prior to December 20, 2002.

In fiscal 2004, we sold the IVD, Medi-Cal and Techni-Cal brands we acquired from Heinz. In the second quarter of fiscal 2005, we acquired a fruit packing business, located in Mexico, and related assets.

On April 24, 2006, pursuant to an Asset Purchase Agreement dated March 1, 2006, between DMC and TreeHouse Foods, Inc. (TreeHouse), we sold to TreeHouse certain real estate, equipment, machinery, inventory, raw materials, intellectual property and other assets that were primarily related to our (1) private label soup business, (2) infant feeding business conducted under the brand name Nature’s Goodness, and (3) the food service soup business (collectively, the “Soup and Infant Feeding Businesses”). Under the terms of the Asset Purchase Agreement, TreeHouse assumed certain liabilities to the extent related to the Soup and Infant Feeding Businesses. The divestiture of the Soup and Infant Feeding Businesses included the sale of our manufacturing facility and distribution center in Pittsburgh, PA and certain manufacturing assets associated with the private label soup business located at the Mendota, IL facility. Upon closing of the divestiture, approximately 790 of our plant employees and approximately 120 additional Del Monte employees joined TreeHouse.

On March 1, 2006, we entered into an agreement to acquire privately held Meow Mix Holdings, Inc. (“Meow Mix”). Meow Mix is the maker of Meow Mix brand cat food and Alley Cat brand cat food. We completed the acquisition of Meow Mix on May 19, 2006. The financial results of Meow Mix are expected to be reported within our Pet Products reportable segment.

On March 15, 2006, we entered into an agreement to acquire certain pet product assets, including the Milk-Bone brand (“Milk-Bone”), from Kraft Foods Global, Inc. We completed the acquisition of Milk-Bone effective July 2, 2006. The financial results of Milk-Bone are expected to be reported within our Pet Products reportable segment.

In 1989, Del Monte Foods Company (“DMFC”), then known as DMPF Holdings Corp., was incorporated under the laws of the State of Maryland and was renamed DMFC in December 1991. DMFC reincorporated under the laws of the State of Delaware in 1998. DMC, the new wholly-owned subsidiary of DMFC, was incorporated in Delaware in June 2002 under the name SKF Foods, Inc. Each of DMFC and DMC maintains its principal executive office at One Market @ The Landmark, San Francisco, CA 94105. Del Monte’s telephone number is (415) 247-3000 and its website is www.delmonte.com.

Our periodic and current reports, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on this website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission.

Our Corporate Governance Guidelines; the Charters of each of the Audit, Compensation, and Nominating and Corporate Governance Committees of the Board of Directors of DMFC; and our

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Standards of Business Conduct for our directors, officers and employees are also available on our website at www.delmonte.com. Printed copies of these materials are also available upon written request to the Corporate Secretary, Del Monte Foods Company, P.O. Box 193575, San Francisco, CA 94119-3575. Our Standards of Business Conduct encompass our “code of ethics” applicable to our Chief Executive Officer, principal financial officer, and principal accounting officer and controller. We intend to make any required disclosures regarding any amendments of our Standards of Business Conduct or waivers granted to any of our directors or executive officers under our Standards of Business Conduct on our website.

The certification of the Chief Executive Officer required by the NYSE Listing Standards, Section 303A.12(a), relating to Del Monte Foods Company’s compliance with the NYSE Corporate Governance Listing Standards, was submitted to the NYSE on October 28, 2005. The certification indicated that the Chief Executive Officer was not aware of any violations of the Listing Standards by Del Monte Foods Company.

The Industry

Overall. The United States processed food industry is generally characterized by relatively stable growth, based on modest price and population increases. We believe that the long-term fundamentals for the overall packaged food industry are favorable since these products are generally considered to be staple items for consumers to purchase. While consumption growth is predicted to be modest in the United States, we believe that certain product categories that address changing consumer needs, such as tuna pouch, premium fruit, dry pet foods and pet snacks offer opportunities for faster growth.

We face substantial competition throughout our product lines from numerous well-established businesses operating globally, nationally or regionally with single or multiple branded product lines. We also face competition from private label manufacturers that compete for consumer preference, distribution, shelf space and merchandising support. In addition, we also compete directly against other private label manufacturers with certain private label products. We generally compete based upon brand strength and loyalty, product and packaging quality and innovation, taste, nutrition, breadth of our product line, price, and convenience. A number of our competitors have broader product lines and substantially greater financial and other resources available to them.

Food producers have been impacted by two key trends affecting their retail customers: consolidation and increased competitive pressures. Retailers are rationalizing costs in an effort to improve profitability, including efforts to reduce inventory levels, increase supply-chain efficiency and decrease working capital requirements. In addition, more traditional grocers have experienced increasing competition from club stores, supercenters and mass merchandisers, which generally offer every-day low prices. Retailer customers generally offer a private label store brand in addition to offering the number one and number two national or regional brands in different product categories. Sustaining strong relationships with retailers has become a critical success factor for food companies.

The market share data presented below excludes sales to certain mass merchandisers. Overall, recent sales in the retail grocery channel have been declining, partially due to a shift in sales away from traditional grocery channels towards club stores, supercenters, mass merchandisers, dollar stores and pet specialty stores. Therefore, the market share percentages presented below may not be representative of the entire market in which we compete. References to trends for the markets in which we compete are based on internal estimates calculated from data obtained through ACNielsen and Household Panel data and are intended to reflect estimates for all retail channels (which include grocery, Wal-Mart, club stores, dollar stores and pet specialty stores).

Consumer Products. The fruit market we compete in grew by over 6% in fiscal 2006 as compared to fiscal 2005 driven by pricing and increased consumption as a result of the health and wellness trend.

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The vegetable market in which we compete increased by over 4%, driven by pricing. The tomato market in which we compete grew approximately 2%. Branded food manufacturers typically establish pricing and lead innovation in the processed food categories in which our products compete. Private label products as a group represented 48.2%, 39.6%, and 31.3% of processed vegetable, major fruit and solid tomato sales, respectively, in fiscal 2006.

Our tuna products compete in a market that includes branded and private label products. In the canned tuna market, private label sales accounted for only 16.4% of the total canned tuna market in fiscal 2006, while the top three branded competitors, led by our StarKist brand, accounted for over 79% of the canned tuna market. While the canned tuna market has experienced an increase of over 4% from fiscal 2005 to fiscal 2006, the tuna pouch market has grown by over 13% from fiscal 2005 to fiscal 2006.

Pet Products. Our Pet Products categories participated in a multi-billion dollar market which experienced an increase of approximately 6% from fiscal 2005 to fiscal 2006. The markets in which we compete are dry and wet dog food, dry and wet cat food, and pet snacks. We believe that growth in these categories has been fueled by steadily increasing pet ownership and higher spending as consumers treat pets as members of the family. Over half of all American households own pets. In fiscal 2006, private label products accounted for 14.8% of the total market share in the Pet Products categories in which we compete, with the rest of the market divided primarily among a small number of large, multi-national manufacturers.

Reportable Segments

We have the following reportable segments:

The following table sets forth our total net sales by segment, expressed in dollar amounts and as percentages of our total net sales, for the fiscal years indicated:

During the fourth quarter of fiscal 2006, we completed the divestiture of our Private Label Soup operating segment and our infant feeding business conducted under the brand name Nature’s

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Goodness. These businesses were formerly included in our Consumer Products reportable segment. During fiscal 2006, we began accounting for sales related to our Private Label Soup operating segment and infant feeding business as discontinued operations. Accordingly, the results of operations relating to these discontinued operations, for all periods presented, were separated from continuing operations and presented as those of discontinued operations and were excluded from the table above for all periods presented.

Company Products

Consumer Products. In our Del Monte Brands operating segment, we sell products under the Del Monte, S&W, SunFresh, Fruit Naturals, Orchard Select, Contadina, and College Inn brand names, as well as private label products to key customers. We are one of the largest marketers of processed vegetables, major fruit and solid tomatoes in the United States, with market shares of 22.1%, 40.1% and 18.8% in fiscal 2006, respectively. Our vegetable, fruit and tomato products are in mature categories, characterized by high household penetration. Due to our strong brand awareness and our value-added products, we are able to price our vegetable, fruit and solid tomato products at a premium compared to private label products. College Inn broth products accounted for 16.7% of the total broth market in fiscal 2006 and was the second largest branded broth product in the U.S. It had 45.6% market share in its core markets in the northeastern United States, which made up 79.5% of its total case volume. Our vegetable, fruit, tomato and broth products compete primarily on the basis of brand, taste, variety and price.

Our Del Monte Brands operating segment includes products such as: vegetables, including cut green beans, French-style green beans, whole kernel and cream-style corn, peas, mixed vegetables, spinach, carrots, potatoes, asparagus, zucchini, lima beans and wax beans; fruit, including cling peaches, pears, fruit cocktail/mixed fruits, apricots, freestone and sliced peaches, mandarin oranges, cherries, grapefruit, pineapples and tropical mixed fruit; tomato products, including stewed, crushed, diced, chunky, wedges, and puree products, as well as ketchup, tomato sauce, tomato paste, spaghetti and pizza sauces; and College Inn broth products. We are continuing our new product innovations with the recent launches of new flavors of Fruit Naturals Single Serve Fruit and Del Monte Organic Tomatoes in fiscal 2006. Competitors in Del Monte Brands products include branded and private label vegetable, fruit, tomato and broth processors. Our primary competitors in the vegetable market are General Mills’ Green Giant and Seneca Foods private label; in the fruit market, competitors include Signature Fruit Company’s private label, Pacific Coast Producers’ private label and Dole; in the tomato market, competitors include Con Agra’s Hunts, Heinz’s Classico and Heinz brands, Campbell Soup’s Prego, Unilever’s Ragu and private label; and in the broth market, competitors include Campbell Soup’s Swanson brand, smaller regional brands and private label.

In our StarKist Seafood operating segment, our StarKist branded tuna products include canned and pouched tuna, including solid white albacore tuna, chunk white albacore tuna, chunk light tuna, and low-sodium and low-fat tuna. While over a third of our case sales are of chunk light tuna in cans, we are continuing to expand our focus on new innovative products in order to shift the product mix away from commodity-like products and towards value-added products. Product launches such as Tuna Fillets in a pouch, reflect this objective. Our tuna products compete based on their price, brand recognition, taste and convenience. Competitors include a small number of large branded and private label producers. The StarKist brand primarily competes with Connors Brothers Income Fund’s Bumble Bee and Thai Union Frozen Products PCL’s Chicken of the Sea brands in the branded tuna market. In fiscal 2006, these top three brands, combined, accounted for over 79% of the tuna market. In fiscal 2006, our StarKist branded canned tuna products had a market share of 34.6%. Our pouch products had a market share of 77.4% of the pouch market.

Pet Products. Our pet products represent some of the leading pet food and pet snacks brands in the United States, with a strong presence in most major product categories. Our pet products portfolio

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includes well-recognized national brands such as 9Lives, Kibbles ‘n Bits, Pup-Peroni and Pounce. We compete in the dry and wet dog food categories, with market shares of 8.8% and 7.3% in fiscal 2006, respectively; the dry and wet cat food categories, with market shares of 4.5% and 19.6% respectively; and the chewy dog snack, biscuit crunchy dog snack, and cat treats pet snacks categories, with market shares of 38.8%, 11.8%, and 20.0%, respectively, in fiscal 2006.

The products in the pet foods categories are primarily marketed under nationally recognized brands. 9Lives cat food is associated by consumers with the widely recognizable icon Morris the cat. Kibbles ‘n Bits dog food is comprised of crunchy, moist and meaty pieces and has historically been supported by national advertising campaigns. As a result of our acquisitions in early fiscal 2007, we have added the Meow Mix and Alley Cat brands to our pet products portfolio.

Our pet snacks portfolio includes strong brands in one of the fastest growing categories of the pet food industry. We have a diverse and expanding pet snack product portfolio, including brands such as Pounce and Pup-Peroni. Pounce cat snacks include both crunchy and soft snacks. Pup-Peroni dog snacks include the traditional soft and chewy snack. Our pet snacks businesses also include the well-established brands Snausages, Jerky Treats, Canine Carry-Outs and Meaty Bone. As a result of our acquisitions in early fiscal 2007, we have added the Milk-Bone brand to our pet snacks products portfolio.

We are focused on expanding our sales in the pet snacks category through continued product and packaging innovation and the targeting of new consumer markets, as illustrated by the fiscal 2006 introduction of the Meaty Bone Denta Delicious, Snausages Roverolis and Pizza Flavored Canine Carryouts products.

We compete in the pet food and pet snacks categories primarily based on taste, brand recognition, nutrition, variety and value. We face competition from branded and private label pet food and pet snack products manufactured by companies such as Nestle-Purina, Mars, Colgate, Procter & Gamble and Menu.

Sales and Marketing

We use both a direct sales force and independent food brokers to sell our products to our customers in different channels. A direct sales force is used for most of our sales to grocery, club store, supercenter and mass merchandiser customers. We use a combination of a direct sales force and some food brokers for other channels such as pet specialty, dollar stores, drug stores, convenience stores, military, foodservice, food ingredients and private label. These brokers are paid commissions based on a percentage of sales. Our StarKist and College Inn foodservice sales in the United States and our sales of pet products in Canada are performed by Heinz through an agency agreement. Within the grocery channel and certain other channels, we manage retail in-store conditions through our primary broker and pay a flat fee for this retail coverage.

We believe that a focused and consistent marketing strategy is critical to the successful merchandising and growth of our brands. Our marketing function oversees new product development, pricing strategy, advertising, publicity, consumer promotion and package design. Collectively, our marketing programs are designed to strengthen our brand equities, generate awareness of new items and stimulate trial among our target customers. We also partner with our customers to develop trade promotion programs which deliver merchandising and price promotions to our consumers.

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Foreign Sales and Operations

Revenues from Foreign Countries

The following table sets forth domestic and foreign and export sales:

During fiscal 2006, we began accounting for sales related to our Soup and Infant Feeding Businesses as discontinued operations. Accordingly, the results of operations relating to these discontinued operations, for all periods presented, were separated from continuing operations and presented as those of discontinued operations and were excluded from the table above for all periods presented.

Our foreign and export sales are consummated either through local operations or through brokers, distributors, U.S. exporters, direct sales force or licensees for foreign destinations.

Foreign Operations

In South America, we have subsidiaries in Venezuela, Colombia, Ecuador and Peru. We operate a food processing plant in Venezuela. We purchase raw product, primarily vegetables and tomatoes, from approximately 30 growers in Venezuela and tomato paste, frozen vegetables and fruit pulps from five suppliers in Chile. We also have a tuna production facility in American Samoa and a fruit packing business in Mexico. We co-manage two tuna processing facilities in Guayaquil and Manta, Ecuador and own one cold storage facility in Manta, Ecuador. We also have a tuna loin supply contract from a facility in Wewak, Papua New Guinea. This facility supplies tuna loins that are delivered and processed into canned products in American Samoa. In addition, we utilize a number of co-packers in various foreign countries.

Geographic Location of Fixed Assets

Our fixed assets are primarily located in the continental United States, with $81.2 million, or 12.7% of our total net fixed assets located in other locations, including foreign countries and American Samoa, at the end of fiscal 2006.

