Question-and-Answer Session
Operator
Thank you, madam. (Operator Instructions) Your first question comes from Farha Aslam - Stephens Inc.
Farha Aslam - Stephens Inc.
Going forward, Jeff, with the Mexican JV in grocery products, how much top line do you think that’s going to reduce next year?
Jeffrey M. Ettinger
I mean it obviously doesn’t take effect until next fiscal year. The top line for MegaMex by itself will actually increase because that will all get registered business. We’re the selling agent. For the division overall, there is somewhat of a washout effect ultimately of the Carapelli lost sales that we’ve cited during this quarter. That’ll only go for a couple more quarters.
One of the things to watch out for though, and we’ll give you some guidance when we hit it next quarter would be the net operating profit since it’s a shared venture will be somewhat lower on a percentage basis. But we’re still very confident it’s accretive overall to our both the GP divisional performance and the total company.
Farha Aslam - Stephens Inc.
And that’s going to still be reported in Grocery Products?
Jeffrey M. Ettinger
Yes that’s correct.
And then the new facility that you’re opening up in Grocery Products, it was originally for the Compleats, what products is that producing now? And the costs related to starting up the plant, is that going to flow through your P&L or is that going to be capitalized on the balance sheet?
Jeffrey M. Ettinger
I’ll let Jody handle the second question. On the first question, the plant is scheduled to open in the December, January timeframe. So it hasn’t opened yet. It will still have a significant microwave meal capability in the plant, and we are also looking at putting some canning operations in the facility. I think we talked in previous calls back when Compleats were growing at 30 or 40% clip we had anticipated maybe two full new microwave lines. We’re more comfortable now with one new line and then that gives us an opportunity to take some of the pressure off some of our other facilities because we’ve been enjoying some very significant growth in some of our canned business areas.
Jody H. Feragen
As far as capital versus expense, the majority of the expenditures relating to the plant will be capitalized. But as you begin any new production facility you have hiring people now that are going to start working down at the plant, and those expenses have been and will continue to flow through the Grocery Products segment.
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