Customers

Most food retailers in the U.S. carry our products, and we have developed strong, long-term relationships with the majority of significant participants in the retail grocery trade. In recent years, there has been significant consolidation in the grocery industry.

On a consolidated basis, sales to one customer, Wal-Mart, represented approximately 30% of our list sales, which approximates our gross sales, for fiscal 2006. Wal-Mart, which includes Wal-Mart’s

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stores and supercenters along with SAM’S CLUB, is also the most significant customer of each of our reportable segments, with sales to Wal-Mart representing in excess of 10% of list sales in each of our segments.

Supply

The cost of raw materials may fluctuate due to demand, weather conditions, governmental regulations, crop yields, fish supply, economic climate, seasonal factors, exchange rates or other circumstances. Raw materials reflect only a portion of our cost of goods sold. See “Item 1A. Risk Factors.”

Consumer Products

We manufacture our products from a wide variety of raw materials. For the Del Monte Brands operating segment, each year, we buy over one million tons of fresh vegetables, fruit and tomatoes from individual growers, farmers, and cooperatives located primarily in the United States. Our vegetable supply contracts are generally for a one-year term and require delivery from contracted acreage with specified quality. Prices are negotiated annually. We purchase raw product from approximately 700 vegetable growers located primarily in Wisconsin, Illinois, Minnesota, Washington and Texas. Our fruit supply contracts range from one to ten years. Prices are generally negotiated with grower associations and normally cover a period of one to three years. We purchase raw material from approximately 300 fruit growers located in California, Oregon and Washington. Yellow cling peaches are contracted by the acre, while contracts for other fruits require delivery of specified quantities each year. Through our fruit packaging business in Mexico, we buy citrus fruits from about 250 growers throughout Mexico, grapefruit from one supplier in Texas and mangoes from approximately 40 growers in Mexico. We purchase raw tomatoes from approximately 20 tomato growers located in California, where approximately 95% of domestic tomatoes for processing are grown. Prices are generally negotiated with grower associations and are reset each year. We actively participate in agricultural management, agricultural practices, quality control and compliance with pesticide/herbicide regulations. Other ingredients, including proteins, sugar, spices, grains, flour, and certain other fruits and vegetables are generally purchased through annual supply agreements or on the open market.

We maintain long-term relationships with growers to help ensure a consistent supply of raw fruit, vegetables and tomatoes. We own virtually no agricultural land. We also maintain a long-term supply agreement to procure a portion of our fish needs. We also have a supply agreement to source the majority of our pineapple requirements from Del Monte Philippines, Inc., an unaffiliated company. This agreement has an indefinite term subject to termination on three years notice.

For the StarKist Seafood operating segment, our tuna supply is obtained through spot and term contracts directly with tuna vessel owners and cooperatives in both the western tropical Pacific and eastern tropical Pacific and by global brokered transactions. For albacore, we also purchase directly from vessel owners in the Atlantic and Indian Oceans. In April 2001, Heinz entered into a supply agreement to purchase certain quantities of raw tuna from Tri-Marine International, Inc. Total minimum annual purchases to be made under this 10-year agreement are estimated to be approximately $41 million in fiscal 2007. We assumed this supply agreement in connection with the 2002 Merger.

Pet Products

We generally purchase meat, meat by-products, other proteins, and other ingredients through supply agreements or on the open market. Our other ingredient purchases include corn, soybean meal, wheat

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and related by-products. For these commodities, we maintain a hedging program designed to limit our financial exposure to price fluctuations. Historically, average coverage of these hedges has ranged from 3 to 12 months of projected production requirements.

Cans and Ends

We have long-term supply agreements with two primary suppliers covering the purchase of metal cans and ends. Our agreement with Impress Holdings, B.V. (“Impress”) grants Impress the exclusive right, subject to certain specified exceptions, to supply metal cans and ends for our pet and tuna products. The agreement includes certain minimum volume purchase requirements and guarantees a certain minimum financial return to Impress. Total purchases made under this agreement, which expires on August 13, 2010, were $152.4 million in fiscal 2006. The minimum purchase commitment under this agreement for fiscal 2007 is approximately $63 million. Our agreement with Silgan Containers Corporation (“Silgan”) is a supply agreement for metal cans and ends used for our fruit, vegetable and tomato products. Under the agreement and subject to certain specified exceptions, we must purchase all of our United States metal food and beverage container requirements for our fruit, vegetable and tomato business products from Silgan. Total purchases made under this agreement, which expires on December 31, 2011, were $220.6 million in fiscal 2006. Pricing under the Impress agreement and the Silgan agreement is adjusted to reflect changes in metal costs and annually to reflect changes in the costs of manufacturing. The Impress supply agreement was amended in fiscal 2004 to simplify the annual cost adjustment process. The Silgan supply agreement was amended in fiscal 2004 to extend the term of the contract to December 31, 2011, to implement certain cost adjustments with respect to containers provided to Del Monte in fiscal 2004 and thereafter, and to provide Silgan with a right to match competitive offers upon the expiration of the agreement.

Production and Distribution

Production

Consumer Products. We operate 16 production facilities for our Consumer Products reportable segment in the United States, American Samoa, Mexico and Venezuela. See “Item 2. Properties” for a listing of our principal production facilities. Our Del Monte Brands operating segment has a seasonal production cycle and produces the majority of our products between the months of June and October. Most of our seasonal plants operate at or close to full capacity during the packing season. This seasonal production primarily relates to the majority of our fruit, vegetable and tomato products, while our remanufactured fruit and tomato products, our College Inn broth products are generally produced throughout the year. Our StarKist Seafood operating segment’s tuna production cycles occur throughout the year.

Our Del Monte Brands operating segment’s fruit, vegetable and tomato products use 37 co-packers and 9 re-packers, located in the U.S. and foreign locations, in addition to our own production facilities. Co-packers are used for pineapple, tropical fruit salad, mandarin oranges, asparagus and certain other products. We also periodically use co-packers to supplement supplies of certain processed vegetables, fruit and tomato products.

We produce canned and a limited amount of pouched tuna in American Samoa. We also use co-packers and re-packers to supplement production capacity of our StarKist canned and tuna pouch products. We use third-party co-packers in Thailand and Ecuador for canned and most of our pouched tuna products.

Pet Products. At the end of fiscal 2006, our pet products were primarily manufactured in four of our production facilities, located in the U.S. and American Samoa. We also use a limited number of third

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party co-packers and re-packers located within the U.S. and Thailand to supplement production capacity. Our facility in Bloomsburg, PA, packs the majority of our canned pet product requirements. Our facility in American Samoa packs the majority of our tuna-based canned cat products requirements. In Lawrence, KS, we pack all of our dry Kibbles ‘n Bits products in a variety of sizes and package types. Our Topeka, KS facility produces a wide variety of dry dog and cat products. In addition, our Topeka factory produces the majority of our pet snacks in a wide range of packages. Our pet food factories supply pet products for both the U.S. and Canadian markets. As a result of the recent acquisitions discussed above, we have a facility in Decatur, AL that produces Meow Mix and Alley Cat dry cat food and a facility in Buffalo, NY that produces Milk-Bone dog snacks. Sole-source co-packers are used to produce Meow Mix wet cat food products in pouches and cups, as well as cat treats. Co-packers are also used to produce a portion of Meow Mix dry cat food products.

Distribution

Customers can order products to be delivered via third-party trucking, on a customer pickup basis or by rail. Our distribution centers provide casing, labeling and special packaging and other services. From time to time we evaluate our distribution center network and, accordingly, may make changes to our network. See “Item 2. Properties” for a listing of our principal distribution centers by reportable segment. See “Item 1A. Risk Factors—Transformation endeavors may have a material adverse effect on our business, financial condition and financial results.”

Research and Development

Our research and development organization provides product, packaging and process development. It also provides analytical, as well as agricultural research and seed production. In fiscal 2006, 2005 and 2004, research and development expenditures were $19.8 million, $18.3 million and $17.6 million, respectively. We maintain a research and development facility in Walnut Creek, CA, where we develop product line extensions and conduct research in a number of areas related to our fruit, vegetable and tomato products, including seed production, packaging, pest management, food science, environmental, engineering and plant breeding. We operate a research and development facility in Pittsburgh, PA where we develop products and packaging related to our tuna products. We also operate a research and development facility in Terminal Island, CA where we develop product lines and research existing products related to our pet food and pet snack businesses. These facilities employ scientists, engineers and researchers and are equipped with pilot shops and test kitchens. We regularly test our products with consumers and pets as part of our effort to provide tasty and satisfying, high quality products.

Intellectual Property

We own a number of registered and unregistered trademarks for use in connection with various food products, including:

Brand name recognition and the product quality associated with our brands are key factors in the success of our products. The current registrations of these trademarks in the United States and foreign countries are effective for varying periods of time, and may be renewed periodically, provided that

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we, as the registered owner, or our licensees where applicable, comply with all applicable renewal requirements including, where necessary, the continued use of the trademarks in connection with similar goods. We are not aware of any material challenge to our ownership of our major trademarks.

Our registered and unregistered trademarks associated with the tuna business relate primarily to North America. With respect to our broth business, our trademarks relate primarily to the United States, Canada and Australia. Our trademarks associated with the pet products business relate primarily to North America but also include portions of Europe and Africa. We generally did not acquire trademark rights for the 2002 Acquired Businesses outside of the territories identified above. As a result, we may be restricted from selling products under the brands relating to the 2002 Acquired Businesses in other territories to the extent these trademark rights are owned by another party.

As of April 30, 2006, we owned 22 issued U.S. patents covering food production and preservation methods, methods for manufacturing cans and ends, methods for sealing cans, animal foods and food processing equipment. These patents expire between 2006 and 2021 and cannot be renewed. In connection with our acquisitions of Meow Mix and Milk-Bone, we acquired nine additional patents covering pet food and pet snacks, which expire between 2008 and 2023 and cannot be renewed. Our patents are generally not material to our business as a whole.

We have developed a number of proprietary vegetable seed varieties, which we protect by restricting access and/or by the use of non-disclosure agreements. We cannot guarantee that these methods will be sufficient to protect the secrecy of our seed varieties. In addition, other companies may independently develop similar seed varieties. We have obtained U.S. plant variety protection certificates under the Plant Variety Protection Act on some of our proprietary seed varieties. Under a protection certificate, the breeder has the right, among other rights, to exclude others from offering or selling the variety or reproducing it in the United States. The protection afforded by a protection certificate generally runs for 20 years from the date of its filing and is not renewable.

We have granted various perpetual, exclusive, royalty-free licenses for use of the Del Monte name and trademark, along with certain other trademarks, patents, copyrights and trade secrets to other companies or their affiliates. Licenses for the use of the Del Monte name and trademark are generally for use outside of the United States. For example, Kikkoman Corporation holds the rights to use Del Monte trademarks in Asia and the South Pacific (excluding the Philippines and the Indian Subcontinent); Del Monte Foods International, Inc. and its affiliates hold the rights in Europe, Africa and the Middle East (including ownership rights for processed food products in South Africa); and Fresh Del Monte Produce Inc. holds the rights to use the Del Monte name and trademark with respect to fresh fruit, vegetables and produce throughout the world. We have granted other licenses for the use of our trademarks both within and outside of the United States.

We retain the right to review the quality of the licensees’ products under each of our license agreements. We generally may inspect the licensees’ facilities for quality and the licensees must periodically submit samples to us for inspection. Licensees may grant sublicenses but all sublicensees are bound by these quality control standards and other terms of the license.

In addition to granting certain licenses, we have sold trademarks from time to time. On November 18, 2003, we finalized the sale of the Techni-Cal trademarks in certain foreign jurisdictions outside of the United States and Canada. On April 16, 2004, we sold our rights in the IVD and Medi-Cal trademarks, as well as our rights in the Techni-Cal trademarks in the United States and Canada.

We license, for use on pet snacks, the Scooby trademark from Warner Bros. Consumer Products, a division of Time Warner Entertainment Company, L.P.

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We have also granted various security and tangible interests in our trademarks and related trade names, copyrights, patents, trade secrets and other intellectual property to our creditors, in connection with our Amended Senior Credit Facility, and to our licensees, to secure certain obligations of Del Monte under the license agreements.

Governmental Regulation; Environmental Compliance

As a manufacturer and marketer of food products, our operations are subject to extensive regulation by various federal government agencies, including the Food and Drug Administration, the United States Department of Agriculture, U.S. Customs and Border Protection, Environmental Protection Agency and the Federal Trade Commission (“FTC”), as well as state and local agencies, with respect to registrations, production processes, product attributes, packaging, labeling, storage and distribution. Under various statutes and regulations, these agencies prescribe requirements and establish standards for safety, purity, performance and labeling. Our products must comply with all applicable laws and regulations, including food and drug laws, of the jurisdictions in which they are manufactured and marketed, such as the Federal Food, Drug and Cosmetic Act of 1938, as amended, and the Federal Fair Packaging and Labeling Act of 1966, as amended. In addition, advertising of our products is subject to regulation by the FTC, and our operations are subject to certain health and safety regulations, including those issued under the Occupational Safety and Health Act. Our manufacturing facilities and products are subject to periodic inspection by federal, state and local authorities. We seek to comply with all such laws and regulations and to obtain any necessary permits and licenses. We believe our facilities and practices are sufficient to maintain material compliance with current applicable governmental laws, regulations, permits and licenses. Nevertheless, we cannot guarantee that we are currently in compliance with all applicable laws, regulations, or requirements for permits or licenses nor that we will be able to comply with any future laws and regulations or requirements for necessary permits and licenses. Our failure to comply with applicable laws and regulations or obtain any necessary permits and licenses could subject us to civil remedies including fines, injunctions, recalls or seizures, as well as potential criminal sanctions. See “Item 1A. Risk Factors—Government regulation could increase our costs of production and increase legal and regulatory expenses” and “Item 3. Legal Proceedings.”

We were a defendant in an action brought by the California Attorney General in the Superior Court in San Francisco, CA, 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. See “Item 3. Legal Proceedings” and “Note 14. Commitments and Contingencies” of our consolidated financial statements for fiscal 2006 in this annual report on Form 10-K for a detailed discussion of this matter.

We are a defendant in an action filed in the Superior Court in Middlesex, NJ, on May 15, 2006. See “Item 3. Legal Proceedings” for a detailed discussion of this matter.

As a result of our agricultural, food processing and canning activities, we are subject to numerous environmental laws and regulations. These laws and regulations govern the treatment, handling, storage and disposal of materials and waste and the remediation of contaminated properties. Violations or non-compliance with these laws and regulations could result in the imposition of fines or civil liability against us by governmental entities or private parties. We seek to comply with these laws and regulations. Outside the United States, we are also subject to applicable multi-national, national and local environmental laws and regulations in the host countries where we do business. We have programs across our international business operations designed to meet compliance with requirements in the environmental area. However, we cannot predict the extent to which the

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enforcement of any existing or future environmental law or regulation may affect our operations. Among the environmental matters currently affecting us are the following:

Our environmental expenditures in recent years have related to wastewater treatment systems, settlement of environmental litigation and remediation activities. We project that we will spend approximately $12 million in fiscal 2007 on capital projects and other expenditures in connection with environmental compliance for our existing businesses, primarily for compliance with wastewater treatment and remediation activities. This includes capital expenditures to purchase land previously leased for wastewater treatment. We believe that our environmental matters for fiscal 2007 will not have a material adverse effect on our financial position or results of operations; however a number of factors may affect our environmental compliance costs or accruals. See “Item 1A. Risk Factors—We are subject to environmental regulation and environmental risks, which may adversely affect our business.”

The Marine Mammal Protection Act of 1972 and the regulations under this act, regulate the incidental taking of dolphins in the course of fishing for Yellowfin tuna in the eastern tropical Pacific Ocean. This is where a portion of our light-meat tuna, including Yellowfin, is currently caught. In 1990, the StarKist Seafood business voluntarily adopted a worldwide policy not to purchase tuna caught in the eastern tropical Pacific Ocean through the intentional encirclement of dolphin by purse seine nets and reaffirmed its policy not to purchase tuna caught anywhere using gill nets or drift nets.

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Also in 1990, the Dolphin Protection Consumer Information Act was enacted regulating the labeling of tuna products as “dolphin safe” and bans the importation of tuna caught using high seas drift nets. The Marine Mammal Protection Act was amended in 1992 to further regulate tuna fishing methods that involve marine mammals. Compliance with these laws and regulations and StarKist Seafood’s voluntary policy has not had, and is not expected to have, a material adverse effect on our operations or financial condition. In 1997, Congress passed the International Dolphin Conservation Program Act, which modified the regulation of the incidental taking of dolphins in the course of fishing for Yellowfin tuna in the eastern tropical Pacific Ocean and revised the definition of “dolphin safe.” Despite the passage of the less-restrictive International Dolphin Conservation Program Act, we remain committed to the more dolphin-friendly standards of the Marine Mammal Protection Act. Revision of the definition of “dolphin safe” and modification of the regulation of the incidental taking of dolphins in the course of fishing for Yellowfin tuna in the eastern tropical Pacific Ocean have not had, and management does not expect them to have, a material adverse effect on our operations or financial condition.

Seasonality; Working Capital

Our historical net sales have exhibited seasonality, with the first fiscal quarter typically having the lowest net sales. Lower levels of promotional activity, the availability of fresh produce, the timing of price increases and other factors have historically affected net sales in the first quarter. We have experienced increased sales of our fruit, vegetable, tomato and broth products during the holiday and back-to-school periods in the United States, extending from September through December, as well as sales associated with the Easter holiday. We have also experienced increases in pet snacks sales during the year-end holiday period. Sales of our tuna products are usually higher during the period after New Year’s Day through the Easter holiday. We typically schedule promotional events to coincide with these periods of increased product consumption.

We use cash from operations in addition to our revolving line of credit to fund our working capital needs. Our quarterly operating results have varied in the past and are likely to vary in the future based upon a number of factors. Our working capital requirements are seasonally affected by the growing cycle of some of the products we process. Our inventory position for these products is also seasonally affected by this growing cycle. The vast majority of Del Monte Brands’ inventories are produced during the harvesting and packing months of June through October and depleted through the remaining seven months. Accordingly, the majority of our cash flow is generated in our third and fourth quarter as we sell inventory that was produced primarily in the first and second quarters. This seasonality factor also has an effect, but to a lesser extent, upon our results of operations. Tuna and pet products are produced throughout the year.

Employees

As of April 30, 2006, we employed approximately 7,500 full-time employees in the U.S. and abroad. In addition, temporary seasonal workers are hired during the Del Monte Brands pack season, typically June through October, adding approximately 9,200 seasonal employees to our workforce during those months. We consider our relationship with our employees to be good. In connection with our recent acquisitions after our April 30, 2006 fiscal year end, our full-time employee count increased by approximately 450 employees.

As of April 30, 2006, we had 15 collective bargaining agreements with 13 union locals covering approximately 63% of our hourly full-time and seasonal employees. Of these employees, approximately 83% are covered under collective bargaining agreements scheduled to expire in fiscal 2007, and approximately 17% are covered under collective bargaining agreements scheduled to expire in fiscal 2008. These agreements are subject to negotiation and renewal. Failure to renew any of these collective bargaining agreements could result in a strike or work stoppage that could

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materially adversely affect our operations. In connection with our recent acquisition of Milk-Bone, we assumed three collective bargaining agreements with three union locals covering approximately 190 employees.

Executive Officers of the Registrant

The following table sets forth the name, age and positions, as of July 1, 2006, of individuals who are current executive officers of DMFC. To our knowledge, there are no family relationships between any director or executive officer and any other director or executive officer of DMFC. These individuals hold the same positions with DMC. Executive officers serve at the discretion of DMFC’s Board of Directors. Additionally, executive officers may be elected to DMFC’s Board. Mr. Wolford currently serves as the Chairman of the DMFC Board of Directors.

Richard G. Wolford, Chairman of the Board, President and Chief Executive Officer; Director. Mr. Wolford joined Del Monte as Chief Executive Officer and a Director in April 1997. He was elected President of Del Monte in February 1998 and was elected Chairman of the Board of Directors of Del Monte Foods Company in May 2000. From 1967 to 1987, he held a variety of positions at Dole Foods, including President of Dole Packaged Foods from 1982 to 1987. From 1988 to 1996, he was Chief Executive Officer of HK Acquisition Corp. where he developed food industry investments with venture capital investors.

David L. Meyers, Executive Vice President, Administration and Chief Financial Officer. Mr. Meyers joined Del Monte in 1989. He was elected Chief Financial Officer of Del Monte in December 1992 and served as a member of the Board of Directors of Del Monte Foods Company from January 1994 until consummation of Del Monte’s recapitalization in 1997. Prior to joining Del Monte, Mr. Meyers held a variety of financial and accounting positions with RJR Nabisco (1987 to 1989), Nabisco Brands USA (1983 to 1987) and Standard Brands, Inc. (1973 to 1983). Mr. Meyers also serves on the Board of Directors of Smart & Final Inc.

Timothy A. Cole, Executive Vice President, Sales. Mr. Cole joined Del Monte in September 2004. From 1979 to September 2004, Mr. Cole held a variety of positions with The Quaker Oats Company, now a unit of PepsiCo., Inc., where he became Vice President of National Accounts for the United States.

Nils Lommerin, Executive Vice President, Operations. Mr. Lommerin was appointed Executive Vice President, Operations in July 2004. He joined Del Monte in March 2003 as Executive Vice President, Human Resources. From March 1999 to July 2002, he was with Oxford Health Plans, Inc., where he most recently served as Executive Vice President, Operations and Corporate Services. From November 1991 to February 1999, Mr. Lommerin held a variety of senior Human Resources positions with PepsiCo, Inc.

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David W. Allen, Senior Vice President, Supply Chain Operations: Mr. Allen was appointed Senior Vice President, Operations and Supply Chain in June 2006, having served as a consultant to Del Monte beginning in November 2005. Prior to that, Mr. Allen was Chief Operating Officer of U.S. Foodservice, a division of Royal Ahold, from 2004 to 2005 and Chief Executive Officer of WorldChain, Inc., a supply chain services company, from 2001 to 2004. He served as Vice President, Worldwide Operations of Dell Inc. from 1999 to 2000. From 1991 to 1999, Mr. Allen held a variety of positions at Frito-Lay North America, a division of Pepsico Inc., most recently as its Senior Vice President, Operations.

Richard L. French, Senior Vice President, Chief Accounting Officer and Controller. Mr. French joined Del Monte in 1980 and was elected to his current position in May 1998. Mr. French was Vice President and Chief Accounting Officer of Del Monte from August 1993 through May 1998 and has held a variety of positions within Del Monte’s financial organization.

Thomas E. Gibbons, Senior Vice President and Treasurer. Mr. Gibbons joined Del Monte in 1969 and was elected to his current position in February 1995. He was elected Vice President and Treasurer of Del Monte in January 1990. Mr. Gibbons’ prior experience also includes a variety of positions within Del Monte’s and RJR Nabisco’s tax and financial organizations.

Apurva S. Mody, Senior Vice President, Consumer Products. Mr. Mody was appointed Senior Vice President, Consumer Products in July 2006, having served as Managing Director, Del Monte Brands since December 2004. Mr. Mody joined Del Monte in January 2002 in the Strategic Planning Group and served as Vice President of Marketing for the Vegetable, Infant Feeding and College Inn businesses from June 2002 to December 2002. Prior to joining Del Monte, Mr. Mody was with Divine/Whitman Hart from 2000 until 2001 where he was an Associate Partner in the Business and Brand Strategy group. From 1994 to 2000, Mr. Mody held a variety of brand management positions with Procter & Gamble.

James G. Potter, Senior Vice President, General Counsel and Secretary. Mr. Potter joined Del Monte in October 2001 and was elected to his current position in September 2002. From December 1997 to December 2000, he was Executive Vice President, General Counsel and Secretary of Provident Mutual Life Insurance Company. From 1989 to November 1997, Mr. Potter was the Chief Legal Officer of The Prudential Bank and Trust Company and The Prudential Savings Bank, subsidiaries of The Prudential Insurance Company of America.

Barry A. Shepard, Senior Vice President, Marketing and Innovation. Mr. Shepard was appointed Senior Vice President, Marketing and Innovation in July 2006, having served as Managing Director, Del Monte Pet Products since August 2004. Mr. Shepard joined Del Monte from Heinz in December 2002 as Vice President Marketing, Pet Food. At Heinz, he was appointed Vice President Marketing Star-Kist Seafood in 2000, after joining as Director of Ketchup and Condiments in 1999. Prior to joining Heinz, Mr. Shepard was with Procter & Gamble in brand management from 1991 to 1998.

Jeffrey M. Watters, Senior Vice President, Pet Products. Mr. Watters was appointed Senior Vice President, Del Monte Pet Products in July 2006, having served as Managing Director, Star-Kist Seafood since August 2004. He joined Del Monte from Heinz in December 2002 as Vice President, Pet Snacks Marketing. Mr. Watters joined Heinz in July 2000, where he most recently served as its Vice President, Pet Snacks Marketing. Prior to joining Heinz, Mr. Watters was with The Clorox Company in brand management from 1995 to 2000.

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Factors that May Affect Our Future Results and Stock Price

We are subject to many risks and uncertainties that may affect our future financial performance and our stock price. Some of the risks and uncertainties that may cause our financial performance to vary or that may materially or adversely affect our financial performance or stock price are discussed below.

If we do not successfully integrate the Meow Mix and Milk-Bone businesses, we may not realize the expected benefits of these acquisitions.

The process of integrating the Meow Mix and Milk-Bone businesses with our existing businesses may involve a variety of difficulties and challenges, including:

We cannot assure you that we will successfully or cost-effectively integrate the Meow Mix and Milk-Bone businesses and our existing businesses. Accordingly, we may be unable to obtain synergies expected in connection with the Meow Mix acquisition and dis-synergies associated with the Milk-Bone acquisition may be higher than expected. Additionally, the process of integrating the Meow Mix and Milk-Bone businesses could cause interruption of, or loss of momentum in, the activities of one or more of the Meow Mix, Milk-Bone or existing businesses. Members of our senior management and other employees may be required to devote considerable time to the integration process, which will decrease the time they will have to devote to our business. The failure to effectively integrate the Meow Mix and Milk-Bone businesses, including failure to obtain expected synergies, manage dis-synergies or effectively manage the acquired and existing businesses despite the demands of the integration process, could have a material adverse effect on our business, financial condition and results of operation. The failure to establish appropriate controls and procedures over the acquired Meow Mix and Milk-Bone businesses could adversely affect our internal controls over financial reporting as well as our business, financial condition and results of operations.

The inputs, commodities, ingredients and raw materials that we require are subject to price increases and shortages that could adversely affect our profitability. We may be unable to effectively pass increased costs along to our customers.

The primary inputs, commodities, ingredients and other raw materials that we use include energy, fuel, packaging (including cans), fruits, vegetables, tomatoes, tuna, grains, sugar, spices, meats, meat by-products, soybean meal, fats, oils and chemicals. Prices for these items may be volatile and we may experience shortages in these items as a result of: external conditions; commodity market

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fluctuations; availability; increased demand; weather conditions; natural disasters; currency fluctuations; governmental regulations, including import restrictions; agricultural programs or issues; and other factors outside our control.

Input, commodity, ingredient and other raw material price increases or shortages may result in higher costs or interrupt our production schedules, each of which could have a material adverse impact on our results of operations. Production delays could lead to reduced sales volumes and profitability as well as loss of market share. Higher costs could adversely impact our earnings. For example, fuel prices affect our transportation costs for both raw materials and finished product and natural gas prices also affect our production costs. Even if we increase pricing in an effort to offset higher costs, such increased pricing may result in reduced sales volume and profitability. Additionally, if we increase our prices, we may need to increase marketing spending, including trade promotion spending, in order to retain our market share. Such increased marketing costs may significantly offset the benefits, if any, of any price increase.

If we are not able to effectively pass cost increases along to our customers, our operating income will decrease. Our competitors may be better able than we are to effect price increases or to otherwise pass along cost increases to their customers.

If costs remain at their current high levels, our projected financial results could be adversely affected.

We are currently experiencing high prices for some of the inputs, commodities, ingredients and other raw materials we use. In particular, we are experiencing high fuel and natural gas prices. If our assessments and assumptions about input and commodity prices, as well as ingredient and other raw material prices, prove to be incorrect, our costs may be greater than anticipated. If we are not able to effectively pass cost increases along to our customers or secure offsetting cost savings, our operating income will decrease and our operating results will be adversely impacted.

In particular, shortages of tinplate and increases in, or continuing high, tinplate prices could materially adversely affect our results of operations. Disruptions in our supply of cans and ends, whether caused by tinplate shortages or other factors, could also adversely affect our results of operations.

Many of our products are packed in tinplate cans. We have experienced, and may experience in the future, tinplate shortages and increased tinplate prices. The price and availability of tinplate is subject to factors outside our control, including factors affecting the steel industry generally. Such factors may include increased demand from other users of tinplate or other forms of steel; import restrictions; government regulations; and competition among, and the financial condition of, steel suppliers. If Silgan or Impress is unable to secure tinplate, our supply of cans and ends may be interrupted. Any disruption in our supply of cans and ends, whether due to tinplate shortages, can and end manufacturing defects, strikes affecting our suppliers, or otherwise, could delay or disrupt our production of product and adversely affect our results of operations. If events occur that result in increased, or continuing high, tinplate costs or in tinplate shortages (whether due to factors affecting tinplate specifically or the steel industry generally), our results of operations could be materially adversely affected.

Increases in logistics and other transportation-related costs could materially adversely impact our results of operations. Our ability to competitively serve our customers depends on the availability of reliable and low-cost transportation.

Logistics and other transportation-related costs have a significant impact on our earnings and results of operations. We use multiple forms of transportation to bring our products to market. They include

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ships, trucks, intermodals and railcars. Disruption to the timely supply of these services or increases in the cost of these services for any reason, including availability or cost of fuel, regulations affecting the industry, or labor shortages in the transportation industry, could have an adverse effect on our ability to serve our customers, and could have a material adverse effect on our financial performance.

Our substantial indebtedness could adversely affect our operations and financial condition.

We have a significant amount of indebtedness and the amount of our indebtedness increased substantially in early fiscal 2007 as a result of the Meow Mix and Milk-Bone acquisitions. As of April 30, 2006, we had a total of $1,302.8 million of indebtedness. On July 3, 2006, immediately following the closing of the Milk-Bone acquisition and including other borrowings made on such date under our revolving credit facility, we had a total of $2,080.2 million of indebtedness, including $178.1 million under our $450 million revolving credit facility, which is part of our credit facility. Our indebtedness could have important consequences, such as:

If our cash from operations is not sufficient to enable us to reduce our debt as anticipated, our interest expense could be materially higher than anticipated and our financial performance could be adversely affected. If our cash from operations is not sufficient to meet our expenses and debt service obligations, we may be required to refinance our debt, sell assets, borrow additional money or raise equity.

We expect to generate the funds necessary to pay our expenses and to pay the principal and interest on our outstanding debt from our operations. Because portions of our business are highly seasonal, our borrowings under our revolving credit facility usually fluctuate during the year, generally peaking in September or October.

Our ability to generate cash to meet our expenses and debt service obligations and to otherwise reduce our debt as anticipated will depend on our future performance, which will be affected by financial, business, economic, legislative, regulatory and other factors, including potential changes in consumer preferences, the success of product and marketing innovation and pressure from competitors. Many of these factors are beyond our control. Any factor that negatively affects our results of operations, including our cash flow, may also negatively affect our ability to pay the principal and interest on our outstanding debt. If we are unable to reduce our debt as anticipated, our interest expense could be materially higher than anticipated and our financial performance could be adversely affected.

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If we do not have enough cash to pay our debt service obligations, we may be required to amend our credit facility or indentures, refinance all or part of our existing debt, sell assets, incur additional indebtedness or raise equity. We cannot assure you that we will be able, at any given time, to take any of these actions on terms acceptable to us or at all.

Despite our significant indebtedness, we may still be able to incur substantially more debt through additional borrowings. This could further exacerbate the risks described above.

While our credit facility generally restricts borrowings outside the existing facility, it does permit additional indebtedness pursuant to specified exceptions. For example, subject to satisfaction of debt incurrence tests contained in our senior subordinated note indentures and other conditions (including pro forma covenant compliance), we are permitted to incur an amount not to exceed $300.0 million of additional unsecured indebtedness and we are permitted to borrow, subject to the willingness of lenders to fund such borrowing and other conditions, an additional $500.0 million through an increase in the Term Loan facility under our existing credit facility. Further, with the concurrence of our senior lenders and satisfaction of our note indenture debt incurrence tests, we could incur substantial additional indebtedness. Additionally, we have the ability to incur substantial additional indebtedness pursuant to our $450.0 million revolving credit facility, which is part of our credit facility. If our current debt level increases, the related risks we face could intensify.

Restrictive covenants in our credit facility and indentures may restrict our operational flexibility. Our ability to comply with these restrictions depends on many factors beyond our control.

Our credit facility and indentures include certain covenants that, among other things, limit or restrict our ability to:

Our credit facility also requires us to maintain compliance with specified financial ratios and satisfy financial condition tests. Our ability to meet these financial ratios and tests may be affected by events beyond our control, and we cannot assure you that we will comply with these ratios and tests. Our credit facility may also limit our ability to agree to certain change of control transactions, because a “change of control” (as defined in the credit facility) will result in an event of default.

A breach of any of the covenants, ratios, tests or restrictions contained in our credit facility or indentures could result in an event of default under the credit facility and under our indentures in which case the amounts outstanding under the credit facility and indentures could be declared immediately due and payable. If the payment of the indebtedness is accelerated, we cannot assure

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you that our assets would be sufficient to repay in full that indebtedness and any other indebtedness that would become due as a result of any acceleration.

We may not be able to successfully implement our business strategies to reduce costs. Failure to reduce costs could adversely affect our results of operations.

The success of our business strategy depends in part on our ability to reduce costs. Because our ability to raise prices for our products can be affected by factors outside of our control, such as aggregate industry supply and market demand, our profitability and growth depends significantly on our efforts to control our operating costs. Because many of our costs, such as energy, fuel, can, logistics, and other input, commodity, ingredient, and raw material costs, are outside or substantially outside our control, we generally must seek to reduce costs in other areas, such as operating efficiency. If we are not able to complete projects designed to reduce costs and increase operating efficiency on time or within budget, if at all, our results of operations could be adversely impacted. In addition, if the cost savings initiatives we have implemented to date, or any future cost-savings initiatives, do not generate expected cost savings and synergies, our results of operations could be adversely affected.

Transformation endeavors may have a material adverse effect on our business, financial condition and financial results.

In addition to efforts related to our strategic plan, which is described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we have adopted a plan to transform certain aspects of our company. Such plan includes headcount reduction as part of organizational streamlining. If the implementation of this headcount reduction has a negative impact on our relationships with employees, major customers or vendors or on our ability to run our businesses, our profitability could be adversely affected. Our transformation plan also involves projects relating to our supply chain, manufacturing, customer relationships and marketing capabilities. If our transformation efforts disrupt our supply chain, manufacturing activities, customer service and relationships, trade promotion programs or other business activities, our results of operations could be adversely affected. If we are unable to successfully implement our transformation plan, we may not be able to fully recognize the estimated cost benefits and our financial results would be adversely affected. If the costs associated with the transformation plan are greater than expected, our results of operations would be adversely affected.

We may in the future contemplate and adopt additional plans, which may also include restructuring components. Such plans, if any, that are implemented, may, but need not, involve disposal of plants, distribution centers, businesses or other assets as well as additional headcount reductions or reductions in the number of product offerings, which could increase our expenses and adversely affect our results of operations. Divesting plants, distribution centers, businesses or other assets or changes in strategy may also adversely impact our results of operations due to related write-offs or due to the loss of operating income that may be associated with any such disposed business. Additionally, restructuring or disposition efforts (including transition efforts following a disposition, such as in connection with our April 24, 2006 sale of our soup and infant feeding businesses) may divert management’s and other employee’s attention from other business concerns, including our integration efforts. We may be unable to complete dispositions we may desire to undertake at targeted prices, if at all, which may adversely impact our financial results and our ability to implement our business strategies.

We may not be able to successfully introduce new products, which could decrease our profitability.

Our future business and financial growth depend, in part, on our ability to successfully introduce new products and improved products. We introduce new products and improved products in all of our businesses from time to time. Our strategy to grow our profits depends on product innovation. We

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incur significant development and marketing costs in connection with the introduction of new products. Successfully launching and selling new products puts pressure on our sales and marketing resources. If customers and consumers do not accept a new product, then the introduction of a new product can reduce our operating income as introduction costs, including slotting fees, may exceed revenues. If we are not consistently successful in marketing and selling new products, our results of operations could be materially adversely affected, our revenues could decrease, our growth rate could drop, and our profitability could decline.

If we do not compete successfully and maintain or improve the market shares of our products, our business and revenues may be adversely affected.

Our businesses are highly competitive. There are numerous brands and products that compete for shelf space and sales, with competition based primarily on quality, breadth of product line, brand awareness, price, taste, nutrition, variety, packaging and value-added customer services such as inventory management services. We compete with a significant number of companies of varying sizes, including divisions or subsidiaries of larger companies. Our branded products face strong competition from private label products, imports, other national and regional brands and fresh alternatives. In our private label sales, we face strong competition at the customer level against other private label providers. At the consumer level, our private label products face strong competition from branded products, other private label products, imports and fresh alternatives. A number of our competitors have broader product lines, substantially greater financial and other resources and/or lower fixed costs than we have. Our competitors may succeed in developing new or enhanced products that are more attractive to customers or consumers than ours. These competitors may also prove to be more successful in marketing and selling their products than we are; and may be better able to increase prices to reflect current cost pressures. We cannot assure you that we can compete successfully with these other companies or maintain or grow the distribution of our products. We cannot predict the pricing or promotional activities of our competitors or whether they will have a negative effect on us. Many of our competitors, including those in the pet products, tuna, tomato and fruit businesses, engage in aggressive pricing and promotional activities. Additionally, our acquisition of the Meow Mix and Milk-Bone businesses may induce pet products competitors to increase competitive activity directed at our products. There are competitive pressures and other factors which could cause our products to lose market share or decline in sales or result in significant price or margin erosion, which would have a material adverse effect on our business, financial condition and results of operations.

If we are unable to increase prices for our products, our results of operations could be adversely affected. If price increases result in greater than expected volume sales losses, our results of operations could be adversely affected.

Our ability to raise prices for our products can be affected by a number of factors, including aggregate industry supply, market demand, and competition. If we are unable to increase prices for our products, particularly as may be necessary to cover cost increases, our results of operations could be adversely affected. Additionally, price increases typically generate volume losses, as consumers purchase fewer units. If such losses (also referred to as the elasticity impact) are greater than expected or if we lose distribution in retribution of a price increase, our results of operations could be adversely affected.

If we do not successfully manage the price gap between our branded products and those of our private-label competition, our sales could suffer and our revenues and results of operations could be adversely affected.

Our branded products generally command a price premium as compared to the prices of the private-label products with which they compete. This price premium has been increasing for certain of our

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products, as private label competition has been slower in effecting price increases. The willingness of consumers to pay a price premium for our branded products depends on a number of factors, including the effectiveness of our marketing programs and the existing strength of our brands. If the price premium for our branded products exceeds the amount consumers are willing to pay, our sales would suffer and our revenues and our results of operations could be adversely affected.

Some of our co-packers are competitors.

We have co-pack arrangements with competitors for some of our pet, vegetable and tomato paste products, as well as for a portion of our tuna supply. These co-pack arrangements may provide competitors with know-how or other information or economies of scale that enable them to compete more effectively against us. In addition, to the extent that a co-packer is also a competitor, we may be at greater risk of supply disruption, in spite of contractual protections, in the event of raw material, commodity or ingredient shortages or other circumstances. Any such disruptions could adversely affect our results of operations.

We will not benefit from preferential tax treatment for our products produced in American Samoa if the legislation providing for such treatment is not renewed.

Section 936 of the Internal Revenue Code generally provided a federal income tax credit for income earned from a business conducted within a United States possession; however, this legislation expired in December 2005, affecting fiscal years beginning after such expiration date. We received the benefit of this credit with respect to income from our canned tuna business in American Samoa throughout fiscal 2006, which resulted in fiscal 2006 savings of approximately $4.9 million in tax expense. We cannot assure you that the legislation providing for this federal income tax credit will be renewed or that similar legislation will be adopted. If such legislation is not renewed or adopted, our effective federal income tax rate on income attributable to our operations in American Samoa will increase and our net profits will decrease.

We rely primarily upon a single company to provide us with logistics services and any failure by this provider to effectively service us could adversely affect our business.

Our logistics requirements in connection with transporting our products are handled by our third-party logistics service provider. Such services include: scheduling and coordinating transportation of our finished products to our distribution centers and customers; shipment tracking and communication; freight dispatch services; shipment optimization using various shipping modes, carriers, routes and configurations; transportation-related payment and billing services; and tracking, asserting, collecting and resolving freight claims. Our business could suffer substantial disruption if our third-party provider does not effectively fulfill its obligations.

Our operating results will depend, in part, on the effectiveness of our marketing and advertising programs.

In general, due to the highly competitive nature of the businesses in which we compete, we must increase or maintain our level of promotional and marketing investment with respect to our businesses to sustain our competitive position in our markets. The effectiveness of our marketing practices and advertising campaigns is important to our ability to retain or improve our market share or margins. We expect to continue to expend significant marketing and advertising resources on a number of our businesses, including pet products and tuna pouch products, which we believe are in product categories that respond favorably to marketing and advertising. If our marketing and advertising campaigns are not successful, our business, results of operations and financial condition may be adversely affected.

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Changes in our marketing and pricing strategies may adversely impact our market share and results of operations.

We may, from time to time, change our marketing and pricing strategies, including the timing of our promotional programs. For example, we have changed our pricing and marketing strategies with respect to certain of our tuna products, which may adversely affect our market share and net sales of such products. To the extent that higher prices for these products do not offset such market share and net sales losses, such strategy may also adversely affect our earnings.

We may be unable to anticipate changes in consumer preferences, which may result in decreased demand for our products.

Our success will depend in part on our ability to anticipate and offer products that appeal to the changing tastes, dietary habits and trends and product packaging preferences of consumers and, as applicable, their pets, in the market categories in which we compete. If we are not able to anticipate, identify or develop and market products that respond to these changes in consumer preferences, demand for our products may decline and our results of operations may be adversely affected.

We may not be able to successfully maintain the level of our product distribution to high volume club stores and mass merchandisers, which could adversely impact our net sales and results of operations.

The success of our business strategy depends, in part, on our ability to maintain the level of our product distribution, and consequently our sales, through high volume club stores, such as SAM’S CLUB and Costco, supercenters and mass merchandisers, such as Wal-Mart Supercenters. Consumers are increasingly shopping at club stores and mass merchandisers as an alternative to traditional grocery channels. If we are unable to maintain the level of our sales and product distribution through these channels, our results of operations could be adversely impacted. The competition to supply products to these high volume stores is intense, particularly where a store elects to carry only one of a particular type of product. These high-volume club stores and mass merchandisers frequently re-evaluate the products they carry and if a major club customer elected to stop carrying one of our products, our sales could be adversely affected. Some customer buying decisions are based upon a periodic bidding process in which the successful bidder is only assured of selling its selected products to the club store until the next bidding process. Our sales volume could decrease significantly if our offer is too high and we lose the ability to sell products, even temporarily, through these channels. Conversely, we risk depressing our margins if our offer is successful but below our desired price points. Either of these outcomes could have an adverse effect on our results of operations. In order to maintain key volume in the face of competition, we may agree to supply customers below desired price points, which could also depress our margins.

Because we are dependent upon a limited number of customers, the loss of a significant customer could adversely affect our results of operations.

A relatively limited number of customers account for a large percentage of our total sales. During fiscal 2006, our top customer, Wal-Mart (including Wal-Mart’s stores and supercenters as well as SAM’S CLUB), represented approximately 30% of our list sales, which approximates our gross sales, overall and an even higher percentage of sales of our Pet Products business. Our ten largest customers represented approximately 61% of our overall list sales. These percentages may increase if there is additional consolidation among food retailers or if the growth of mass merchandisers continues. We expect that a significant portion of our revenues will continue to be derived from a small number of customers. Our customers are generally not contractually obligated to purchase from us. These customers make purchase decisions based on a combination of price, product quality,

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consumer demand, customer service performance and their desired inventory levels. Changes in our customers’ strategies, including a reduction in the number of brands they carry or a shift of shelf space to private label products (unless we provide such products) may adversely affect our sales. Additionally, our customers may face financial or other difficulties that may impact their operations and their purchases from us, which could adversely affect our results of operations. If our sales of products to one or more of these customers are reduced, this reduction may have a material adverse effect on our business, financial condition and results of operations. Bankruptcy or other business disruption of a significant customer could adversely affect our results of operations. Loss of a significant customer could also adversely affect our reputation.

Large sophisticated customers may pressure us to lower our prices, not institute price increases, or take other actions that may adversely impact our results of operations.

There has been a consumer trend away from traditional grocers and towards mass merchandisers, which includes club stores and super centers. This trend has resulted in the increased size and influence of these mass merchandisers. As these mass merchandisers grow larger and become more sophisticated, these food retailers may demand lower or unchanged pricing, increased promotional programs or special packaging from, or impose other requirements on, product suppliers. These business demands may relate to inventory practices, logistics or other aspects of the customer-supplier relationship. For example, Wal-Mart and other customers have indicated a desire to utilize Radio Frequency Identification (“RFID”) technology in an effort to improve tracking and management of product in their supply chain. Large-scale implementation of this technology would significantly increase our product manufacturing and distribution costs. Meeting demands by our customers may adversely affect our margins and results of operations. If we are not selected by our large food retailer customers for most of our products or if we fail to effectively respond to their demands, our sales and profitability could be materially adversely affected.

To the extent our customers purchase product in excess of consumer consumption in any period, our sales in a subsequent period may be adversely affected as customers seek to reduce their inventory levels. To the extent customers seek to reduce their usual or customary inventory levels, our sales may be adversely affected.

From time to time, customers may purchase more product than they expect to sell to consumers during a particular time period. Customers may grow their inventory in anticipation of, or during, our promotional events, which typically provide for reduced prices during a specified time or other customer or consumer incentives. Customers may also grow inventory in anticipation of a price increase for our products. If a customer increases its inventory during a particular reporting period as a result of a promotional event, anticipated price increase or otherwise, then sales during the subsequent reporting period may be adversely impacted as customers seek to reduce their inventory to usual levels. This effect may be particularly pronounced when the promotional event, price increase or other event occurs near the end or beginning of a reporting period. To the extent customers seek to reduce their usual or customary inventory levels, the impact of such “de-inventorying” would be even greater.

We use a single national broker to represent a significant portion of our branded products to the retail grocery trade and any failure by the broker to effectively represent us would adversely affect our business.

We use a single national broker to represent a significant portion of our branded products to the retail grocery trade. Our business would suffer substantial disruption if this broker were to default in the performance of its obligations to perform brokerage services or if this broker fails to effectively represent us to the retail grocery trade. Changes in our sales strategy may impact this relationship.

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If our assessments and assumptions about commodity prices, as well as ingredient and other prices, prove to be incorrect in connection with our hedging or forward-buy efforts or planning cycles, our costs may be greater than anticipated and our financial results could be adversely affected.

We generally use commodity futures and options to reduce the price volatility associated with anticipated commodity purchases of corn, wheat, soybean meal and soybean oil used in the production of certain of our products. Additionally, we have a hedging program for heating oil as a proxy for fluctuations in diesel fuel prices as well as a hedging program relating to natural gas. The extent of our hedges at any given time depends on our assessment of the markets for these commodities, diesel fuel and natural gas, including our assumptions about future prices. For example, if we believe market prices for the commodities we use are unusually high, we may choose to hedge less, or even none, of our upcoming requirements. If we fail to hedge and prices subsequently increase, or if we institute a hedge and prices subsequently decrease, our costs may be greater than anticipated or greater than our competitors’ costs and our financial results could be adversely affected.

Concerns regarding methylmercury in seafood products, including tuna, could adversely affect our business.

A 2004 consumer advisory jointly issued by the U.S. Food and Drug Administration and the Environmental Protection Agency (the “EPA”) provided some consumers (in particular, women who may become pregnant, pregnant women, nursing mothers and young children) with information emphasizing the value of fish and shellfish in healthy diets and the need to limit their dietary exposure to methylmercury found in certain sea foods, including tuna. This advisory was focused on specific consumer populations that are most susceptible to the harmful effects of methylmercury. With respect to canned tuna, health officials advised that these certain consumers can eat up to 12 ounces of light tuna or six ounces of white tuna per week. Discussions, stories, concerns and warnings regarding mercury levels in seafood, including tuna, appear in various media outlets and other venues with increasing frequency. We may be adversely affected by this publicity and the recently announced guidance as well as any future warnings, guidance, recommendations, developments or publicity. Consumer perceptions that consumption of canned tuna should be limited may adversely affect our business and results of operations.

If we are subject to product liability claims, we may incur significant and unexpected costs and our business reputation could be adversely affected.

We may be exposed to product liability claims and adverse public relations if consumption, use or opening of our products is alleged to cause injury or illness. Our insurance may not be adequate to cover all liabilities we may incur in connection with product liability claims. For example, punitive damages are generally not covered by insurance. We may not be able to continue to maintain our existing insurance or obtain comparable insurance at a reasonable cost, if at all. A product liability judgment against us or our agreement to settle a product liability claim could also result in substantial and unexpected expenditures, which would reduce operating profit and cash flow. In addition, even if product liability claims against us are not successful or are not fully pursued, these claims would likely be costly and time-consuming and may require management to spend time defending the claims rather than operating our business. Product liability claims, or any other events that cause consumers to no longer associate our brands with high quality and safe products, may hurt the value of our brands and lead to decreased demand for our products. Product liability claims may also lead to increased scrutiny by federal and state regulatory agencies of our operations and could have a material adverse effect on our brands, business, results of operations and financial condition.

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If we experience product recalls, we may incur significant and unexpected costs and our business reputation could be adversely affected.

We may be exposed to product recalls, including voluntary recalls, and adverse public relations if our products are alleged to cause injury or illness or if we are alleged to have violated governmental regulations. We may also voluntarily recall products that we consider below our standards, whether for taste, appearance or otherwise, in order to protect our brand reputation. A product recall could result in substantial and unexpected expenditures, which would reduce operating profit and cash flow. In addition, a product recall may require significant management attention. Product recalls may hurt the value of our brands and lead to decreased demand for our products. Product recalls may also lead to increased scrutiny by federal and state regulatory agencies of our operations and could have a material adverse effect on our brands, business, results of operations and financial condition.

We may not be successful in our future acquisition endeavors, if any, which could have an adverse effect on our business and results of operations.

We have historically engaged in substantial acquisition activity. We may be unable to identify suitable targets, opportunistic or otherwise, for acquisition in the future. If we identify a suitable acquisition candidate, our ability to successfully implement the acquisition would depend on a variety of factors including our ability to obtain financing on acceptable terms and to comply with the restrictions contained in our debt agreements. If we need to obtain our lenders’ consent to an acquisition, they may refuse to provide such consent or condition their consent on our compliance with additional restrictive covenants that limit our operating flexibility. Acquisitions involve risks, including those associated with integrating the operations, financial reporting, disparate technologies and personnel of acquired companies; managing geographically dispersed operations; the diversion of management’s attention from other business concerns; the inherent risks in entering markets or lines of business in which we have either limited or no direct experience; unknown risks; and the potential loss of key employees, customers and strategic partners of acquired companies. We may not successfully integrate any businesses or technologies we may acquire in the future and may not achieve anticipated revenue and cost benefits. Acquisitions may be expensive, time consuming and may strain our resources. Acquisitions may not be accretive to our earnings and may negatively impact our results of operations as a result of, among other things, the incurrence of debt, one-time write-offs of goodwill and amortization expenses of other intangible assets. In addition, future acquisitions that we may pursue could result in dilutive issuances of equity securities.

Changes in weather conditions and natural disasters can affect crop or fish supplies, which can adversely affect our operations and our results of operations.

Changes in weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes or pestilence, may affect the cost and supply of commodities, ingredients and raw materials, including fruits, vegetables, tomatoes, grain, beef, sugar and spices. Additionally, these events can result in reduced supplies of raw materials, lower recoveries of usable raw materials, higher costs of cold storage if harvests are accelerated and processing capacity is unavailable or interruptions in our production schedules if harvests are delayed. Competing manufacturers can be affected differently by weather conditions and natural disasters depending on the location of their supplies or operations. Changes in the weather may also change the thermoclines in which fish such as tuna may be located. If fish are driven to lower thermoclines, it may be harder for fishermen to catch these fish, which could reduce the supply of tuna. In addition, some scientists believe that the population of some larger fish species has been depleted due to over fishing, potentially affecting the current and future supply of tuna. If our supplies of raw materials are reduced, we may not be able to find enough supplemental supply sources on favorable terms, if at all, which could impact our ability to supply

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product to our customers and adversely affect our business, financial condition and results of operations. Increased costs for raw materials could also adversely affect our business, financial condition and results of operations.

Natural disasters can disrupt our operations, which could adversely affect our results of operations.

Our executive offices, one of our research centers, and some of our fruit, vegetable and tomato operations are located where earthquakes can occur. Additionally, some of our tuna operations are located in areas where natural disasters such as hurricanes can occur. If our operations are damaged by a natural disaster, we may be subject to supply interruptions or other business disruption, which could adversely affect our business and results of operations.

Inventory in our Del Monte Brands operating segment’s results of operations is highly seasonal. Interference with our production schedule during peak months or inventory shortages could negatively impact our results of operations.

We do not manufacture the majority of our Del Monte Brands products continuously throughout the year, but instead have a seasonal production period that is limited to approximately three to four months primarily during the summer each year. We refer to this period as the “pack season.” An unexpected plant shutdown or any other material interference with our production schedule could adversely affect our results of operations.

In the majority of our Del Monte Brands businesses, the inventory created during the pack season, plus any inventory carried over from the previous pack season, determines the quantity of inventory we have available for sale until the next pack season commences. The size of the pack is influenced by crop results, which is affected by weather and other factors. Similarly, the timing of the pack season depends upon crop timing, which in turn is affected by weather and other factors. In the event that the inventory produced during the pack season is less than desired, or if the new pack season is delayed, or if demand for product is greater than forecasted, we may be required to “allocate” or limit sales of some items to customers in an effort to stretch supplies until the new pack season begins and new product is available. We could also experience inventory shortages in the event of can or end defects, whether discovered during the pack season or thereafter, or other factors. In the event we are required to allocate or limit sales of some items, we may lose sales volume and market share and our customer relationships may be harmed.

We rely upon co-packers to provide our supply of some products. Any failure by co-packers to fulfill their obligations could adversely affect our financial performance.

We have a number of supply agreements with co-packers that require them to provide us with specific finished products. For some of our products, including each of canned pineapple, mandarins and tropical fruits, some fruit in plastic containers, some fruit in glass jars, some dog snack and pet food products, and most of our tuna pouch products, we essentially rely upon a single co-packer as our sole-source for the product. We also anticipate that we will rely on sole suppliers for future products. The failure for any reason of any such sole-source or other co-packer to fulfill its obligations under the applicable agreements with us could result in disruptions to our supply of finished goods and have an adverse effect on our financial performance. Additionally, from time to time, a co-packer may experience financial difficulties or bankruptcy, which could disrupt our supply of finished goods or require that we incur additional expense by providing financial accommodations to the co-packer or taking other steps to seek to minimize or avoid supply disruption, such as establishing a new co-pack arrangement with another provider. A new co-pack arrangement may not be available on terms as favorable to us as the existing co-pack arrangement, if at all.

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The terms in our supply agreement for cans and ends with Impress could adversely affect the profitability of our products.

Impress supplies metal cans and ends for our pet and tuna businesses. Our agreement with Impress includes minimum volume purchase requirements and guarantees a minimum financial return to Impress. These terms may result in increases in the unit costs of our pet and tuna products if we reduce our production levels.

We are subject to environmental regulation and environmental risks, which may adversely affect our business.

As a result of our agricultural and food processing operations, we are subject to numerous environmental laws and regulations. Many of these laws and regulations are becoming increasingly stringent and compliance with them is becoming increasingly expensive. We cannot predict the extent to which any environmental law or regulation that may be enacted or enforced in the future may affect our operations. We have been named as a potentially responsible party (“PRP”) and may be liable for environmental investigation and remediation costs at some designated “Superfund Sites” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), or under similar state laws. We are defending ourselves in these actions as we believe appropriate. However, we cannot assure you that none of these matters will adversely impact our financial position or results of operations. We may in the future be named as a PRP at other currently or previously owned or operated sites, and additional remediation requirements could be imposed on us. Other properties where we conduct or have conducted operations could be identified for investigation or proposed for listing under CERCLA or similar state laws. Also, under the Federal Food, Drug and Cosmetic Act and the Food Quality Protection Act of 1996, the U.S. Environmental Protection Agency is involved in a series of regulatory actions relating to the evaluation and use of pesticides in the food industry. The effect of these actions and future actions on the availability and use of pesticides could adversely impact our financial position or results of operations. The Maximum Achievable Control Technology (MACT) and other regulations promulgated under the Clean Air Act may also impact our operations and require that we expend additional capital to meet such requirements. If the cost of compliance with applicable environmental laws or regulations increases, our business and results of operations could be negatively impacted.

Government regulation could increase our costs of production and increase legal and regulatory expenses.

Manufacturing, processing, labeling, packaging, storing and distributing food products are activities that are subject to extensive federal, state and local regulation. These aspects of our operations are regulated by the U.S. Food and Drug Administration (“FDA”), the United States Department of Agriculture (“USDA”) and various state and local public health and agricultural agencies. In addition to periodic government agency inspections affecting our operations generally, our operations, which produce meat and poultry products, are subject to mandatory continuous on-site inspections by the USDA. Complying with government regulation, including any new regulations such as the new federal Country of Origin Labeling (“COOL”) labeling requirements, can be costly. Failure to comply with all applicable laws and regulations, including, among others, California’s Proposition 65, could subject us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material adverse effect on our business, financial condition and results of operations. Our business is also affected by import and export controls and similar laws and regulations. Issues such as national security or health and safety, which slow or otherwise restrict imports, could adversely affect our business. In addition, the modification of existing laws or regulations or the introduction of new laws or regulations could require us to make material expenditures or otherwise adversely affect the way that we have historically operated our business.

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Failure by third-party co-packers to comply with environmental or other regulations may disrupt our supply of certain products and adversely affect our financial performance.

We rely on co-packers to produce certain of our products. Such co-packers, whether in the U.S. or overseas, are subject to a number of regulations, including environmental regulations. Failure by any of our co-packers to comply with regulations, or allegations of compliance failure, may disrupt their operations. For example, our co-packer in Ecuador, which produces a substantial portion of our retail tuna pouch products, experienced environmental compliance issues and was closed briefly in fiscal 2005. Disruption of the operations of a co-packer could disrupt our supply of product, which could have an adverse effect on our net sales and other results of operations. Additionally, actions we may take to mitigate the impact of any such disruption or potential disruption, including increasing inventory in anticipation of a potential production interruption, may adversely affect our results of operations.

If we are unable to renew our lease in Terminal Island, CA, we may incur expenses that could materially adversely affect our earnings.

The current ground lease for our facilities in Terminal Island, CA terminated May 1, 2006. We believe we have negotiated an up to three and a half year extension of this lease. If we are unable to enter into an agreement reflecting such extension on these or substantially similar terms, we would accelerate certain demolition, remediation and relocation expenses and be responsible for reimbursing certain third-party costs and losses. These expenses could materially adversely affect our earnings.

Risk associated with foreign operations, including changes in import/export duties, wage rates, political or economic climates, or exchange rates, may adversely affect our operations.

Our foreign operations and relationships with foreign suppliers and co-packers subject us to the risks of doing business abroad. The countries from which we source our products may be subject to political and economic instability, and may periodically enact new or revise existing laws, taxes, duties, quotas, tariffs, currency controls or other restrictions to which we are subject. Our products are subject to import duties and other restrictions, and the United States government may periodically impose new or revise existing duties, quotas, tariffs or other restrictions to which we are subject. For example, we currently import tuna pouch products from Ecuador on a duty-free basis under the Andean Trade Preference and Drug Eradication Act (ATPDEA), which expires December 31, 2006. If new legislation is not adopted that provides similar benefits to the ATPDEA, our costs could increase and our results of operations could be adversely affected. In addition, steps we may take to mitigate the impact of the expiration of the ATPDEA in the short-term, such as accelerating our production of affected products and increasing our inventories, could adversely affect our results of operations.

In addition, changes in respective wage rates among the countries from which we and our competitors source product could substantially impact our competitive position. For example, wage rates in American Samoa are currently substantially higher than wage rates in Thailand. However, this wage rate difference is generally offset by the fact that U.S. tariffs are currently imposed on Thai products but not on American Samoa products.

Changes in exchange rates, import/export duties or relative international wage rates applicable to us or our competitors (whether due to an increase in wage rates in American Samoa, a decrease of wage rates elsewhere, or otherwise) could adversely impact our business, financial condition and results of operations and require us to restructure our business in order to remain competitive. Because our competitors may have operations in different foreign jurisdictions than we have, such changes may impact us in a different manner than our competitors.

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If we are not successful in protecting our intellectual property rights, we may harm our ability to compete.

Our brand names and trademarks, including the marks “Del Monte,” “StarKist,” “9Lives,”, “Kibbles ‘n Bits,” “Meow Mix,” and “Milk-Bone,” are important to our business. We rely on trademark, copyright, trade secret, patent and other intellectual property laws, as well as nondisclosure and confidentiality agreements and other methods, to protect our proprietary information, technologies and processes. We also have obligations with respect to the non-use and non-disclosure of third-party intellectual property. We may need to engage in litigation or similar activities to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of proprietary rights of others. Any such litigation could require us to expend significant resources and divert the efforts and attention of our management and other personnel from our business operations. We cannot assure you that the steps we will take to prevent misappropriation, infringement or other violation of our intellectual property or the intellectual property of others will be successful. In addition, effective patent, copyright, trademark and trade secret protection may be unavailable or limited for some of our trademarks and patents in some foreign countries. Failure to protect our intellectual property could harm our business and results of operations.

Intellectual property infringement claims may adversely impact our results of operations.

As we develop, introduce and acquire products, we may be increasingly subject to claims by others that we infringe on their intellectual property. Such claims may require us to change our products, cease selling certain products or engage in litigation to determine the scope and validity of such claims. Any of such events may adversely impact our results of operations.

Our business could be harmed by strikes or work stoppages by Del Monte employees.

As of April 30, 2006, we have 15 collective bargaining agreements with 13 union locals covering approximately 63% of our hourly full time and seasonal employees. Of these employees, approximately 83% are covered under collective bargaining agreements scheduled to expire in fiscal 2007, and approximately 17% are covered under collective bargaining agreements that are scheduled to expire in fiscal 2008. We cannot assure you that we will be able to negotiate these or other collective bargaining agreements on the same or more favorable terms as the current agreements, or at all, without production interruptions caused by labor stoppages. If a strike or work stoppage were to occur in connection with negotiations of new collective bargaining agreements, or as a result of disputes under our collective bargaining agreements with labor unions, our business, financial condition and results of operations could be materially adversely affected. In connection with our recent acquisition of Milk-Bone, we assumed three collective bargaining agreements with three union locals covering approximately 190 employees.

Our Del Monte brand name could be confused with names of other companies who, by their act or omission, could adversely affect the value of the Del Monte brand name.

We have licensed the Del Monte brand name (and with respect to The Philippines and South Africa, transferred title) to various unaffiliated companies internationally and, for some products, in the United States. The common stock of one licensee, Fresh Del Monte Produce Inc., is publicly traded in the United States. Acts or omissions by these unaffiliated companies may adversely affect the value of the Del Monte brand name, the trading prices for our common stock and demand for our products. Third-party announcements or rumors about these licensees could also have these negative effects. In addition, in connection with the 2002 Merger, Heinz retained its ownership of some of the brand names used by our businesses in countries in which we do not compete. Acts or omissions by Heinz or its licensees that adversely affect the value of these brand names may also adversely affect demand for our products.

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None.

As of April 30, 2006, our principal facilities included 15 production facilities and 11 distribution centers in the United States, as well as four production facilities and one other facility in foreign locations. We generally own our production facilities. Our distribution centers are owned or leased by us, or operated by others on our behalf. We also own the cold storage facility in Manta, Ecuador. We also have various other warehousing and storage facilities, which are primarily leased facilities. Our leases are generally long-term. Certain of our owned real properties together with a leased real property located in Mendota, IL, are subject to mortgages or other applicable security interests in favor of the lenders under our amended senior credit facility. Our combined production facilities total approximately 5.4 million square feet of owned property, while our distribution centers total approximately 1.7 million square feet of owned property and approximately 3.3 million square feet of leased property.

The following table lists our principal production facilities and distribution centers as of April 30, 2006:

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Our principal administrative headquarters are located in leased office space in San Francisco, CA. We own our primary research and development facilities in Walnut Creek, CA, Terminal Island, CA and Pittsburgh, PA. We also own or lease additional administrative facilities in Pittsburgh, PA. During fiscal 2004, we committed to a lease arrangement for a new administrative office facility in Pittsburgh, PA, and, in January 2006, we began to occupy this new facility.

Our facilities in Birmingham, AL, Stockton, CA and Swedesboro, NJ are currently held for sale. In addition, we also have parcels of land adjacent to our facilities in Walnut Creek, CA and Rochelle, IL that are currently held for sale. During fiscal 2006, we sold a portion of our property in San Jose, CA, as well as our facility in Elmira, Ontario, Canada, which was included in discontinued operations.

We believe our facilities are suitable and adequate for our business and have sufficient capacity for the purposes for which they are currently intended.

We are a defendant in an action filed in the Superior Court in Middlesex, NJ, on May 15, 2006. The complaint alleges that four-packs of StarKist albacore tuna wrapped in shrink-wrap were mislabeled because the nutritional information on the shrink-wrap was different from the nutritional information on the individual cans. The causes of action include consumer fraud, violations of the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act and unjust enrichment and seeks compensatory, punitive and treble damages. The complaint seeks certification of this matter as a class action. We dispute the plaintiff’s allegations. We are not able to estimate our exposure, if any, at this time and accordingly we have not accrued any reserves for this matter.

We filed a Notice of Arbitration with the American Arbitration Association (“AAA”) on February 15, 2006, which initiated arbitration proceedings against Pacer Global Logistics (“Pacer”). We alleged that Pacer breached the Logistics Services Agreement (the “Pacer Agreement”) entered into between the companies on April 4, 2005, effective as of March 4, 2005. We are seeking damages of $40.0 million. Pacer filed a Demand for Arbitration with AAA on March 9, 2006, as amended on April 4, 2006, in which Pacer asserted claims against us for breach of the Pacer Agreement. Pacer is seeking a declaration of its ability to terminate the Pacer Agreement and damages of $22.5 million. We have denied Pacer’s claims. We believe we have accrued adequate reserves to cover any material liability in this matter. Although the parties have been unable to negotiate a formal termination of the Pacer Agreement, we began using a different transportation services provider beginning on May 1, 2006.

We were 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. 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 alleged that it relied on our alleged statements when the plaintiff sold its shares of Del Monte

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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 sought compensatory damages of at least $22.0 million, plus punitive damages. On December 9, 2004, we agreed to a settlement with PPI Enterprises. Counter-claims against us by two third-parties in the amount of $1.4 million remained after the settlement with PPI Enterprises. The court granted our motion for summary judgment against these third-parties on November 28, 2005. The third-parties appealed that decision. We settled with one of the third-parties on March 14, 2006 and that third-party withdrew its appeal. We believe we have accrued adequate reserves to cover any material liability that may result from the remaining counterclaim.

We were a defendant in an action brought by the Public Media Center in the Superior Court in San Francisco, CA, on December 31, 2001. 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 sought 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 disputed the plaintiff’s allegations. This case was consolidated with the California Attorney General case described below and trial began on October 18, 2005. The court issued a decision in our favor on May 11, 2006. The plaintiff may appeal this ruling.

We were a defendant in an action brought by the California Attorney General in the Superior Court in San Francisco, CA, 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 sought 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 disputed the Attorney General’s allegations. This case was consolidated with the Public Media Center case described above and trial began on October 18, 2005. The court issued a decision in our favor on May 11, 2006. The Attorney General may appeal this ruling.

We are also involved from time to time in various legal proceedings incidental to our business, including proceedings involving product liability claims, worker’s compensation and other employee claims, tort and other general liability claims, for which we carry insurance, as well as trademark, copyright, patent infringement and related litigation. While it is not feasible to predict or determine the ultimate outcome of these matters, we believe that none of these legal proceedings will have a material adverse effect on our financial position.

During prior quarters in fiscal 2006, we also concluded the following matters:

We were 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 infringed the 746 Patent. The plaintiff sought 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

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technology. On January 25, 2005, the court granted partial summary judgment in favor of the plaintiff and ruled that we infringed the plaintiff’s patent. On March 2, 2005, a jury returned a verdict in favor of Mars and awarded Mars damages in the amount of $3.6 million. On April 21, 2005, the Court entered 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 were insignificant in light of our total net sales and net income. On May 3, 2005, the Court entered a final judgment which also awarded Mars prejudgment interest and reimbursement of costs in the amount of $0.6 million. On May 19, 2005, we filed a notice of appeal. On September 2, 2005, we resolved remaining disputes with Mars. We withdrew our appeal on September 6, 2005. In the second quarter of fiscal 2006, we paid all amounts due in accordance with the final judgment.

We filed a lawsuit against several manufacturers of linerboard in the U.S. District Court for the Eastern District of Pennsylvania on June 9, 2003, alleging an illegal conspiracy to fix the price of linerboard in the 1990s. A class action had previously been filed against similar defendants on behalf of purchasers of linerboard. We elected to opt-out of the class action and file suit separately. We were seeking to recover damages sustained as a result of this alleged conspiracy. In the fourth quarter of fiscal 2005, we settled with some of the defendants in this litigation. In the second quarter of fiscal 2006, we settled with the remaining defendants in this litigation.

None.

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PART II

Common Stock Prices

Del Monte Foods Company common stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “DLM.” We voluntarily de-listed from the Pacific Exchange during fiscal 2006 due to the limited volume traded on that exchange.

The following table sets forth the high and the low sale prices for Del Monte Foods Company common stock as reported by the NYSE for the periods indicated:

Dividend Policy

Prior to fiscal 2006, we had not paid a cash dividend on our common stock since our initial public offering in February 1999. We declared aggregate dividends of approximately $16 million during fiscal 2006, of which approximately $8 million of such dividends were paid during fiscal 2006. The dividends were declared in December 2005 and March 2006 and were paid in February and May 2006, respectively. In each case, the dividend declared and paid was $0.04 per share of outstanding common stock of DMFC.

Our credit facility and indentures generally limit, subject to certain financial tests and other exceptions, the ability of DMC to make cash payments to DMFC, which therefore limits DMFC’s ability to pay cash dividends. Under the credit facility, as amended, one of the exceptions provides that so long as no default or event of default has occurred and is continuing or would result therefrom, DMC may pay dividends to DMFC in an aggregate amount not to exceed the sum of (i) $195 million plus (ii) 50% of consolidated net income of DMFC determined on a cumulative basis from October 31, 2005, plus (iii) at such time as no more than $25 million in principal amount of Del Monte’s 8 ⁵/8% Senior Subordinated Notes due 2012 remain outstanding, an additional $110 million; provided that no dividend payment may be made under the credit facility if the making of such dividend payment would violate applicable provisions of Del Monte’s indentures. As of April 30, 2006, the amount available to be paid as additional dividends by DMC to DMFC under this provision of the credit facility was approximately $230 million. The restriction on DMC dividends described above currently is more restrictive than the comparable provisions in the indentures. To the extent that DMC pays cash dividends to DMFC and DMFC uses such cash dividends for purposes other than dividends to its stockholders, such as stock repurchases, DMFC’s ability to pay cash dividends to its stockholders effectively will be limited further.

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We expect to continue to pay quarterly dividends. However, there can be no assurance that future dividends will be declared or paid. The actual declaration and payment of future dividends, and the establishment of record and payment dates, if any, is subject to final determination by our Board of Directors each quarter after its review of our then current strategy, applicable debt covenants and financial performance and position, among other things See “Item 1A. Risk Factors” for a discussion of factors that might affect our financial performance and compliance with debt covenants, including covenants that affect our ability to pay dividends. Also see “Note 7. Short-Term Borrowings and Long-Term Debt” to our consolidated financial statements in this annual report on Form 10-K.

We expect to continue to use cash flows from operations (and other sources of cash, if any) to finance our working capital needs, to pay dividends (subject to the conditions described above), to reduce debt, and to develop and grow our business. We may from time to time consider other uses for our cash flows from operations and other sources of cash. Such uses may include, but are not limited to, acquisitions.

Stockholders

As of June 28, 2006, we had 42,911 stockholders of record, which excludes stockholders whose shares were held by brokerage firms, depositories and other institutional firms in “street name” for their customers.

Equity Compensation Plan Information

Information required by Item 5 of Part II of this annual report on Form 10-K will be included in our Proxy Statement relating to our 2006 Annual Meeting of Stockholders, under the caption relating to our Equity Compensation Plan, and such information is incorporated in this section by reference.

Issuances of Unregistered Securities

There were no issuances of unregistered securities in the quarter ended April 30, 2006.

Issuer Purchases of Equity Securities

On June 29, 2005, we purchased 11,996,161 shares of our common stock from Goldman Sachs International (“Goldman Sachs”) in a private transaction in connection with an accelerated stock buyback (the “June 29, 2005 ASB”). Excluding commission payable to Goldman Sachs, the shares were repurchased for an upfront payment of approximately $125 million or $10.42 per share, subject to a price adjustment provision. The repurchased shares are being held in treasury.

In connection with the June 29, 2005 ASB, Goldman Sachs was expected to purchase an equivalent amount of shares in the open-market over time. At the end of the program, we were to pay a price adjustment based on the volume weighted average price of shares traded during the purchase period. Approximately half of the shares purchased in connection with the June 29, 2005 ASB were subject to a collar, a contract that sets a minimum and maximum price for purposes of calculating the price adjustment. Generally, the purchase price adjustment could have been settled, at our option, in cash or in shares of our common stock.

As described under “Dividend Policy” above, in December 2005, we declared a cash dividend of $0.04 per share on our common stock. Pursuant to the June 29, 2005 ASB with Goldman Sachs, the declaration of such dividend constituted an Extraordinary Dividend (as defined in the June 29, 2005 ASB) and provided Goldman Sachs with the right to terminate the June 29, 2005 ASB. On December 19, 2005, Goldman Sachs notified us of its intent to terminate the June 29, 2005 ASB

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effective as of the close of business on such date. The termination did not affect the retirement of the shares previously repurchased by us but, as described below, affected the timing and amount of payments between the parties with respect to the June 29, 2005 ASB.

Simultaneously with the termination of the June 29, 2005 ASB, on December 19, 2005, we entered into a new collared accelerated share repurchase arrangement (the “December 19, 2005 ASB”) with Goldman Sachs based on 8,010,046 shares to complete the balance of the June 29, 2005 ASB. As a result, the new arrangement required us and Goldman Sachs to settle the price adjustment with respect to the 3,986,115 shares already purchased by Goldman Sachs based on their actual cost to purchase the shares in the open market between July 22, 2005 and December 19, 2005. The aggregate amount required to be paid by us to Goldman Sachs under the June 29, 2005 ASB, which included the amount of the price adjustment for the 3,986,115 shares purchased by Goldman Sachs, was approximately $1.1 million and was paid in cash on December 22, 2005.

The December 19, 2005 ASB contains terms substantially identical to the June 29, 2005 ASB, requiring certain payments by both us and Goldman Sachs. As with the June 29, 2005 ASB, the most significant of these payments is the purchase price adjustment with respect to the remaining 8,010,046 shares based principally on Goldman Sachs’ actual cost to purchase such shares in the open market, subject to a partial collar, over a period that is expected to extend to late October 2006. Any payments that we may make under the December 19, 2005 ASB can be settled, at our option, in cash or in shares of our common stock. Pursuant to the agreements governing the December 19, 2005 ASB, we must have 25,000,000 shares available for issuance during the term of the program.

The following tables set forth our selected historical financial data as of and for the periods indicated. The selected historical financial data for the fiscal years ended April 30, 2006, May 1, 2005, and May 2, 2004 was derived from the audited balance sheets as of April 30, 2006, May 1, 2005, and May 2, 2004, respectively, and the audited statements of operations for each of the years then ended, as audited by KPMG LLP. As a result of the need to classify certain assets as discontinued operations to conform to the fiscal 2006 presentation, the selected historical financial data as of and for the period ended April 27, 2003 and May 2, 2002 is unaudited. For the periods prior to December 20, 2002, the selected historical financial data reflect the results of operations of the 2002 Acquired Businesses while under the management of Heinz, and include the results of the fruit, vegetable and tomato businesses post December 20, 2002. The 2002 Acquired Businesses were not historically managed as a standalone entity but as part of the operations of Heinz. Additionally, our financial statements for fiscal year 2002 and the first 8 months of fiscal 2003 contain no debt or interest expense, and therefore are not indicative of the results of operations that would have existed if the 2002 Acquired Businesses had been operated as an independent company during these periods. The following information is qualified by reference to, and should be read in conjunction with, “Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations,” and “Item 8. Financial Statements and Supplementary Data.” The historical results are not necessarily indicative of results to be expected in any future period.

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This discussion summarizes the significant factors affecting our consolidated operating results, financial condition and liquidity during the three-year period ended April 30, 2006. This discussion should be read in conjunction with our consolidated financial statements for the three-year period ended April 30, 2006 and related notes included elsewhere in this annual report on Form 10-K. These historical financial statements may not be indicative of our future performance. We reclassified certain items in our consolidated financial statements of prior years to conform to our current year’s presentation. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing, particularly in Item 1A. “Risk Factors.”

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 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. As a result of our recent acquisitions discussed in the “Executive Overview” below, we have added the Meow Mix, Alley Cat and Milk-Bone brands to our pet products portfolio.

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 pursuant to a separation agreement between Heinz and SKF Foods, Inc. (“SKF”), then a wholly-owned subsidiary of Heinz, and an Agreement and Plan of Merger (the “2002 Merger Agreement”), among Del Monte Foods Company (“DMFC”), SKF, and Del Monte Corporation, a wholly-owned direct subsidiary of DMFC (“pre-Merger DMC”). This acquisition is referred to as the “2002 Merger.” See “Note 1. Business and Basis of Presentation” of our consolidated financial statements in this annual report on Form 10-K for a detailed discussion of this acquisition.

On April 24, 2006, we sold certain assets and liabilities related to our private label soup, infant feeding and food service soup businesses to TreeHouse Foods, Inc. The results of operations of these businesses have been reclassified to discontinued operations for all periods presented. See “Note 1. Business and Basis of Presentation” of our consolidated financial statements in this annual report on Form 10-K for a detailed discussion of this divestiture.

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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:

Executive Overview

Our fiscal 2006 results reflect increased pricing across our business, partially offset by continuing inflationary cost pressures. In fiscal 2006, we achieved net sales of $2,998.6 million, operating income of $304.8 million and net income of $169.9 million, compared to net sales of $2,899.3 million, operating income of $294.3 million and net income of $117.9 million in fiscal 2005. In fiscal 2005, we incurred $33.5 million in costs related to the debt refinancing described in “Liquidity and Capital Resources” below and $20.7 million of integration expense, while we did not have these types of costs in fiscal 2006.

We continued to generate strong cash flow in fiscal 2006. At April 30, 2006 we had $459.9 million in cash and $43.3 million of restricted cash. Our cash balances were generated from operations as well as the proceeds from the divestiture noted below. Subsequent to April 30, 2006, we used this cash, along with additional debt, to complete the acquisitions noted below.

In June 2005, we announced our long-term strategy, or Strategic Plan, designed to fulfill our mission to fortify Del Monte’s position as a leading branded marketer of quality food products in the U.S. retail market. In line with our Strategic Plan, on April 24, 2006, pursuant to an agreement dated March 1, 2006, we sold to TreeHouse Foods, Inc. (“TreeHouse”) certain real estate, equipment, machinery, inventory, raw materials, intellectual property and other assets that were primarily related to our private label soup business, infant feeding business (conducted under the brand name Nature’s Goodness), and food service soup business (collectively, the “Soup and Infant Feeding Businesses”). Under the terms of the Asset Purchase Agreement, TreeHouse assumed certain liabilities to the extent related to the Soup and Infant Feeding Businesses and paid a purchase price of approximately $275 million in cash, subject to post-closing adjustment based on a determination of working capital at closing. We believe this divestiture will simplify our business and enable us to focus our

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innovation initiatives and financial resources against faster-growing, margin-enhancing branded businesses that share a common go-to-market platform.

On March 1, 2006, we entered into an agreement to acquire privately held Meow Mix Holdings, Inc. (“Meow Mix”) for approximately $705 million. Meow Mix is the maker of Meow Mix brand cat food and Alley Cat brand dry cat food. We completed the acquisition on May 19, 2006. We funded the Meow Mix acquisition with proceeds from the divestiture of the Soup and Infant Feeding Businesses, as well as with cash from operations and additional debt. The financial results of Meow Mix are expected to be reported within our Pet Products reportable segment. On March 15, 2006, we entered into an agreement with Kraft Foods Global, Inc. to acquire certain pet product assets, including the Milk-Bone brand (“Milk-Bone”) for approximately $580 million in cash, subject to a post-closing adjustment for inventory of the business at closing. We completed the acquisition effective July 2, 2006. We funded the Milk-Bone acquisition with additional debt. The financial results of Milk-Bone are expected to be reported within our Pet Products reportable segment. We believe this acquisition, together with the Meow Mix acquisition, will give our pet business an improved platform for developing innovative and successful products and enhance our overall gross margins.

Economic Factors

During fiscal 2006, we experienced higher steel and other packaging costs; energy, logistics and other transportation-related costs; and fish costs. We implemented price increases across all of our operating segments which offset these cost increases; however, we believe that we will continue to experience cost increases in fiscal 2007, primarily in steel and other packaging costs, and energy, logistics and other transportation-related costs.

Strategic Plan

Our mission is to fortify Del Monte’s position as a leading branded marketer of quality food products in the U. S. retail market. As part of our long-term strategy announced in early fiscal 2006 and referred to as Project Brand, we plan to continue to focus on five main goals. These goals include 1) innovation and brand driven growth, 2) portfolio assessment, 3) asset and cost streamlining, 4) mergers and acquisitions vigilance, and 5) financial flexibility. Each of these goals and our progress against these goals is described below.

Innovation and brand driven growth—We leveraged our brands and innovation to expand sales in our existing categories. We believe that in our Consumer Products segment our Del Monte brand has significant potential beyond its traditional product categories. Over 90% of our products are all natural, without preservatives, and we believe they have the potential to help meet the health and wellness needs of our consumers. We built on that potential in fiscal 2006 with the introduction of new flavors of Fruit Naturals Single Serve Fruit and Del Monte Organic Tomatoes. We believe our StarKist brand and the seafood category have potential well beyond the traditional “chunk light halves” products. We leveraged our StarKist brand strength in fiscal 2006 with the introduction of products such as StarKist Tuna Fillets in a pouch. In our Pet Products segment, we leveraged our innovation and brand building ability through the introduction of products such as Meaty Bones Denta Delicious long lasting chew, Snausages Roverolis and Pizza Flavored Canine Carryouts. We plan to continue to focus our innovation against our key higher margin, higher growth categories, pet snacks, and dry pet food.

Portfolio assessment—We divested our off-strategy, lower margin Soup and Infant Feeding Businesses in fiscal 2006. This contributed significantly to our overall SKU reduction. We expect this will improve our inventory management, reduce supply chain costs and simplify our overall business. We plan to invest in on-strategy higher margin areas of our business.

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Asset and cost streamlining—We will continue to review our asset base for alignment with our brand-driven strategy. Our goal is to create a sourcing and supply chain structure that will provide greater flexibility compared to a more traditional fixed-asset focused business. In terms of our costs, we have taken significant steps in fiscal 2006 to reduce and realign our cost base. Our cost reduction initiatives were significant in fiscal 2006 and helped offset a portion of the cost increases that impacted us in fiscal 2006. We expect that these initiatives will result in additional cost savings over the next two years that will help mitigate the continued cost pressures from the economic factors described above.

Mergers and acquisitions vigilance—Subsequent to the end of fiscal 2006, we completed the Meow Mix and Milk-Bone acquisitions as described in the “Executive Overview” above. We believe these acquisitions will improve the competitive position of our pet products portfolio and enhance our overall gross margins. We continue to believe that the Del Monte platform has the potential to add value to acquired U.S. brands and we will continue to evaluate acquisition opportunities. Our strategy may also involve exploring divestures of businesses or other assets that do not meet our portfolio or asset requirements.

Financial flexibility—We plan to continue to prudently manage debt while we return cash to stockholders. In fiscal 2006, we executed a $125 million stock repurchase as described in “—Liquidity and Capital Resources.” In addition, in each of the third and fourth quarters of fiscal 2006, we declared a cash dividend of $0.04 per share of our common stock. We expect to continue to pay quarterly dividends; however, there can be no assurance that future dividends will be declared or paid. The declaration and payment of future dividends, and the establishment of record and payment dates, if any, is subject to final determination by our Board of Directors each quarter after its review of our then current strategy, applicable debt covenants and financial performance and position, among other things. See “Item 1A. Risk Factors” for a discussion of factors that might affect our financial performance and compliance with debt covenants, including covenants that affect our ability to pay dividends.

Transformation Plan

On June 22, 2006, we announced a transformation plan to further our progress against our strategic goal of becoming a more value-added, consumer packaged food company. The plan’s initiatives, which are focused on strengthening systems and processes, streamlining the organization and leveraging the scale efficiencies expected from the recent acquisitions noted above, are anticipated to improve our competitiveness and enhance our overall performance.

As part of our plan, we will be focusing on the following initiatives:

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We expect to incur costs associated with these initiatives over the next two years of approximately $110 million in pre-tax costs, including $60 million in anticipated capital expenditures and $10 million of non-cash expenses. We expect to begin generating savings in fiscal 2007, and capture approximately $40 million of pre-tax savings in fiscal 2008 and approximately $50 million in fiscal 2009.

Critical Accounting Policies and Estimates

Our discussion and analysis of our 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 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 reevaluate our estimates, including those related to trade promotions, retirement benefits, goodwill and intangibles with indefinite lives, and retained-insurance liabilities. Estimates in the assumptions used in the valuation of our stock option expense are updated periodically and reflect conditions that existed at the time of each new issuance of stock options. 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, therefore, 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 annual report on Form 10-K. Our significant accounting policies are described in Note 2 to our consolidated financial statements for fiscal 2006. The following is a summary of the more significant judgments and estimates used in the preparation of our consolidated financial statements:

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 fiscal 2006 and fiscal 2005 resulted in net reductions to the trade promotion liability and increases in net sales of $4.3 million and $5.8 million, respectively, which related to prior year activity. These adjustments represented less than 1% of our trade promotion expense in both fiscal 2006 and fiscal 2005.

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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.

Our Assumptions. 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 actuaries measure our annual DB plans benefits and other benefits expense by relying on certain assumptions made by us. Such assumptions include:

These assumptions reflect our historical experience and our best judgment regarding future expectations. The assumptions, the plan assets and the plan obligations are used to measure our annual DB plans benefits expense and other benefits expense. During fiscal 2005, we changed the date on which we measure our annual DB plans and other benefits projected benefit obligation and benefits expense (the “measurement date”) from the end of the fiscal year to March 31 of the fiscal year. This one month change was made to allow sufficient time for our third party actuaries to develop their reports and for us to process the information on a timely basis in accordance with our year-end close process.

Since the DB plans benefits and other benefits liabilities are measured on a discounted basis, the discount rate is a significant assumption. The discount rate was determined based on an analysis of interest rates for high-quality, long-term corporate debt at each measurement date. In order to appropriately match the bond maturities with expected future cash payments, in fiscal 2005 we began utilizing differing bond portfolios to estimate the discount rates for the DB plans and for the other benefits. The discount rate used to determine DB plans and other benefits projected benefit obligation as of the balance sheet date is the rate in effect at the measurement date. The same rate is also used to determine DB plans and other benefits expense for the following fiscal year. The long-term rate of return for DB plans’ assets is based on our historical experience, our DB plans’ investment guidelines and our expectations for long-term rates of return. Our DB plans’ investment guidelines are established based upon an evaluation of market conditions, tolerance for risk, and cash requirements for benefit payments.

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The following table presents the weighted-average assumptions used to determine our projected benefit obligations for our Pension Benefits and Other Benefits:

The following table presents the weighted-average assumptions used to determine our periodic benefit cost for our Pension Benefits and Other Benefits:

For measurement purposes, a 10.0% and an 11.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for the preferred provider organization plan and associated indemnity plans for fiscal 2006 and fiscal 2005, respectively. The rate of increase is assumed to decline gradually to 5.0% over the next five years and remain at that level thereafter. For the health maintenance organization plans, a 12.0% and an 11.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for fiscal 2006 and fiscal 2005, respectively. The rate of increase is assumed to decline gradually to 5.0% over the next seven years. A 5.5% and a 6.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for the dental and vision plans for fiscal 2006 and fiscal 2005, respectively.

Sensitivity of Assumptions. If we assumed a 100 basis point change in the following assumptions, our fiscal 2006 projected benefit obligation and expense would increase (decrease) by the following amounts (in millions):

An increase in the assumed health care cost trend by 100 basis points in each year would increase the postretirement benefit obligation for the fiscal 2006 year-end by $16.4 million and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the period

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then ended by $1.8 million. A decrease in the assumed health care cost trend by 100 basis points would decrease the postretirement benefit obligation for the fiscal 2006 year-end by $13.7 million and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the period then ended by $1.3 million.

Future Expense. Our fiscal 2007 pension expense is currently estimated to be approximately $12 million and we expect to recognize a credit to other benefits expense of approximately $0.3 million. These estimates incorporate our 2007 assumptions as well as the impact of an amendment to our retiree medical and dental benefit plans, which eliminated benefits for those who are eligible for Medicare Part D, beginning in calendar year 2006. Our actual future pension and other benefit expense amounts may vary depending upon the accuracy of our original assumptions and future assumptions.

Goodwill and Intangibles with Indefinite Lives

Del Monte produces, distributes and markets products under many different brand names. Although each of our brand names has value, in accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” 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 capitalized 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. We review the asset groups containing Amortizing Brands (including related tangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable in accordance with FASB Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate. If an asset or asset group is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Non-Amortizing Brands and goodwill are not amortized, but are instead tested for impairment at least annually. 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 estimated 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 Non-Amortizing Brands or goodwill during fiscal 2006, fiscal 2005 or fiscal 2004. During fiscal 2006 and fiscal 2005, we determined that immaterial unamortized balances of Amortizing Brands were impaired, and, accordingly, recognized

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an impairment charge to write-off such immaterial balances. We did not recognize any impairment charges for our Amortizing Brands during fiscal 2004. At April 30, 2006, we had $758.7 million of goodwill, $525.2 million of Non-Amortizing Brands and $44.3 million of Amortizing Brands, net of amortization. The Pet Products segment has 73% of the goodwill and the Consumer Products segment has 83% of the Non-Amortizing Brands, with the Del Monte brand itself comprising 67% of the total. 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 future impairment losses.

Stock Option 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 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.

Fair Value Method of Accounting. 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. We did not recognize any stock option expense under this method because we granted our stock options at the then current market price of the stock.

Effective at the beginning of fiscal 2004, we voluntarily adopted the fair value recognition provisions of FASB Statement of Financial Accounting Standards 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 of Financial Accounting Standards 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.

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 fiscal years beginning after June 15, 2005, and early adoption is permitted. Management intends to use the modified prospective transition

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method to adopt SFAS 123R beginning in fiscal 2007 and expects that the implementation of SFAS 123R will result in a minor increase to our stock-based compensation expense in fiscal 2007.

The fair value of stock options granted was $8.8 million, $15.3 million, $14.1 million in fiscal 2006, fiscal 2005 and fiscal 2004, respectively. The fair value of stock options granted will be recognized as stock compensation expense over the vesting period of the options.

Our Assumptions. Under the fair value method of accounting for stock-based compensation, we measure stock option expense at the date of grant using the Black-Scholes valuation model. This model estimates the fair value of the options based on a number of assumptions, such as interest rates, employee exercises, the current price and expected volatility of our common stock and expected dividends, if any.

The following table presents the weighted-average valuation assumptions used for the recognition of option compensation expense for stock options granted during fiscal 2006, fiscal 2005 and fiscal 2004:

The expected life is a significant assumption as it determines the period for which the risk-free interest rate, volatility and dividend yield must be applied. The expected life is the average length of time in which we expect our employees to exercise their options. The risk-free interest rate is based on the expected U.S. Treasury rate over the expected life. Expected stock volatility reflects movements in our stock price over the last several years. We had not historically paid a dividend; however, in the second quarter of fiscal 2006, we began using a dividend yield of 0.9% as it was deemed likely that a dividend would be paid within the seven-year life of the options.

Sensitivity of Assumptions (1). If we assumed a 100 basis point change in the following assumptions or a one-year change in the expected life, the value of a newly granted hypothetical stock option would increase/(decrease) by the following percentages:

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

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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:

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 fiscal 2006, we experienced no material adjustments to our estimates.

Results of Operations

Fiscal 2006 vs. Fiscal 2005

Net sales

Net sales increased by $99.3 million, or 3.4%, in fiscal 2006 compared to fiscal 2005. The increase was primarily due to increased net sales in our Consumer Products reportable segment.

Net sales in our Consumer Products reportable segment increased by $82.9 million, or 4.0% in fiscal 2006 compared to fiscal 2005. Increased pricing drove 5.5% net sales growth during the year, driven by pricing gains reflected throughout the reportable segment. The pricing increase was partially offset by volume declines, primarily from price elasticity (the volume decline associated with price increases). The Del Monte Brands operating segment had sales of $1,576.4 million in fiscal 2006, an

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increase of $61.0 million or 4.0% over fiscal 2005. We benefited from price increases, increased fruit volume driven by the health and wellness trend and new product volume, partially offset by the effect of price elasticity. To a lesser degree, we also benefited from increased tomato sales, resulting from customers buying in advance of our May 1 price increase, and expect first quarter fiscal 2007 sales of tomatoes to be lower than first quarter fiscal 2006 as a result. The StarKist Seafood operating segment had sales of $565.9 million, an increase of $21.9 million or 4.0%, compared to fiscal 2005. This increase was primarily due to pricing actions and increased sales volume of pouch products. The impact of such increases was partially offset by expected sales volume decreases of chunk light halves driven by our strategic decision to increase pricing and reduce overall promotional activity for such products.

Net sales in our Pet Products reportable segment increased $16.4 million, or 2.0%, in fiscal 2006 compared to fiscal 2005. Pricing and new products in dry dog and pet snacks drove sales growth, partially offset by lower volume in wet pet food sales.

Cost of products sold

Cost of products sold increased by $58.4 million, or 2.7%, in fiscal 2006 compared to fiscal 2005. This increase was primarily a result of cost increases. Our cost increases were primarily due to higher steel and other packaging costs, energy, logistics and other transportation-related costs and fish costs. In fiscal 2005, cost of products sold included $5.6 million of integration costs, while in fiscal 2006, we did not have such costs.

Gross margin

Our gross margin percentage for fiscal 2006 increased 50 basis points to 26.2% compared to 25.7% for fiscal 2005. Net pricing benefited gross margin by 2.9 points. This benefit was partially offset by a 2.4 margin point reduction related to higher costs. The higher costs reflected higher manufacturing and energy costs, steel and other packaging costs, logistics and other transportation-related costs, and fish costs, partially offset by lower commodity, ingredient and integration costs. Energy, logistics and other transportation-related costs were impacted by higher oil and natural gas prices than in the prior year.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses increased by $30.4 million, or 6.8%, during fiscal 2006 compared to fiscal 2005. This increase was primarily driven by a $26.5 million increase in transportation costs and $19.3 million in incentive compensation costs under our Annual Incentive Plan. The increase in SG&A expense was also due to higher benefit and other costs. There was no accrual for the Annual Incentive Plan for fiscal 2005 because no bonuses were paid with respect to fiscal 2005. The increase in SG&A was partially offset by the absence of integration costs and certain legal expenses related to the Kal Kan litigation, as well as lower marketing expenses. In fiscal 2005, SG&A included $15.1 million in integration costs, while in fiscal 2006 we did not have such costs.

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Operating income

Operating income increased by $10.5 million, or 3.6%, during fiscal 2006 compared to fiscal 2005, primarily due to higher product pricing, partially offset by higher costs, primarily energy, logistics and other transportation-related costs, fish costs and steel and other packaging costs. The increase in operating income in fiscal 2006 was also impacted by the absence of $20.7 million of integration costs incurred in fiscal 2005, which was largely offset by the incentive compensation cost recognized under the Annual Incentive Plan in fiscal 2006.

Our Consumer Products reportable segment’s operating income increased by $0.3 million, or 0.1%, during fiscal 2006, compared to fiscal 2005. The impact of the increase in sales and the decrease in integration costs completely offset the higher inflationary costs related to energy, logistics and other transportation-related costs, steel and other packaging costs and fish costs, in addition to the increased SG&A expenses as noted above.

Our Pet Products reportable segment’s operating income increased by $15.4 million, or 12.2%, during fiscal 2006 compared to fiscal 2005. This increase was driven primarily by increased net pricing and decreased marketing expense, partially offset by inflationary cost increases in steel, energy, logistics and other transportation-related costs. The increase in fiscal 2006 also resulted from the absence of certain legal expenses related to Kal Kan of $7.5 million.

Our Corporate Expenses increased by $5.2 million, or 11.8%, in fiscal 2006 compared to fiscal 2005, primarily due to incentive compensation costs under the Annual Incentive Plan (which were absent in fiscal 2005) and higher benefit and other costs, partially offset by the $5.8 million decrease in integration expense.

Interest expense

Interest expense decreased by $42.6 million, or 32.6%, in fiscal 2006 compared to fiscal 2005. This decrease was driven by $33.5 million in costs related to our debt refinancing in February 2005 which did not recur in fiscal 2006. See “—Liquidity and Capital Resources” section for detailed discussion of the refinancing. The remaining decrease resulted from lower debt balances in fiscal 2006 than in fiscal 2005 and reduced interest rates as a result of the refinancing in February 2005. We expect interest expense to increase in fiscal 2007 as a result of higher debt balances resulting from the recent acquisitions, as well as increasing interest rates.

Provision for income taxes

The effective tax rate for continuing operations for fiscal 2006 was 36.4% compared to 37.4% for fiscal 2005. The decrease in the tax rate was primarily due to the tax benefit from foreign losses, the

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commencement of the deduction relating to U.S. production activities, and an increase in tax credits in fiscal 2006. These decreases were partially offset with a greater portion of pre-tax income being taxed in higher rate jurisdictions. We expect our effective tax rate to be between 37% and 39% in fiscal 2007. While we have benefited from the Section 936 federal income tax credit in the past, our tax rate for fiscal 2007 assumes no benefit related to the Section 936 federal income tax credit since the legislation has expired.

Income from discontinued operations

Income from discontinued operations increased $15.6 million from fiscal 2005 to fiscal 2006. This increase resulted primarily from the approximately $11 million gain on the sale of the Soup and Infant Feeding Businesses.

Fiscal 2005 vs. Fiscal 2004

Factors Affecting Comparability of Results

A factor that affected comparability of our results of operations between fiscal 2005 and fiscal 2004 relates to our fiscal year, which ends on the Sunday closest to April 30. Every five or six fiscal years, depending on leap years, our fiscal year has 53-weeks. Fiscal 2004 had 53-weeks, while fiscal 2005 had 52-weeks. We have estimated the impact of the 53^rd week to be approximately 2% of sales.

Net sales

Net sales increased by $43.0 million, or 1.5%, in fiscal 2005 compared to fiscal 2004. The increase was primarily due to increased net sales in our Pet Products reportable segment.

Net sales in our Consumer Products reportable segment decreased by $7.6 million, or 0.4%, in fiscal 2005 compared to fiscal 2004. Increased pricing was more than offset by a volume decrease due to the additional week in fiscal 2004. In addition, we had a volume decrease in our StarKist Seafood operating segment’s net sales resulting from a strategic decision to change our promotional strategy for our chunk light tuna halves products.

Net sales in our Pet Products reportable segment increased $50.6 million, or 6.4%, in fiscal 2005 compared to fiscal 2004. Volume was the primary driver of the increase in net sales, with the

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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 increased by $69.6 million, or 3.3%, in fiscal 2005 compared to fiscal 2004. This increase was primarily a result of cost increases. Our cost increases were primarily due to higher steel, fish, energy, logistics and other transportation-related costs, commodity and ingredient costs. These increases were partially offset by lower volume caused by the absence of the 53^rd week in fiscal 2005. In fiscal 2005 and fiscal 2004, cost of products sold included expenses for integration, restructuring and merger-related items totaling $5.6 million and $4.3 million, respectively.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses increased by $25.1 million, or 5.9%, during fiscal 2005 compared to fiscal 2004. This increase was primarily driven by a $27.1 million increase in transportation costs and a 21% increase in marketing investments across all of our reportable segments. The increase in SG&A expense was also due to increased legal expenses, including the unfavorable verdict related to the Kal Kan litigation for which we recorded $7.5 million of expense in fiscal 2005, and increased professional services costs primarily resulting from costs incurred to comply with the Sarbanes-Oxley Act of 2002. The increase in SG&A was partially offset by the absence of an expense related to our Annual Incentive Plan as we did not meet the criteria for bonus payments to employees under the plan. The bonus expense recognized under the Annual Incentive Plan in fiscal 2004 was $19.8 million. In fiscal 2005 and fiscal 2004, SG&A included expenses for integration, restructuring and merger-related items totaling $15.1 million and $26.0 million, respectively.

Operating income

Operating income decreased by $51.7 million, or 14.9%, during fiscal 2005 compared to fiscal 2004, primarily due to higher inflationary costs, primarily energy, logistics and other transportation-related costs, fish costs and steel costs and new product investment costs, partially offset by higher product pricing and a reduction in compensation and benefits expenses. Operating income was also negatively impacted by the absence of the 53^rd week in fiscal 2005 when compared to fiscal 2004.

Our Consumer Products reportable segment’s operating income decreased by $11.4 million, or 5.1%, during fiscal 2005, compared to fiscal 2004. This decrease was primarily attributable to increased fish, steel, logistics and other transportation-related costs.

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Our Pet Products reportable segment’s operating income decreased by $30.2 million, or 19.3%, during fiscal 2005 compared to fiscal 2004. This decline occurred despite Pet Products net sales growth of 6.4% during fiscal 2005. 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. Inflationary pressures, primarily from higher commodity, ingredient, steel, and energy, logistics and other transportation-related costs, and significantly higher marketing investments also negatively impacted earnings.

Our Corporate Expenses increased by $10.1 million, or 29.6%, in fiscal 2005 compared to fiscal 2004, primarily due to increased payroll and benefits costs, increased stock compensation expense, and increased professional services cost primarily relating to costs incurred to comply with the Sarbanes-Oxley Act of 2002.

Interest expense

Interest expense increased by $1.8 million, or 1.4%, in fiscal 2005 compared to fiscal 2004. This increase resulted from the $33.5 million cost of the debt refinancing in February 2005, largely offset by lower debt balances in fiscal 2005 than in fiscal 2004 and reduced interest rates as a result of the refinancing. See “—Liquidity and Capital Resources” section for detailed discussion of the refinancing.

Provision for income taxes

The effective tax rate for continuing operations for fiscal 2005 was 37.4% compared to 35.6% for fiscal 2004. The increase in the tax rate was primarily due to an increase in state taxes, larger non-deductible charges during fiscal 2005 associated with higher employee stock-based compensation and foreign losses for which no current tax benefit was recognized.

Income from discontinued operations

Income from discontinued operations decreased $6.4 million from fiscal 2004 to fiscal 2005. This decrease resulted primarily from the sale of the IVD, Medi-Cal and Techni-Cal brands in fiscal 2004. In addition, in fiscal 2005, the private label soup and infant feeding businesses were affected by the same inflationary cost increases discussed above.

Liquidity and Capital Resources

We have cash requirements that vary based primarily on the timing of our inventory production for fruit, vegetable and tomato items. Inventory production relating to these items typically peaks during the second fiscal quarter. 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 and term loans under our senior credit facility, senior subordinated notes and, if necessary, letters of credit), expenditures for capital assets, lease payments for some of our equipment and properties, expenditures related to our transformation plan, payment of dividends, and other general business purposes. We expect to continue to pay dividends. However, the declaration and payment of future dividends, if any, is subject to determination by our Board of Directors each quarter and is limited by our Credit Facility and indentures. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Dividend Policy.” We may from time to time consider other uses for our cash flow from operations and other sources of cash. Such uses may include, but are not limited to, acquisitions or future transformation or restructuring plans. Our primary sources of cash are typically funds we

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